The actual problem is that it costs an enormous amount of money to retrofit commercial properties as residential.
Source: currently have dozens of commercial RE clients
Edit: from the SFChron article mentioned above:
> “Finding the deal for us is almost like the needle in the haystack,” he said. “We had to basically build a brand-new building within a building. It’s not for the faint of heart.” > > Each apartment at 229 Ellis St., ranging from 180 to 300 square feet, cost around $400,000 to build out, less than ground-up construction.
Seems expensive for that tiny of a space.
Office buildings are often concrete with drop ceilings to make it easy to access sprinklers, wiring, and pipes, but you would still need to run all of those things across every floor of the building.
A single, modern condo likely has 2+ full baths, so if you're trying to get 10 units per floor, you're going to do that work 20+ times.
Kitchens are also difficult, yes. You need to be able to vent heat and smoke, and you need different electrical wiring in most cases.
Then think about ceilings. Drop ceilings are not appealing to most people, so you need a solution for that. Even if you keep the drop ceiling and just use a nicer tile, you're still spending $5-$30/sqft.
Walls aren't that expensive, but you need a lot of them to convert back from the trendy open-office plans that most buildings have.
There's also a lot of legal work to convert to condos (assuming you don't want to do rentals, which most of these office owners absolutely don't want to do).
There's just a much bigger difference between office and residential space than people realize, I think.
And in the case of land, this appears to be the case.
Even if that's only an illusory belief, it's still a determinative one in constraining supply.
Though that may be starting to change:
"After Years of Failure, California Lawmakers Pave the Way for More Housing"
To ease an affordability crisis, the Legislature voted to open suburbs to development, allowing two-units on lots long reserved for single-family homes.
https://www.nytimes.com/2021/08/26/business/california-duple... (https://news.ycombinator.com/item?id=28319169)
I'm still skeptical the roadblock's been cleared. But the noise about fixing the problem's getting louder, at least.
For example, universities and hospital bills have shot up way more than inflation, just huge.
You'd think that would lead to more competition and lower prices, but no way.
Where are this inexpensive accredited universities that charge half the price? Where are the new hospitals that charge half the price?
The only thing that actually goes down are real wages. Companies will gladly pay a lot for real estate, inventory, whatever, but not the employees. Minimum wage in 1979 was $2.35, which is $8.84 in today's dollars. The minimum federal wage now is $7.25.
From the 1930's to 1985, the top tax bracket was 70-90% taxes. The rich get richer. Bill Gates, Jeff Bezos, Sergy Brinn and Larry Page, Tim Cook, Larry Ellison, and the rest of the immoral patrol.
Community college? To be fair, the underlying problem is that everyone is competing for whole "jobs". Since it is a discrete unit you cannot be 95% as good as the best competitor, you have to be 101% as good to get the job. Assuming perfect structural unemployment, it would still make more sense to just let you and the best guy work 50% of the time rather than let the best guy work and let you stay unemployed. Of course the best guy wants moral superiority so he redefines success to be hard work and thus his ability to push you out of the labor market becomes his success.
Health care is a special circumstance. The free market maximalist assumption that the free market and the law of the jungle are the same is actually wrong. The free market is created by denying the law of the jungle (by delegating all violence to the state). With health care the law of the jungle is quite strong. It's easy to extort an unhealthy patient. Whatever benefits the free market is supposed to offer is swamped by our fear of death and the ability to abuse it.
It is not a coincidence that you picked two industries that thrive on the magic of regulatory capture.
Student loans, which follow a person even if they go bankrupt, removed all incentives for banks to lend intelligently. In fact, they are incentivized to lend larger sums to as many people as they can. And health care is a 9,000 layered beast of corruption across local, state, and federal levels.
Utah Valley University. It's less than half the price and if you're from a midwestern state they have sweetheart scholarship deals.