So apparently a lot of this concern about rampant shoplifting wasn’t based on accurate information.
(My bold)
So, this one guy testified in front of the senate - and cites statistics from 2016 about all improperly taken merchandise, and boom, Bob’s your uncle, and the nation has a shoplifting Epidemic.
I know one major retailer whose General Counsel (chief lawyer) has been pleading with executives not to make unsupported, exaggerated claims about rampant increases in theft. To no avail. Making exaggerated claims is part of the toolkit to get the public, legislators, police and prosecutors to side more with retailers in the tension between preventing theft and trampling on the civil rights of the public.
Yep, and the GOP needs to show that America is in the middle of a crime wave only a corrupt con man fraud meister can fix! One that applauds the deaths of five police officers who died due to the insurrection on Jan 6.
But I guess they have a point- mass shoplifting will become a tiny issue compared to a fascist take over.
I suppose one response is for regulators to require that all retailers keep all merchandise in the back room and make them use actual employees to retrieve each item for each customer. Like back in Ye Olden Tymes.
Or like the catalog sales merchandise outfits popular in the 1980s / 90s where the “store” was just a showroom with everything in cases behind glass, or just pictures in books for the big stuff, and you wrote up your order, paid for it, then somebody picked it for you from the warehouse out back and dumped it in your car.
The execs might want to think twice about just which demon they summon when they rub the magic lamp of government.
They are running the lamp with huge wads of cash. They know what genie they are going to get.
Yeah. I was mostly engaging in “wishful kidding”. We can always dream though. e.g.
Well there retail execs, you’ve certainly persuaded us in Congress that these roving bands of flash-mob thieves laying waste to your stores daily are a mighty public menace, commonly slaughtering innocent customers and workers right and left with their mindless depravity as you’ve so movingly testified.
As deeply concerned low-tax low-spend right-leaning government officials we must protect both our innocent citizens and our long-suffering over-burdened taxpayers. We won’t fund more police; we need you to fund more protection. From now on it’s strict liability on you the retailer if a worker or consumer gets hurt during a crime your physical security measures failed to prevent.
Thank you for helping identify this great scourge on our nation that you will now squelch with any and all means at your disposal. Your country gratefully thanks you for your service.
Why yes, I did have a 3-martini 
lunch today. Why do you ask? 
A bit of a nitpick; the 2016 statistic was about retail “shrinkage”, which does include shoplifted merchandise but it also includes stuff stolen by store employees, by suppliers, goods rendered unsaleable, etc. In other words, it’s not all improperly taken merchandise.
Not at the bottom yet: SF office vacancy hits record high
Yikes - 1/3+ of offices in SF are now vacant.
Yet, this part leaves me confuzzled:
Asking rents for office spaces still aren’t coming down nearly as fast, though. In the past quarter, rates declined just 2.5% compared to the third quarter of the year.
With all the pain of the building owners, I would have thought there would be a steep decline in rents by now.
There’s a post above that explains some of the stickiness in rents:
Same in Seattle. Lots of empty space, but no discounts to be had. My guess is that the owners are hoping this is temporary and don’t want get be stuck with a lot of long term below market rental agreements. Our landlord isn’t willing to cut our rate, even when we said we’d be leaving at the end of our lease if they don’t make an adjustment downward.
It’s really about building valuation. If you lower the rent, the building’s income potential drops, and therefore its valuation. And if you have a big mortgage on that building…
And commercial real estate is leveraged to the hilt because everyone was encouraged by our betters to run out and borrow money as fast as they could for ‘stimulus’ and because the central bank made loans almost free.
That caused a lot of foolishness, and commercial real estate is just one example. If they are forced to lower rents, there will be bank foreclosures all over the place, followed by bank failures because many banks foolishly loaded up on commercial real estate paper.
But building owners will be forced to lower rents, and commercial real estate will likely be our next ‘crisis’. Or, they’ll just walk away from the debt. Bank failures, etc.
IMHO a moot point:
how is that better than a 50% vacancy rate for the past 18 months - which is also very visible and will have other negative externalities (law of broken windows, ghettification)
A 30% discount on rent is easier to “disguise” than empty, shuttered and graffitied storefronts in any other business in the building.-
I mean its not that the rental agreements are in the public domain or reprited in the newspaper - so who would know of this discount?
A big issue in the US with commercial leases downtown is the typical duration is multiple years. 5 or 10 is not unusual. So a landlord accepting a cut-price lease now is giving a decade long discount for what the hope will be an 18 month recession.
As with all leverage overhangs, everybody hopes they can hang on until the crisis abates. And as with all leverage overhangs, once a few entities can’t hold out any longer, the collapse (and / or bailout) is all the more spectacular. As @Sam_Stone just said.
My company simply could not break the lease on an office building we no longer need, nor can we find anyone to sub-lease. We’re stuck with it for another 2-3 years. I’m not sure who will rent it once our lease is up though.
Yeah, my company made some real estate adjustments in 2015 by consolidating teams at the main building and getting rid of some pricey leased office space nearby, then leasing another building down the road for a presumably lower rate. They had to refurbish the building and add all the furnishings (desks, cubicles, offices, conference rooms, a cafe, etc.).
It was a nice set-up and well used until the pandemic. The building is barely getting any use now, with almost everyone telecommuting most days. With the main building also barely getting any use, I can’t see the company keeping the 2nd building, and the lease is up in 2025. My guess is the don’t resign the lease, leave all the furnishings, and walk away, telling everyone to just use the main building.
I suspect there are companies in SF doing the same thing - paying for empty space because they cannot get out of their lease. But as leases come up for renewal, and aren’t, and space sits empty for a while, perhaps rents will gradually start to come under downward pressure.
Could it be because it is so God-awfully expensive to live there? I’ve heard horror stories about the astronomical housing costs, etc.
This is a problem everywhere I think. In a few years, leases for office space will end and those who own commercial real estate won’t be able find new tenants. This is going to be a problem even in Little Rock and I imagine in places like San Francisco and New York the pain will be even more severe.
WFH was gaining steam in the late 2010s, but COVID that got underway in early 2020 really made the step-change difference to WFH-as-norm for huge swathes of white collar workers.
If we assume large commercial office leases are all from 5-10 years duration, and effectively unbreakable ahead of time, that suggests that starting in about 2024 and accelerating rapidly in/after 2025 we’ll see a one-way exodus from big office buildings, whether downtown or in suburban “office parks” throughout the US. By 2030 the transition will be complete and any then-existing leases will have been signed post-COVID.
Makes me think of shorting office REITs.
Agree. It seems there is little immediate pain to building owners following the pandemic, so they can stay put on rates for now since they are protected by existing leases, and as previously stated, until they think the storm has passed. But, I think you are right that WFH is more widely accepted now, and growing, so there is a delay in the pain for building owners - but it’s coming, and it will likely be a wave for the latter part of the 2020s.
One thing to look at will be the rate of new office building and office park starts - I imagine anything in those areas not having already broken ground by this point has been paused. If no/less capacity is being added to the market, and existing space sits empty - yeah, it will be a wave.
Agree there is more to downtown SF’s health than commercial office space - hence the whole “Doom Loop” thinking.
I don’t think the trend is ever going to reverse. It might slow down. Might.
I have a neighbor who’s in commercial real estate, and I don’t want to ask him how it’s going.