Killer Whale wrote: ↑Tue Jun 08, 2021 2:25 pm
What does it matter?
It actually matters a lot. I wrote about this on the old MW but the hollowing out of Central Business Districts matters a great deal.
There can be no serious doubt that cities will become more liveable if these largely daytime, weekday areas become repurposed for those who prefer denser living spaces with on-tap retail and entertainment. However, that is just the ground floor. The upper floors are destined to rot for decades unless they too can be repurposed for living rather than simply shuffling papers. It's difficult but not impossible. Whether it is financially viable is another question.
The problem sets in when we note that pension funds are massively weighted to commercial property and that that weighting was always a hedge to mitigate the liabilities which are looming due to longevity and falling birth-rates.
Withdraw that safety net of rising rents underpinned by long-term migration towards city centres and a knowledge (but geographically fixed) economy and everything starts to unravel as an alarming rate.
It is overly simplistic to suggest that Tamara in Turkey will be able to step in to the breach. Just as Derek in Delhi is only able to provide a basic first-line response to customers' needs. But, AI will increasingly fill in the gaps, as it was always going to do anyway, regardless of the availability of low wage workers' availability and enthusiasm.
I don't have a hotline to the future but my guess is that localised work-pods have a future in the mid-term, providing customer service in all its guises, albeit from decentralised workspaces that are clustered around commercial centres but not dependent upon them. There are perhaps ten years in that hypothesis.
But, the pension fund owned tower blocks have run out of road in the most spectacularly abrupt of fashions. It is a fact which will take a year or two to dawn on the markets. Sure, they will try to innovate their way out of the impending doom but there simply isn't the demand (and by definition, the profit motive) to soak up that vast amount of available repurposed office space.
Moreover, who the hell is going to meet the pension payments for all the boomers who thought that they had it made?
A safe-as-houses future predicated upon real estate is suddenly looking horrible, isn't it?
