Reply to Doom loop in cities - Commercial real estate

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[quote=Anonymous][quote=Anonymous]I’d also be curious about how industrial space in NYC transitioned to residential.  I think that’s a way forward for DC commercial property.  Become housing and hoteling.  [b]Or if retrofitting is too burdensome tear down and start fresh[/b]— look at the Navy Yard and the Wharf developments. [/quote]

The problem with this approach is:
(1) creditors/banks who are owed the money would need to write off the mortgage and take possession of property - courts are not fast, you'd have properties sitting empty for a few years while things shake out; abd 
(2) would re-trigger a massive devaluation of otherwise-performing CRE which would then (i.) force existing CRE borrowers to pony up more capital to their lenders (because LTV ratios would increase with a devaluation) and (ii) create a large property tax shortfall for the city government due to lower valuations

The best thing to do right now is for the city to create incentives for conversion of existing properties to residential/mixed use by easily changing zoning codes, construction codes, eliminating permitting red tape, provide some tax variances/relief for a fixed period of time, etc. Maybe even think about a temporary reduction/elimination of corporate tax rate. [/quote]

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