Los Angeles

I'd argue this has already happened, and we're in a "phase 3" of this. When everyone emptied offices during covid, many buildings assumed people would flood back at some point, and so they took the opportunity to get loans and finance office upgrades. The office workers never came back, so some got more loans and converted to multifamily. Even then, the trend has been for people to move out of cities, so they didn't get the prices they needed for those units. It's a fraction of what they were charging for office space.

This has played out over 3 years now, and it's finally come to a head. Buildings are defaulting on their loans more and more. Meanwhile, the municipalities have not dropped their tax assessments so the taxes on these buildings is make them unprofitable to keep. There are some foreign companies with deep pockets buying properties at pennies on the dollar. But what will they do with it to make it profitable? Let that play out, and eventually banks will turn more and more properties over to the local government. I think we're going to see a market where large amounts of city real estate is owned by cities. That will be expensive to maintain, so wrecking balls and greenspace will be an attractive choice.