Let's discuss an interesting pivot I've been seeing.

Two out of the three suffering commercial product types (office, retail, and hospitality) can be converted to a use with high demand, living spaces.

Even in tourist havens like San Diego, hotels have been hit particularly hard. While most hotel rooms can only be converted into studios, Extended Stay operations usually have all the components of an apartment. With occupancy at historic lows, these properties may trade cheaply and implementing an affordable housing play makes sense.

Office buildings do not yet show the type of vacancy where their value decreases, however, the occupancy rates for the last 10 months have been hovering around 20% in metro areas. Whether tenants will return to the office in mass is yet to be seen, if they don't, expect to see office-to-multifamily conversions for older product.

Of course zoning restrictions may apply & cities may be reluctant to lose transit occupancy tax from hotel uses, but these conversions would most definitely benefit struggling retailers and restaurants in the neighborhood who desperately need the patronage.

That's my take, would love to hear what you think.