“It’s one asset class that just has to get redone, and redone meaning demolished,” Kyle Bass, founder and chief investment officer of Dallas-based Hayman Capital Management, said of office buildings across the US. 

Bass, who won big betting against subprime mortgages before the US housing collapse of 2008, believes that office demand is not coming back, and it’s not efficient to convert most office buildings into apartments.

“You have to jackhammer, rebar, and concrete. You have to re-plumb everything,” Bass said in an interview. “And when you finish it, it just doesn’t feel right. You wouldn’t want to live there.”

Jones Lang LaSalle Inc (NYSE: JLL) reported that the US office vacancy rate has increased to 20.2% in the first quarter of this year versus 19.6% in the last quarter of 2022. The adjustments in the tech sector have also pushed big companies into mass layoffs, and shrinking their office spaces.

He pointed out an imbalance in real estate, and said that there is a severe lack of multi-family units, particularly in fast-growing cities such as Dallas where the investor is based. But, despite the demand, the rising cost of borrowing is making it almost impossible for developers to get the financing they need.

For his part, Bass is investing in vast swathes of undeveloped Texas land. Bloomberg reports that he has spent $100 million acquiring six properties since starting Conservation Equity Management in 2021. 

Bass intends to turn his land into an asset class of sorts. He plans to restore some of his properties to wetlands to earn ESG credits he can sell to companies looking to offset their environmental impact.

Information for this story was found via Bloomberg, Tiwtter, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.