This is what happens when urban planning goes wrong. In asian cities where most office buildings are zoned along with residential buildings and other types of buildings (shops, service providers etc) the office commercial property would just get converted to another type of commercial and possibly residential property and life moves on. An extreme example of this would be to have residential building type be almost identical to a commercial type which I have seen plenty of in south Asia. The problem in US is that when offices close down the entire city dies. The economic activity halves, it feels empty, creepy and unsafe. A lot of cities in the US exist to cater to the 9-5 office workers that relapse back to suburbs far from the city for anything other than work and some entertainment.
> An extreme example of this would be to have residential building type be almost identical to a commercial type which I have seen plenty of in south Asia.
I have seen this a lot too in the US... Usually a home gets converted to a business
When something isn't needed, it tends to atrophy. It took us a long time to realize that offices are not needed when working only with information but it is undeniably the case.
You can argue that it is somehow better when everyone is typing on keyboards and exchanging air pressure fluctuations in close physical proximity but you cannot argue it is necessary. Furthermore you cannot make any conclusive claims regarding the relative effectiveness of WFH vs WFO. You can, on the other hand, conclusively make claims that commuting is time/energy consuming while largely being an externality for most companies (as they do not have to pay for roads, cars, time, ambulances, carbon emissions, etc.). You can also make conclusive claims regarding lease costs, building maintenance, etc. Offices are plainly irrational from a first principles perspective.
What amazes me is that we didn't see a faster cratering in value in office space.
On any given day in any capital city, perhaps 50% of office desks sit empty.
Yet I can't buy an office building for cents on the dollar.
Normally when supply far exceeds demand like this, companies owning those assets can't pay their bills, the building is sold, there are no buyers, auction prices crash, the crashing prices cause more companies to go underwater, those buildings are sold too, and there is a big wipeout of all leveraged property owners. Rent and purchase prices prices for office buildings fall 70%, encouraging other uses of the buildings (retail, residential, industrial), and they end up full again.
But for some reason that isn't happening. 3 years later, and still more office desks are empty than full in most capital cities.
Typical business leases were 5-10 years. If you weren't willing to commit to 5 years in 2018, nobody owning a building in a major CBD wanted to see you. You could get sublets from businesses that wanted to recoup costs while moving to a bigger space, or space at the fringes or outside of the CBD.
I don't understand why they can't have shorter leases with lower rent. I'm not sure why they can't do that and swallow their pride a bit. They can charge the next renter more when the short term 1-2 year lease is up. Better than making $0
It isn't better than making $0 because now at lower rents the property gets revalued to be lower, and when the rents and underlying property is used as collateral on loans then they adjust higher than they already would in a rising rate environment to cover the risk of default.
It works out better to kick the can down the road for as long as possible, hoping that something will change and to put off the day of reckoning, so they fight it tooth and nail.
The market is only going to adjust downwards when there's a real crisis and fire sales start happening due to forced liquidation that causes everything to get marked down to market. Then there's no point in kicking the can down the road any more.
One of the things that can be done is to maintain the illusion of a high rent by working out lease terms. For example, a 60-month lease at $75/sqft might come with the first 4 months of rent in each calendar year for free, making the actual price $50/sqft. Or, a ten year lease on biolab space might come with the landlord paying for the initial buildout and equipment installation, equal to a 30% discount.
Interests rates only started rising in 2022. Before then it was possible to get a basically free loan to buy time in hopes of locking in a good long term deal. It’s going to take time to suck all the money out of the system and force hard choices.
In the UK this isn’t even limited to office space. Business rates on any kind of retail space are so absurdly high that it is a huge barrier to entry for setting up shop.
They haven’t adapted to the continuing death of the high street at all, so you have loads of property sitting empty because the rates to lease it, on top of the rent, are too much.
In fact, a loophole was to allow a business shop to set up rent-free for a few months, and then close up just before they were due to cover tax and business rates, allowing the landlord to keep the property vacant for a while longer. This is how places like Oxford Street in London became inundated with ‘American Candy’ Stores.
Even san francisco isn't that bad, only about 25% of office space isn't being use. It's not an apocalypse, these real estate people are just trying to declare "woe is me" because profits are down 10%
Your numbers may be outdated, San francisco is lower than my city coming in around 16 or 17% (i do not have the numbers in front of me atm).
The hard problem with % numbers is that they are usually made up on the fly, 62% of the time. However, in my case, I got the CRE vacancy numbers from NAI which is more credible than a random person on HN (no offense)
Those figures are the percentage of office space that is unleased.
However, there is a good chunk of office space that is leased by someone yet isn't actually used every day. Usually because the company now does WFH yet can't terminate the lease early.
There seem to be a large number of employees who have a desk in an office, yet barely ever use it too.
I'm classing any seat that doesn't have an ass on it during the day as unoccupied.
Keep in mind, this is coming from the same firm who told AT&T in the 1980's that mobile phones would be a niche market with only 0.9 million subscribers.[a]
Truth is, no one knows with certainty whether office real-estate losses will be in the hundreds of billions or in the trillions of dollars.
And then, there's the question of indirect, non-real-estate financial losses -- for example, by downtown shops, restaurants, and other establishments that cannot survive if offices remain half-empty for much longer. The indirect, non-real-estate losses may well dwarf the direct ones!
All predictions about losses caused by remote work are little more than educated guesses at this point.
The building i currently live in is a 20+ storey apartment block that was made out of a converted office building built in the 60s. Given the housing prices in [checks notes] cities, it feels like a wave of residentializing is on the horizon.
Why? Does no one like floor to ceiling windows anymore? I’m sorry if I sound sarcastic, it’s a real question. I kind of love the way some offices look on the outside.
Commercial buildings are too deep and so you have to do fancy things to give internal apartments natural light and meet building regulations for windows.
I don't think the points made in that video will survive long-term. Zoning laws will be forced to change, i.e. minimum parking laws, single zone areas, expensive high-end designs, high-pressure plumbing per residence, lack of use of fiberoptics for sunlight lamps etc. Ideal designs will need to change to accommodate all the empty space that will slowly fall apart without use. I would hate to see all these huge buildings demolished on a shortened lifecycle.
Large floor plates make it difficult to fit in smaller, affordable apartments with their own windows and full utilization of the interior. The rich already have their dedicated aeries so they don't need to live in a conversion to find large spaces.
Not an expert but I've read it's not easy to add all the necessary plumbing to provide showers and toilets if you redistribute office space into apartments.
A lot of times office buildings will have one large bathroom per floor.
It's not easy but it's also just like an ordinary phase of construction. They have to strip it down and replumb it, which in construction also just looks like drilling big holes through the floor.
What they're saying is the buildout from commercial to apartments involves more work than the buildout from one commercial client to another.
There was a time when many of us on this board lived in buildings without personal bathrooms and only shared facilities. Dorm style housing could work.
For the Millennials with proper jobs that never could buy a house, still live at their parents, and are inclined to communal ideas that lower the impact of individuals on their environments.
Luxury conversions - 2 apts max per floor? — could address the single shared utility risers/core of the typical office building. Schematically: [ a | util | b ].
Malls are also on the table for conversions these days. That is a much simpler transformation.
Why are malls simpler to transform? All the malls I'm familiar with have relatively few bathrooms per floor, and huge interiors (low wall:floor ratio) that would seem hard to slice up into apartments.
Was discussing the same with dad when walking through a nearly abandoned mall in MD a while ago. Think a sort of gated community - anchor stores can become things like WholeFoods. Reclaiming a ribbon of parking around the mall allows for creating a green zone around the mall and possibly even ‘backyard’ gardens. And as noted by others, it is far more trivial to add the necessary infrastructure to support housing. Natural light is another issue which can be addressed with minor alteration to the external facing walls of stores. Basically you can easily stamp out big studios, merge stores for n-bedrooms, and depending on the structure of the mall possibly even punch through floors for duplexes, etc. These will be luxury units. And the ‘food court’ etc. can form the core of the ‘village’.
Whats the layout like? Many office spaces are hard to partition into housing due to not having enough natural lighting, plumbing and other building infra that is built with offices in mind…
This has taken such a long time to play out. It's been obvious to me since it became possible to physically move my computer out the office and take it home (c. 1990) that software development doesn't need to be done in a central building.
Then when I worked in Silicon Valley in the late 90s, I did go into an office, but realized that 80% of the colleagues I interacted with were not in that office. They were either elsewhere on campus in other buildings, or in other countries.
This, of course, facilitated by the internet that we were building at the time.
So I moved to a location where I wanted to live, a long way from the office building. My employers' would ask that I travel to be "on site" from time to time. Fair enough, but after a few years of this I noticed that I was traveling to an empty office to have meetings where all the other participants were on the
Polycom.
So subsequently I only worked for clients who were mostly/fully remote.
Next a pandemic, where everyone else adopts my work model. Everything's fine -- nobody is commuting and they can continue to do productive work while attending useless meetings remotely. Collaboration (aka "pair programming") is much easier thanks to remote screen sharing. Business relationships widen because nobody cares where anyone is located any more.
Heck, supposedly the personal computer was invented in a garage (not an expensive office).
I believe it. It's also going to lead to much more developed suburbs IMO. When you don't have to travel into a city, it's a much less compelling argument to live in one.
I think we're all going to find out that the inflated costs of living that are regularly discussed on here are more a result of people being forced to move to these cities than NIMBYism that's it has often been attributed too. Some people like the idea of moving for work, but I have to imagine that many would prefer to stay closer to their families. This only gets more pronounced when you have kids, especially young kids.
Every mainstream issue that is talked about from parental leave to child care cost is amplified because so many people have moved away from their own parents for work. My in-laws moved near us when our oldest was 7 years old and the before and after was life changing in how much easier it made everything.
I greatly prefer space and trees to the alternatives.
Property "values" are extremely inflated in the countryside as well, that's why people move to the cities to work in the first place, because they can get better paid there. The average person born in a rural area has a really hard time affording a place to live there, unless they get help from the landed gentry (usually their parents) - no matter how hard he or she works.
Meanwhile, somebody born into rural property will never have to work in their entire life, unless they prefer to. They can rent out productive land, or sell it in small pieces to people who work. And this they can do for generations.
Aren’t we for reducing inequality and spreading the wealth?
The concentration of these massive amounts of wealth in Silicon Valley and NYC is the driver of a whole lot of pathologies from the high cost of housing to homelessness to gentrification of historical neighborhoods to the hollowing out of large portions of the United States.
Remote work has a chance to spread some of the wealth throughout the country and across different neighborhoods.
This wiping out of $800B from already wealth-concentrated areas is a good thing.
I hate the framing of this. It's so click bait and sensational. Remote work isn't wiping it out. Decreased demand for office space, with a ton of supply on market, and owners wanting to make antiquated leasing agreements are ignoring the market/reality. They are refusing to adapt to modern needs are seeing easily anticipatable economic outcomes as the consequence. It's not simply "remote did this" when the problem is greedy investors can't cope and refactor. Their target market's core consumer (employees of their renters) have unequivocally made it clear they do not want to go into offices or be bound to failing cities just to please a company that will lay them off or not take care of them (use any of the dozens of reasons employees don't want to rto or be forcibly relocated anywhere). I don't feel a shred of pity for impacted businesses or investors if these offices just as I wouldn't feel sorry for an investment group pouring millions into horse infrastructure in the early days of the automobile.
Since the value was never created by the real estate investors themselves, honestly, who cares. Housing as a speculative asset is bad enough, let alone rewarding somebody trying to get rich off being a cubicle landlord.
Many city centers used to be a lot more varied and interesting (and depraved at nights) a few decades back. I guess its possible with falling rents they could become more interesting again.
Yup, a whole lot of our "housing crises" are caused by stupid/greedy cities zoning for more commercial usage than residential and continuing to grow the disparity. If you actually kept them at a fixed ratio you wouldn't generate housing problems. Your commercial space would fill up and then be full, additional jobs wouldn't be added to your city until residential units were and companies would just have to go somewhere else when there wasn't space.
"Remote work increases productivity by nearly a trillion dollars for businesses by reducing costly office space overhead costs" Should have been the title.
I've been working at an organization for 3 years that contracts McKinsey (and others, like BCG) frequently. Based on that experience, I automatically ignore everything coming out of these consultant companies.
"Value" in this context meaning "prospective source of money".
"Value" in normal context means something like "source of things that people actually want". If people choose not to use something the moment they have that option, then perhaps they never wanted it in the first place.
Target audience. 3 cafes have popped up within walking distance of my house in the past 5 years and they all seem to be going strong. I doubt any of the owners give a flying fuck what Bloomberg has to say about office rents lol.
And therein lies the push from big companies to force back-to-office working.
I know from my previous company who are huge in the US who were very candid and honest about it saying they had signed several years worth of leasing and couldn't pull out of those contracts and basically the middle management didn't want to appear to have these expensive contracts on them when nobody was using the offices and the infrastructure that was also involved.
When I started my career in the late 80s programmers had their own offices, which was great. Then in the 90s I largely worked in shared offices, which was still OK. By the late 90s everyone was working in cubicles, which was a step down, and I longed for the days of offices. Then, for me, in the teens it had seemed that everyone had converted to the open-plan hellscape we're all now familiar with, and I longed for the days of cubicles.
Now since the pandemic, I work from my personal office at home, which is the absolute best, and I'm never going back.
Yeah, if I actually had an office I would probably be significantly more into the idea.
Instead I was paid in the top whatever small percentile of workers and had, at best, a few feet in a couple of directions in a big open room where I spent a third of my life.
Which is just... stupid capitalism. Degrading conditions until they are just above intolerable.
Given the scale of their claim, do they have anything to lose if this is completely wrong? Or if it turns out to add $800B in value to the economy? /rhetorical question
but how much more value does it bring to other places! It's a zero sum game, that money will go to boost other people's fortunes. It has helped the piece of mind of millions not to sit in traffic!
> And yet the world has not stopped. In fact everything seems to be going faster than ever.
Indeed.
I know many people who used to religiously go to the office 5-days a week. The only time they were not in the office was when they were on holiday or they were sick. It's what they did for their entire working lives. And in some cases it's what "custom and practice" historically dictated in their industry, e.g. those working in the financial sector.
The pandemic forced their hand. And now my unscientific sample would suggest 80-90% of them now only go to the office for client meetings. Most weeks they don't go at all, or maybe they pop-in for a couple of hours on their way somewhere else. There is the occasional week where they do a full-day in the office for one or two days. But nobody I know is anywhere near the old 5-days a week regime.
Employers attempting to force (or, if we're being polite "strongly encourage") people to return 5-days a week are playing a loosing game.
The future is now and the future is hybrid or fully-remote for 99% of jobs. There are very few jobs out there that genuinely need you to be in a different building 5-days a week to do your job.
Yeah, you can't be anything blue-collar remotely. As well as jobs like healthcare. Lots of jobs still require you to physically interact with people or things.
If I say "you should really get that cut checked out, it looks infected", then I'm making a recommendation to you or giving you advice (solicited or not).
But here you seem to be giving advice to a class of jobs, which doesn't make a lot of sense. A class of jobs has no agency.
Are you advising plumbers (one example of a blue collar job) to charge more for their services? I'm sure the thought occurred to them and it doesn't work for one reason or another.
Are you advising customers of the plumber to pay more? Have you ever requested plumber services, and if so, did you pay the plumber "much more" (in other words, are you taking your own advice)?
Maybe, but as always supply and demand are at play. Perhaps in the future these jobs will pay much more than “information only” jobs but there are also other dynamics involved as well.
I wonder if that's because you give a lot of value to remote work. It's full of people wanting to go back to the office too and that are really looking for day to day human interaction, so the value is way lower than if we consider the one that people who enjoy remote work give it.
why should they though? They pay what the market will bear. They could pay a bit more if they would unionize successfully. Also lots of them do pay more when people take a risk and enter specialties and openly look for opportunity. You aren't going to make 100k digging ditches, but you can easily make that much as a plumber or electrician or machining expert.
I don't even turn my video on these days during calls. Most of my team mates don't. Some of them don't know how I look and I don't know how some of them look. And yet, we work well as a team. We are all in different cities and countries and work remote.
Unless our physical presence is necessary (hairstylist, nurse, chef...), we should aggressively push back on "come to office 300 days a year" requirement. Only dumb middle managers and arrogant upper management (who probably have money invested in commercial real estate) think physical presence is required for all jobs. Either we work remote, or we improve housing and transportation. The former is easier to do while the latter is a near impossible problem to solve in the current political climate.
Those who claim they build friendships etc at work, maybe genuinely ask yourselves - how many colleagues from your previous jobs do you really keep in touch?
This is fine for experienced workers who already know the job, but for anyone who is new (say first 2-5 years) or is looking for mentoring and growth/advancement opportunities, then the lack of in-person connections does hurt.
> Those who claim they build friendships etc at work, maybe genuinely ask yourselves - how many colleagues from your previous jobs do you really keep in touch?
I'll speak for myself and say that I am still regularly in touch with folks I worked at 4 jobs ago (12 years).. I guess it depends on why you are making those friendships, are you actually making friends or just looking to build social capital to give you advantage at work?
It can certainly be both, but if you don't keep in touch when you move on, then maybe it was only the latter.
I've a team member who is about a year out of college. He calls me 2-3 times a week asking for help on whatever task he is working on. His timezone is 10 hours ahead of mine. Mentoring is doable. Couple of months ago, there were some discussions on restricting remote work (thankfully it didn't go anywhere, at least not yet). He was distraught, as his commute was at least 90 minutes, one way.
Obviously nothing beats face-to-face interactions. But we need to consider the cost of it too. 3 hours of commute a day? Paying for gas, childcare? Polluting the environment, clogging the roads?
We can try to solve these problems with better infrastructure (like highspeed rails), banning corporations like BlackRock buying up large chunks of desirable neighborhoods/holding them hostage etc. That would require some serious effort and willpower, which seem hard to come by.
As for relationships, I too have a handful of people from years ago that I keep in touch. This can certainly be a disadvantage with remote work, but we need to compromise somewhere...
Yep, I agree with you. Bottom line is it's complicated. I don't think there's an easy answer, and neither "work at the office" or "work at home" are catch-all perfect solutions!
The world will never stop, not even for humans. On the other hand, if you have built a career around commercial office real-estate, the world might just have stopped for you.
There are plenty people who are making money in real estate in other market though, why is office space special? No one cared when my Great-great grandpa Willy the wagon wheel maker lost his job because of cars.
Companies could surely recoup some of those imaginary billions by letting go of a whole layer of superfluous managers whose only role is to peer longingly into empty cubicles.
I suggest a large reasoning: why big&powerful seems to want people back in offices? IMO the primary reason is their own economic model.
Office means city. City means services. Services means profit for those who run them. If inflation keep going and there is not much space for the New Deal in cities, too dense to change, people get poorer, so try cheaper solution, meaning owning less, witch indirectly means using more services. Let's say some try to go to smaller apartments, then they have not much space for keep foods and cook at home, not much space to washing clothes at home, and that means services. No cars? Well, collective transportation service (improperly named public, since they are private companies in most of the cases) are there. They start to be toll free? Oh, someone pay, it does not matter if it's the transported human or the State. The point is that the SOLE way to realistically reach the famous "in 2030 you'll own nothing" is pushing people to total poverty and doing so without massive revolt means substituting what people loose with something else, services. In cities people can be impoverished while kept calm giving "aids" and services. Once their are trapped is just a matter of time to pushing services economical entry barrier a bit higher and de-facto imposing jobs people's can't refuse to earn enough to pay for all the services they need.
If WFH became the norm, in the western countries where tertiary sector is largely dominating other jobs many people would go out of the city, looking for large homes in nice places, homes large enough to have a personal office per adult, at least, so they have also space for cars, for fridge, kitchen etc and since perhaps they are in an area not so well serving they would prefer some redundancy and they learn how to repair stuff and so on => they would value their properties and they do want to posses, not to lease, not to externalize, less services. Owning means also have valuable assets, witch means an economic reserve that allow for life changes without being so tied to a 24/7/365 jobs and services, they be less blackmailable than someone who own nothing and spend anything in services. Such ownership also means people less keen to relocate, witch means less easy reorganization of the society following some ruling class will.
Then the rest. If the home will be the center of so many people lives, homeservers will be the norm, personal desktops as well, far less mobile devices and own hw means "hey, but it's cheaper than the cloud" and so a certain mentality shift also in the IT world toward a more decentralized computing, like we had in the past.
Then large real estate owners who loose big money and so on, essentially MOST large big capitals will loose points. A middle class can flourish again.
So? Well, they likely prefer pushing people in offices, allowing only some, the most skilled and useful, to be outside the smart city.
We've become more efficient as a society. We stopped wasting fuel, our time and wear and tear on cars. All that time and material can be spent on something productive.
Instead headlines tell about value of offices. Maybe that value was not real. It only existed because someone with power over employees could force them to waste resources. It's a market failure.
Why is the question about being more productive? Yes, family time especially is important to me. I only get to spend 18 years or so with each kid; enjoying them, giving them love, and guiding them through/preparing them for life. I want to prioritize that.
Some day, I'll give anything for the chance to have more time with them. Trying to keep that in mind while they are young.
This is a failure of our understanding of value in our current culture, which we almost always equate to productivity.
In a human society, agnostic of economics or politics, productivity would be the measure of ones ability to support their family unit , extended family, and community both in terms of physical support (food, clothing, shelter, child rearing, education, etc.) And emotionally support (cultural interactions, familiar interactions, social interactions). This is the fundamental nature of our social order, but with the advent and rise of modern American capitalism, everything must equate to a dollar amount. And that in a simple sense works for helping drive an economy, but in the complex sense of actual society - it devalues the foundational structures that make up human society.
My former employer (in London) has just instructed everyone, finally after COVID, to be in the office for 50% of the time. Many of my former colleagues starting looking for other jobs last week.
It seems employers have two concerns: cost and presenteeism.
The first is easily solved, downsize your office. The second, is an organisational problem.
Why commute for 90 minutes each way to sit in a office with headphones on trying to avoid other distracting people to get some work done and then spend hours in Zoom meetings with those that don't come in on the same day?
> It seems employers have two concerns: cost and presenteeism.
There's real value in people talking to their coworkers in person and knowing them. There's an obvious cost as well, but let's not pretend there's no value there.
> There's real value in people talking to their coworkers in person and knowing them.
I don't think this is true. A certain type of person who enjoys socializing at the office may like this, but a lot of people feel like they have a stronger voice when remote vs being talked over in real life. When you WFH you democratize communication (if you do it right), when you're with people IRL the most domineering people control the conversation and in my experience, productivity greatly suffers vs WFH.
Does that require 50% of my week to be in an office? My current employer has several 'company days' in a year, and we're in an always on (camera optional) Zoom channel. I know my current set of colleagues far better than my previous group which was actually a smaller company where we were in the office 4 days a week.
> There's real value in people talking to their coworkers in person and knowing them.
There can also be real toxicity. From intimidation to harassment in-person interactions can be enabling.
In addition, in person interaction favors the person who speaks confidently and quickly over those who may be of the type that ponders more. Often in inperson interactions those feedbacks can be drowned out whereas a more collaborative document oriented interaction may bring that kind of feedback out.
There is some small value but you can rectify that by working closer together over phone calls and such. It's not nearly worth what middle management says it's work to cover for their need to have everyone in the office to lord over, which is the 99% reason for it.
Humans are infinitely adaptable, I believe that most of the wailing and gnashing of teeth is purely psychological need for middle managers to lord over people in their office fiefdoms. My productivity has never been better not having to commute and listen to infinite office gossip and random phone calls while in my cube. It could be a personal failing that I'm easily distracted but it is what it is. I work better from home and will continue to seek out those opportunities over driving an hour to and from work. Consider it my contribution to the lower CO2 effort.
The argument, as always, will be that the real estate market is using all of society as human shields and thus must be bailed out or otherwise protected from financial loss.
But actually these are two markets: commercial real estate and the residential one. While you could have some (weak IMO) arguments in favor of the latter, it is the former that is undergoing changes and I see no reasons for taxpayers to bail anybody involved.
>New Jersey and Texas are states that stand out for spelling out exactly how often employees must work from the office to qualify for tax breaks. Before the pandemic, several New Jersey tax programs required workers to show up at least 80% of the time, and one Texas program set the threshold at 50%.
>Miami, which has seen an influx of new businesses throughout the pandemic, created a program in 2021 that requires companies to sign a minimum five-year lease for office space. The city of Sugar Land, Texas, outside of Houston, launched a new incentive in November that requires businesses to renew their existing leases for five to 10 years and invest a minimum of $1 million in office improvements.
Tax breaks for businesses are not a secret plot by the illuminati to prop up their side-investments in commercial real estate. Please read what you're actually linking to and replying to.
HN seems to have avoided "microchips in vaccines" and "UFOs are alien aircraft" for the most part. But "return to office is a secret plot to prop up commercial real estate" gets almost zero pushback.
If a company wants someone to come back to the office, it isn't for their landlord's property value.
If they have lots of free space they can sublease it out, it doesn't make any sense to force people in to an office just to burn money and miss out on revenue.
Even for businesses that own buildings but are losing money, they can't sell their building in this market. So, they expect you to use it even though they would rather sell the building for the cash flow.
> It's quite embarrassing to be paying the lease on an empty office though.
While I agree, and I can imagine CEOs/CFOs in a hard spot over a 10-year lease with an empty office, what is better: to just pay what you had promised if downsizing is not possible, or pay and have disgruntled employees, with most of them immediately starting to look for another job and leaving as soon as they manage to find it?
Do you have any data to show how prevalent this is? I suspect worker retirement plans have more exposure than leaders of companies, and it seems only the largest, most stable and slower growing companies own their own real estate.
My former employer's CEO (a small business) owned the floor of the building we were in and leased it back to the company.
I've known other smaller companies that owned their own building, but it would be interesting to see how prevalent it is. I suspect it's more common than we think.
In North America at least, having condo or strata units by floor of office buildings is relatively rare. I’m not saying it is ever a motivation but I just don’t think it is as big a motivation among tenants/employers as I see people on HN claim it is.
I realized that owning an office floor, condo style is unusual. My point is that I've known of several small businesses that owned their own buildings outright.
I don't know what this is supposed to mean. Do you think a company is asking someone to come in to the office because they're worried about their landlord's property values?
They're definitely being asked to come in (in many cases) because the cities in which the buildings exist are granting the companies tax breaks (and/or other monetary incentives) to "encourage" workers to work from the office in order to prop up local property values. (see the story here: <https://news.ycombinator.com/item?id=36835843>)
And also, yeah, I expect there are some companies that are seriously concerned about propping up the value of the building in which their office is located.
My comment never said that, so either you misread or you are being dishonest. It said "No one is asking you to" (come into the office to boost property values).
That's a lot different than "No one is asking you". I think you owe me an apology.
On the owner side "Remote work will transfer $800b from someone to anticipated it to someone who didn't as much. Neither will do anything valuable with it anyways."
On the renter side "Remote work will allow all the rents to be redistributed to shareholders, who will stack it neatly in piles of virtual $100 bills"
Remote work adds 800b to suburb and small city real estate value.
(Suburb because people not going into office will move further away on avg but also on average want a bigger house to have an office. Small cities from people moving from coastal cities to places like Boise and Austin.)
When the paper value of an asset disappears you don't get the money back to spend elsewhere. Nobody does.
Just like lending creates money, destruction of assets destroys money. Which happens to be what we want right now, as long as it can be done in an orderly fashion.
I suppose when we say these things we should say, fractional reserve lending creates some money. Otherwise one can get the impression that banks can create as much money as they want, which they can’t.
How is something worth anything? How is something worth $800b? Is it because someone else would pay $800b for it? Why would they pay $800b for that somethin? Is it because they need to in order to make more money?
If that all is true, then by destroying the need to pay $800b, we freed up $800b, right?
This is not exactly correct. For example consider a single office building and say it’s worth $2 billion. But now demand has fallen and the most anyway will pay is $1 billion. The other $1 billion is not “lost”, but it’s not freed up either. It just means that the buyer no longer transfers it to the seller. So the buyer has an extra $1 billion to spend on other things and the seller has $1 billion less. The net effect on the economy should be approximately neutral (of course sometimes if asset prices fall too much then companies can go out of business which can hurt the economy etc)
>The net effect on the economy should be approximately neutral
It wouldnt, and that's exactly my point. Company A is producing something of value (presumably) while Landlord B isnt (as evidenced by COVID-19 forcing us to WFH). So the $1 billion has now and always has had a wasted opportunity cost attached to it (who's making better use of it).
In other words, if Apple wired me personally half of their yearly profit, do you think that the net effect on the economy would be neutral?
Lowered asset values does not destroy money in the sense that the money supply is unchanged (ignoring secondary effects, but those are hard ti predict anyway).
That capital that would have been spent by real estate owners can now be spent by the company for pay raises, putting it into other investments, etc. Capitalism is a rough business and lots of winners and losers. Why am I supposed to feel sorry for these real estate guys? They never came to my aid when I got laid off in the past.
I actually miss going in. But do not miss long commute. And do not like the poor selection of local employers. And will not be moving for them at this stage in my life -- I already did that in my 20s -- so have to make do with remote.
But, I question any of the (esp local) employers now who are strictly hybrid or in-office only, because it tells me that -- among other reasons -- they're fine restricting their talent pool to what's in their immediate surroundings. That's fine in maybe a handful of locales where strong talent has traditionally congregated (Bay Area, maybe New York, London, a few places in Europe?). And so you have to ask the reason why?
It's gotta be one of: work doesn't call for special talent (so likely not interesting, and I likely don't want to work there). Or work doesn't pay competitive (so I don't want to work there). Or they feel they need to be looking over the shoulder of their staff (I likely don't want to work there.)
At least here in Toronto (linked article is Bloomberg Canada), banks (minus tech department) are back to office 5 days a week. I just feel like outside of tech, wfh isn't much of a debate.
Costs will be appended to the workers. I hope we all realize someday how working from home applies further wear & tear to our amenities and homes compared to the office's. Think toilets, sinks, fridges, chairs, doors, floors, etc.
I fully advocate for WFH regardless and to even supplement with an option like DeskPass for those that want to take a break from home. But a portion of those former office costs should go to the workers.
Time and flexibility is worth much, much more to me.
I agree that employers should pay for adequate equipment (desk, chair, additional monitors, a great camera and headset, not just the laptop). A reasonable sum of money for mortage/rent and utilities should also be considered.
Though be careful what you wish for. One of the advantages of home office is that commuting time is not paid (with the somewhat reasonable justification that people can freely pick where they live and it’s not the employer’s job to subsidize those living far away). I think if those at home get something for the additional rent/mortage and utility use then those commuting should also get something for their commute time and lost flexibility. So in the end that comes to me out in a wash and I’m generally fine with no one getting anything.
Yes, but so do the costs of the commute. How much wear and tear is that 55min/41 mile commute on the worker's car - or more rarely how much does that train/bus ticket cost monthly?
Some of the cost is always borne by the workers. And most people don't realize just how expensive wear and tear on a car is (or just owning one to get to work independent of wear and tear).
Personally, I'd take the wear and tear on the house over time lost commuting.
I work from home and haven't noticed significant additional wear and tear on my toilet. The same with my sink, fridge, doors and floors. I did buy a chair. It was about 300 bucks and it's a better one than I've ever had in an office.
Id say that it’s insignificant. Moreover one can write off office equipment. The stress and wear on daily transportation to and from offices is far more significant at that: wasted time, energy, pollution.
You should examine how you are using your toilets, sinks, fridges, doors, and floors if you are causing measurable wear and tear by staying home an additional 9 to 10 hours.
IDK about how much wear and tear I inflict on my doors and floors by programming from home.
You would have a better point by arguing about energy consumption, there the difference might actually be significant. If you, e.g., need to run your air conditioning in hot summer.
