“Return to office!”
Why?
“Because otherwise these buildings we bought are worthless!”
Ok, hard pass.
“In that case, with our new-found leverage, we’d like to formally request a 40% pay increase and a 4-day work week to compensate for the inconvenience of propping up your failed real estate ventures. We look forward to your affirmative response.”
That’d be a lot easier with some sort of collective group that could make such a deal.
You want to bargain collectively? Presenting a united front? What would you even call such a thing?
“Socialism!”
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Somehow, when people talk about “the government overregulating things”, they never mean the insane amount of regulation in place in the US to prevent effective collective labour action.
I just realized something. Making people work in expensive office buildings is how the rich extract more wealth from the working class.
How can I get more money? Start a business! Perfect. Now how can I get more money from that? Well … If I owned an office building, then I could rent office space to the business. But what is the business going to do with an office building? Ohhhh, the business, that I own, or am the majority shareholder in, the business in which I make all the decisions, could decide that employees have to come into the office. That I rent to the business, because I own the office building.
There’s also the businesses nearby that serve the workers in the office building. Supposedly one of the reasons Amazon has pushed so hard on RTO is a lot of their executives have personal investments in those businesses and without Amazon workers in the area they were taking in way less money. When you happen to own the restaurant across the street it’s in your interest to force your coworkers back into the office.
Interest rates were so low for so long, people tried to find other ways to grow their money.
Hey you want to borrow what is essentially free money to buy a building in charge tenants? It’s a safe investment, right, there’s no reason why businesses would stop needing office space, right,…right right.
And of course it goes deeper than that too. Even if a company doesn’t have any real skin in the game as far as owning The real estate, shutting down the offices makes for some colossal problems. If your stuff’s not already in the cloud you need to migrate everything. It changes secure networks, where do you meet with clients, when you don’t have that huge beautiful branded space with a magnificent mahogany table in your conference room how do you impress your clients? Where do you have your new hardware shipped? Does your IT team now just store hundreds of thousands of dollars of hardware in their house? How much are you going to lose when you auction off all the furniture?
This of course can all be overcome and answered but it’s not easy. It’s also not easily reversible.
Most of management cares a lot less that people are working from home and cares a lot more about having to decommission the actual offices because it’s strategic and financial nightmare fuel.
The company I work for reduced our office space from 3 floors of the building to 1, started leasing out the other two, and now maintains only a few conference rooms for client meetings and similar functions, the server rooms and IT space, and a very small set of communal workspaces for people who want or need to work from the office.
Point being, there’re always options less extreme than “Sell the entire building!”.
Or maybe don’t return to office and then they can sell the building and recover some lost equity?
My current employer did just that – sold the space, sold the desks, and then enshrined remote work in the union contract.
Since they weren’t tied to an office, people could work from anywhere the privacy and security regs allowed. That’s the entire country. Turn-over is incredibly slow, but we can now pull from a national talent pool for a 100%WFH job. Competition is gonna heat up.
Lucky they found a buyer
Your Piped link doesn’t work (as per usual with Piped).
Regardless I’m not watching it. Maybe you’d like to just make your point?
I’m advocating for not returning to office and questioning the logic in the comment I replied to, which I assume Shapiro is not.
It’s a very funny video with a clip of Ben Shapiro saying that the coast going underwater doesn’t matter because people can just sell up and move. And hbomberguy asks who he thinks they’re going to sell to, Aquaman?
Haha that’s a good one.
Nah, there will be buyers for commercial buildings for the right price. Not pretending like they’re going to get all of their investment back but as I said, you can still get some of it back.
For the right price, yeah. You’ll be able to sell coastal properties for the right price too. Just nowhere near as much as you paid for them. They’re not interested in getting only some of it back.
Who’s going to pay $1 for an underwater home? No, these things are not alike.
🎻
Commercial real estate loans are interest only? I had never heard of that before, but it makes sense with the buried lede:
borrowers prefer handing the property keys over to creditors over putting good money after bad
Which is what happens whenever a company has an asset they don’t own and no longer want. Shrug and handover the keys. Seems to me like the lenders are going to be the ones taking the haircut, despite what the article asserts.
The lenders are the banks…sounds like an '08 again.
Yep and it will end in massive public giveaway in free loan money to retrofit buildings to something useful, like residential(yes I know of the challenges but there is no better option). Even progressive cities are fucked because their downtown cores that they sold gladly sold out or allowed to be developed out from under their constituents have almost all their tax dollars coming from CRE so they are levered to pro up CRE.
There is at least one other option: Vertical Farming. I saw one of these in San Francisco go up, but there’s quite a few cities trying it out:
I hope they’ll do retrofits. I wonder what that would do to the housing market. If it actually made housing affordable a huge chunk of investors and home owners would be royally pissed. Great way to decrease homelessness, and I might be able to afford a house, but I doubt they’ll do it for that and previous reasons.
