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SoftBank Backs Away from Part of Planned WeWork Bailout

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Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#51

Post by redis_mlc »

swiley wrote: post #44
sjtgraham wrote: post #37

Earlier quoted context omitted.

Arguably it's in the interest of the landlords to make this work. If WeWork goes under there will be a ton of void commercial space. It's a question of how many lease payments to forgive before it makes sense (and is actually viable) to repossess the buildings and replacement tenants.

There’s going to be a lot of empty space. The land owners did it to themselves pushing for tighter building codes and zoning. No one built, rent went up, the economy got more fragile because people on the bottom had absolutely nowhere to go. Now they’re going to pay for it (except the ones that saw this coming, I know the building I live in just got sold a few days ago...) I’ve been saying for years that the housing…

This thread is about commercial real estate, not residential. And certainly not about your apartment building.

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#52

Post by daemin »

joedevon wrote: post #45
Lazare wrote: post #24

Earlier quoted context omitted.

It's a long story, but: First, sometimes people build (or buy) office buildings, and then lease the space in them to companies. Office buildings (and the land they're built on) tend to be very expensive, so landlords tend to be levered (ie, they borrow money to build/buy them), and they like to sign long term leases to try and lock in revenue so they know they can cover their loan payments. Companies like flexibility…

Pretty good summary but I think you were a little off on the Softbank side of things. SB pioneered the practice, based on the concept of Blitzscaling, of pushing entrepreneurs to take an insane amount of money. WW's CEO likely convinced SB that it was a great idea, and then SB likely just ran it through their playbook of throwing money in. If you read up on SB, you'll hear several examples where they did this. Their…

So in that case Neumann was a damn smart individual, he saw the money flood coming and tried to siphon off as much as he could in creative ways.

On one point, well done getting as much of the flood as he could, even though a lot of it was done in incredibly dodgy ways. Though these ways don't actually sound at all that ridiculous given some other accounting and financial practices that exist. He just got caught.

On another point, this shows how much of a divide there is between normal or even high earning people and the ultra wealthy. Even if you make six or seven figures working at a big company, you're not part of that ultra wealthy crowd, not even close. There is all this money and opportunity if you are already rich that doesn't seem to exist for working class people in general.

On my last point, it just goes to show how much of a divide there is between capital and society. Yes new taxes could be introduced but it will most likely hit those people earning six figures (and lower) than the ultra wealthy that got almost a billion dollar payout for failing. There are a lot things that society needs to reflect upon and consider, perhaps now is a good time because of the isolation.

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#54

Post by toomuchtodo »

wayoutthere wrote: post #41
godzillabrennus wrote: post #19

Earlier quoted context omitted.

Largest corporate tenant in New York City. We are just starting to see the first wave of this crash.

Even after we start to recover; how many companies are going to keep as much floor space as they had before? Remote work is here to stay. This is going to turn into a global commercial real estate crash in 6 months, no doubt.

Fantastic. Finally some sanity about disintermediating work from locality.

Sidenote: Carl Icahn is currently shorting commercial RE, so I think you're right.

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#55

Post by breatheoften »

TheFiend7 wrote: post #16
gamesetmath wrote: post #12

Good. Let that PoS burn.

Forgive my ignorance, but why is WeWork a PoS? I don't have much awareness on the situation.

I'm a WeWork customer and I really like the service ... their financials I understand have been controversial for a number of years -- the service itself is great though!

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#56

Post by wayoutthere »

toomuchtodo wrote: post #54
wayoutthere wrote: post #41

Earlier quoted context omitted.

Even after we start to recover; how many companies are going to keep as much floor space as they had before? Remote work is here to stay. This is going to turn into a global commercial real estate crash in 6 months, no doubt.

Fantastic. Finally some sanity about disintermediating work from locality. Sidenote: Carl Icahn is currently shorting commercial RE, so I think you're right.

Paradoxically, I think that the post-crash recovery will be a great opportunity for WeWork (if they survive). My guess is that many companies will outright close most of their branch offices, shifting people / teams that want or need to be in an office to coworking spaces.

This movement will also have reductive effects on carbon emissions, so despite the coming carnage in commercial real estate, it's the right direction. Hopefully a lot of that square footage can be converted to residential, because there is still an affordable housing shortage...

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#57

Post by toomuchtodo »

wayoutthere wrote: post #56
toomuchtodo wrote: post #54

Earlier quoted context omitted.

Fantastic. Finally some sanity about disintermediating work from locality. Sidenote: Carl Icahn is currently shorting commercial RE, so I think you're right.

Paradoxically, I think that the post-crash recovery will be a great opportunity for WeWork (if they survive). My guess is that many companies will outright close most of their branch offices, shifting people / teams that want or need to be in an office to coworking spaces. This movement will also have reductive effects on carbon emissions, so despite the coming carnage in commercial real estate, it's the right direct…

If you can work from anywhere, that helps alleviate the affordable housing shortage. Move where the housing is cheap. Not everyone is going to get to live in Manhattan or SF proper.

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#58

Post by wayoutthere »

toomuchtodo wrote: post #57
wayoutthere wrote: post #56

Earlier quoted context omitted.

Paradoxically, I think that the post-crash recovery will be a great opportunity for WeWork (if they survive). My guess is that many companies will outright close most of their branch offices, shifting people / teams that want or need to be in an office to coworking spaces. This movement will also have reductive effects on carbon emissions, so despite the coming carnage in commercial real estate, it's the right direct…

If you can work from anywhere, that helps alleviate the affordable housing shortage. Move where the housing is cheap. Not everyone is going to get to live in Manhattan or SF proper.

This may be somewhat cynical, but housing policy in the US continues to be one of the main tools in systemic oppression of minorities. There are powerful segments of the population who are fine with the status quo and will not be happy if "they" move in next door. So they will do everything they can to "keep property values high" in suburban neighborhoods -- which has historically been a dog whistle for "keep minorities out" -- and in direct opposition to creating more affordable housing.

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#59

Post by toomuchtodo »

wayoutthere wrote: post #58
toomuchtodo wrote: post #57

Earlier quoted context omitted.

If you can work from anywhere, that helps alleviate the affordable housing shortage. Move where the housing is cheap. Not everyone is going to get to live in Manhattan or SF proper.

This may be somewhat cynical, but housing policy in the US continues to be one of the main tools in systemic oppression of minorities. There are powerful segments of the population who are fine with the status quo and will not be happy if "they" move in next door. So they will do everything they can to "keep property values high" in suburban neighborhoods -- which has historically been a dog whistle for "keep minorit…

It'll take decades to "fix" housing policy through upzoning and waiting for the existing population of homeowners to shrink (freeing up housing stock). I don't disagree that there are challenges due to the status quo, but remote work is a fix that can be implemented today and can help lift the wages of folks who might not otherwise be able to have those roles.

You're not going to be able to change property rights in the US, so the problem may be unfixable to be frank, and those property rights are what keeps property values high.

Re: SoftBank Backs Away from Part of Planned WeWork Bailout

#60

Post by wayoutthere »

toomuchtodo wrote: post #59
wayoutthere wrote: post #58

Earlier quoted context omitted.

This may be somewhat cynical, but housing policy in the US continues to be one of the main tools in systemic oppression of minorities. There are powerful segments of the population who are fine with the status quo and will not be happy if "they" move in next door. So they will do everything they can to "keep property values high" in suburban neighborhoods -- which has historically been a dog whistle for "keep minorit…

It'll take decades to "fix" housing policy through upzoning and waiting for the existing population of homeowners to shrink (freeing up housing stock). I don't disagree that there are challenges due to the status quo, but remote work is a fix that can be implemented today and can help lift the wages of folks who might not otherwise be able to have those roles. You're not going to be able to change property rights in…

I agree remote work is the right way to go, but the affordable housing crisis can't be fixed through any other method than "build more housing". Every other thing that people propose is designed to protect property value by not building more housing. We simply have to make housing less scarce and yes, that will drive down property value. That's kind of the point.
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