I thought it was strongly discouraged to have sensationalist titles on scholarly papers? Maybe that's just in physics.
Work from home and the office real estate apocalypse
201–210 of 269 posts
Re: Work from home and the office real estate apocalypse
#202Earlier quoted context omitted.
Residential neighborhoods don’t have the same peak density. In central business districts every street has shops, in residential ones it wouldn’t be sustainable.
Much of the world proves this assumption false. See, e.g.: - Residential districts in China and many former Soviet countries. Big concrete blocks, with the bottom floor lined with small stores. They're absolutely delightful places to live. - Urban residential districts in the US aren't quite in this style, but a city like Cambridge will have small shops within walking distances of virtually all housing. The critical…
> a city like Cambridge will have small shops within walking distances of virtually all housing
I lived in Cambridgeport near Central Square in Cambridge, MA. There was indeed a small convenience store/variety shop almost within sight of my apartment. In six years, I bought something from them only once that I can recall. I used to walk quite literally past them to Whole Foods to save money. (When Whole Foods is killing you on price, you’re going to have a tough go of it.) Looking on Street View now, there’s paper over the windows and a notation of “permanently closed”.
I’m in a different neighborhood of Cambridge now. There are local shops here as well. Except for the food places, most are empty of shoppers almost all of the time. I don’t know what’s different to make these shops not particularly useful, but most purchasing seems to happen at the larger supermarkets and big box stores a few miles away (or online). Those have better selection, much better pricing, and are faster/more convenient in aggregate.
I don’t blame the local stores if they have to set uncompetitive prices due to rent or whatever other factors, but consumers also don’t have to buy products at uncompetitive prices.
Re: Work from home and the office real estate apocalypse
#203 any chance they will be converted to residential and push rent down?
Re: Work from home and the office real estate apocalypse
#204From the abstract, “We revalue the stock of New York City commercial office buildings taking into account pandemic-induced cash flow and discount rate effects. We find a 32% decline in office values in 2020 and 28% in the longer-run, the latter representing a $500 billion value destruction.” Is that value “destroyed”? Is it not unlocked to flow elsewhere? I’m genuinely curious about the dynamics of this.
Whether value was 'destroyed' or not depends on how you look at it. $500 billion dollars worth of assets were lost by the owners of the real estate; that value is gone, and it didn't go to someone else. It just vanished. The value didn't disappear because it transferred to someone else, it went away because the asset itself become less desirable and valuable to other people. You can imagine it being like if a farmer…
I assume in your analogy the general population is still buying the same amount of grain, so losing a silo of grain to rot is a pure loss to the farmer, and in a way is a loss to grain buyers (prices have to go up slightly).
But in the office space scenario, less office space is being used overall. This means that yes, landlords are losing the value of their investment, but (former) tenants are gaining access to cash flow that would have been tied up in rent and maintenance. So value has not been destroyed in the same way it was in the silo example.
I don't know if this is a good or bad thing, just pointing out a material difference in the two things you're trying to analogize.
Re: Work from home and the office real estate apocalypse
#205This has an impact not just in rents for office buildings but the entire ecosystem of support businesses that sell to workers who come into city centre to work. One example. Small organic food shop, that sold mostly to office workers and has seen a 70% drop in foot traffic. The same thing hits bars, cafes, restaurants, theatres and other venues. Those very things that make living near or in a city interesting for man…
I have always found that office-heavy areas of a city were pretty lame in comparison to denser residential. It does not seem like a big loss to me. Office centers tend to have some sandwich/salad lunch places that close at 4pm, some stuffy overly corporate happy hour bars, some dry cleaning places, some convenience stores and fast food spots. Dense residential area tend to have the full range of services, more intere…
These characteristics are not true for most large cities. San Francisco for example suffers none of this.
Re: Work from home and the office real estate apocalypse
#206Earlier quoted context omitted.
Residential neighborhoods don’t have the same peak density. In central business districts every street has shops, in residential ones it wouldn’t be sustainable.
Much of the world proves this assumption false. See, e.g.: - Residential districts in China and many former Soviet countries. Big concrete blocks, with the bottom floor lined with small stores. They're absolutely delightful places to live. - Urban residential districts in the US aren't quite in this style, but a city like Cambridge will have small shops within walking distances of virtually all housing. The critical…
> Residential districts in China and many former Soviet countries. Big concrete blocks, with the bottom floor lined with small stores. They're absolutely delightful places to live.
That really isn’t true. At least in China, the most common living arrangement in big cities is the gated apartment complex, their might be some retail on floor one, but it is usually on the other side of the gate, and the gate you can enter or exit from is often not conveniently located to access that retail easily (given my experiences living in Beijing). If they did away with the fences/gates, things would be much more convenient.
Re: Work from home and the office real estate apocalypse
#207Earlier quoted context omitted.
I have always found that office-heavy areas of a city were pretty lame in comparison to denser residential. It does not seem like a big loss to me. Office centers tend to have some sandwich/salad lunch places that close at 4pm, some stuffy overly corporate happy hour bars, some dry cleaning places, some convenience stores and fast food spots. Dense residential area tend to have the full range of services, more intere…
These characteristics are not true for most large cities. San Francisco for example suffers none of this.
The financial district, esp north of market, and south going towards embarcadero (Google, ...), is basically exactly this.
Re: Work from home and the office real estate apocalypse
#208Earlier quoted context omitted.
These vibrant ecosystems flourished where people spent most of their day. It could be a huge win if they finally migrate to residential neighborhoods, where people will now be more present.
Residential neighborhoods don’t have the same peak density. In central business districts every street has shops, in residential ones it wouldn’t be sustainable.
> Residential neighborhoods don’t have the same peak density
This is only true in American suburbs. You have horrible one family dwellings only, and you space them far out on empty sections with massive roads between them.
This is the problem, and its also what is actually unsustainable.
Re: Work from home and the office real estate apocalypse
#209Earlier quoted context omitted.
The economy is supposed to be about enhancing other people's lives, not vice versa. Living in a city where you can walk down the road to get a chicken sandwich is a big win over living in a suburb where you have to drive everywhere. That's still true if you're working remotely.
Right but the vast majority of folks won’t pay more to live in a similarly sized apartment as a house in suburbia to experience that. They will spend less money on a nice house in suburbia unless they had no other choice. If the big apartment were a fraction of the price of the house in suburbia, maybe. But it costs way too much to build tall buildings for that to ever be feasible. Asian and European cities work beca…
This has it the wrong way around. The price of infrastructure means that dense places cost less to upkeep than sparse places. The reason that cities cost more than the suburbs is 1) that there's more demand for cities, and 2) in the US, taxes paid by city-dwellers subsidize the expensive suburban infrastructure.
Re: Work from home and the office real estate apocalypse
#210I’m a believer in reversion to the mean, and I think that’s what we will see with the office market and work from home. The technology to work from home existed before the pandemic. Why didn’t it take off before the pandemic if it works so well? We didn’t suddenly discover a new technology here. The use of that technology was precipitated by a transient force, and when that force is removed completely, things will re…
I am not entirely convinced WFH will stay the norm either. Certainly more normal, but I think the HN crowd might be uniquely positioned to exploit the situation. Your average office worker doesn't usually have the agency to push back on office policies at the best of times, and you already see plenty of pull back into the office. The other part of the equation is the more common hybrid arrangement. If you still have…
Wearing my Tinfoil Hat: I see a looming, hypnotically-self-induced recession, manufactured precisely so that workers (incl. those who tend to hang on HN) feel more insecure and thus feel less empowered to say "No" to back-to-the-office mandates, thereby rescuing the rent-seeking classes from a Covid hangover. The timing is just too convenient...
(Only half joking...)