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US offices are sitting empty – business owners will have to adapt

theguardian.com

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Re: US offices are sitting empty – business owners will have to adapt

#71

Post by latchkey »

EMM_386 wrote: post #50
latchkey wrote: post #16

Earlier quoted context omitted.

> We don’t need a Chipotle on every corner. We don’t need another $20 box salad store. These are the only types of business that can afford the rents though. Even if you get another lower cost place in there, they have to cut corners on quality and end up going out of business or just being really bad food. How do you overcome that?

> How do you overcome that? It will lower itself naturally. Less people in office buildings means less foot traffic to stores, which means less fewer stores will be enticed to rent. If nobody's renting, eventually the owners and investors will have to realize some rent is better than no rent, even if it means they are going to take a loss. Then rents start dropping back to earth.

That doesn't mean the people will come back to support those businesses though. In the case of SF, since there is only office space downtown and almost zero housing, this is going to be a problem of finding tenants than it is about lowering rents. Who's going to want to open a retail space where there is no foot traffic?

Re: US offices are sitting empty – business owners will have to adapt

#72

Post by Animats »

dageshi wrote: post #46
Animats wrote: post #32

Business owners are adapting just fine. Commercial real estate owners are in big trouble.[1] That article says that most office real estate is leased for five years with an option to renew. Many of those renewals are not happening. [1] https://www.forbes.com/sites/jimscheinberg/2023/07/26/dont-l...

It might ultimately be the banks who are in trouble. "For an office landlord, abandoning a building can be the best of bad options. Commercial mortgages on offices are usually structured as “nonrecourse” loans, which means that only the building is forfeited in a default. " https://www.curbed.com/article/nyc-office-real-estate-rechle... This is a great article on the situation in New York, I highly recommend it.

> It might ultimately be the banks who are in trouble.

Commercial real estate landlords keep saying that, in hopes of a bailout. Whether it's a real problem for banks remains to be seen. It's a slow problem, and banks can generally deal with slow problems.

Re: US offices are sitting empty – business owners will have to adapt

#74

Post by [deleted] »

latchkey wrote: post #22
lotsofpulp wrote: post #19

Earlier quoted context omitted.

Lower the rent.

Easier said than done. Limited space == Higher rent. People are downvoting me, but not really understanding what I'm saying. Even if there is more empty space, what is happening is that landlords are leaving them empty, which keeps the rents higher because there is still limited effective availability. They aren't going to rent to a small business because they don't want to get locked into a 5-10 year lease on a smal…

[deleted]

Re: US offices are sitting empty – business owners will have to adapt

#76

Post by andrei_says_ »

jnwatson wrote: post #43
gochi wrote: post #36

Earlier quoted context omitted.

>We need neighborhoods that people want to be in for reasons other than work! Every other reason eventually boils down to this very point. Turns out, specialized districts were a massive city planning mistake.

Dunno. I don’t need a cement plant on my block.

I think it’s clear that this conversation is about business office districts and not cement manufacturing?

I don’t see any cement plants in Manhattan and I don’t think many cement plant employees work remotely.

Re: US offices are sitting empty – business owners will have to adapt

#77

Post by andrei_says_ »

TeffenEllis wrote: post #5

I’ve been a remote engineer for over a decade, but only recently switched to a hybrid schedule on Tuesdays and Thursdays. IMO, these two days are effectively useless for any kind of productive technical work. There are simply too many visual distractions, interruptions, and a complete lack of comfort in an office. …But I do enjoy these in-office days for what they make up for in remote work: Face to face chats; Real…

Not being forced into an office n times per week has allowed me to work from different parts of the country including Hawaii for over a month. This beats face to face small talk and $25 food court lunches beyond measure.

I make sure to socialize on zoom in every call, my focus is through the roof as well as my productivity.

Re: US offices are sitting empty – business owners will have to adapt

#78

Post by ImPostingOnHN »

latchkey wrote: post #60
profile53 wrote: post #55

Earlier quoted context omitted.

A lot of those five-year contracts were negotiated before Covid and I suspect they will expire in the next year or two. After a certain point, the building owner will have to choose between lowering rents, or having the building foreclosed on due to having no tenants. Also, at the beginning of Covid, several big businesses just refused to pay retail rent as a negotiating tactic. It would not surprise me if that happe…

I'm not talking about past, I'm talking about current and future. "Why would a landlord lower the rent now to a small business" now.

as the post you responded to said:

> After a certain point, the building owner will have to choose between lowering rents, or having the building foreclosed on due to having no tenants

Re: US offices are sitting empty – business owners will have to adapt

#79

Post by latchkey »

ImPostingOnHN wrote: post #78
latchkey wrote: post #60

Earlier quoted context omitted.

I'm not talking about past, I'm talking about current and future. "Why would a landlord lower the rent now to a small business" now.

as the post you responded to said: > After a certain point, the building owner will have to choose between lowering rents, or having the building foreclosed on due to having no tenants

Except that isn't their only choices. It'll depend on their finances as well as the market futures. Many many buildings sit empty for ages for a whole bunch of different reasons. Can't just generalize into a binary like that.

Re: US offices are sitting empty – business owners will have to adapt

#80

Post by ImPostingOnHN »

latchkey wrote: post #79
ImPostingOnHN wrote: post #78

Earlier quoted context omitted.

as the post you responded to said: > After a certain point, the building owner will have to choose between lowering rents, or having the building foreclosed on due to having no tenants

Except that isn't their only choices. It'll depend on their finances as well as the market futures. Many many buildings sit empty for ages for a whole bunch of different reasons. Can't just generalize into a binary like that.

given the choice between no money and money, most will choose money, and no amount of 'it depends' will change that

the fact that some people let some buildings sit empty for some time doesn't mean most will let most sit empty for most of the time

after all, the next best alternative for building owners is foreclosure or abandonment or sale at a loss, the next best alternative for businesses is 1 of a thousand different places, or just a remote workplace

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