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Work from home and the office real estate apocalypse

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Re: Work from home and the office real estate apocalypse

#101

Post by betwixthewires »

IAmGraydon wrote: post #23

I’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…

That's one take, it's not an unreasonable one.

The internet was always going to enable people to perform information work remotely. It was all a matter of the process and how long it was going to take. Covid accelerated it, but it was already happening. There was no equilibrium before, just a lot of resistance and legacy social structure keeping the inertia going. With covid, that resistance was shown to be mostly substanceless, and now the inertia is preventing going back. In the end, there will be a premium paid on any work that requires someone to be at a specific location, and jobs that don't require it to be able to do the job itself won't pay that premium.

That's my take. It's basically the opposite of yours. I would not invest in office properties.

Re: Work from home and the office real estate apocalypse

#102

Post by 88840-8855 »

betwixthewires wrote: post #98

This is just the beginning of a wider shift that will destabilize domestic economies worldwide, particularly in well developed nations, if the trend continues. It's not just urban office buildings. It starts there, then it leads to deurbanization, increased populations in less urban areas, a more flat population distribution. Why live in a city unless your job requires it? All the other perks of a city only really ap…

I disagree. Living in a city is way better than living on the countryside.

- access to a large airport to go on regular holidays easily

- better health care coverage, more doctors, more specialists

- cultural access

- more diversity and more colorful services and products

- better public transportation

Re: Work from home and the office real estate apocalypse

#103

Post by vincnetas »

betwixthewires wrote: post #98

This is just the beginning of a wider shift that will destabilize domestic economies worldwide, particularly in well developed nations, if the trend continues. It's not just urban office buildings. It starts there, then it leads to deurbanization, increased populations in less urban areas, a more flat population distribution. Why live in a city unless your job requires it? All the other perks of a city only really ap…

but as you said, these information workers nees these services provided by city, so where will they move to? and if these services are sustainable only by economics of scale, you cant expect to just move out of the city to neatby area but still use city services time to time. its similar to all discount stores probaby. you can have them only because there are a lot of poeple buing non-discount things, and you get the leftovers. if everyone would only by at discount stores, the music would stop soon and game would be over.

Re: Work from home and the office real estate apocalypse

#104

Post by nomilk »

wmeredith wrote: post #2

From 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.

And if everyone quit smoking it would cause the "destruction" of billions of value in the tobacco industry.

Re: Work from home and the office real estate apocalypse

#105

Post by golemiprague »

betwixthewires wrote: post #98

This is just the beginning of a wider shift that will destabilize domestic economies worldwide, particularly in well developed nations, if the trend continues. It's not just urban office buildings. It starts there, then it leads to deurbanization, increased populations in less urban areas, a more flat population distribution. Why live in a city unless your job requires it? All the other perks of a city only really ap…

Maybe in the US where cities are very strictly zoned and there is clear divide between the business district and suburbia. European and Asian cities are much more mixed and the effects there will not be necessarily the same. Actually, if American office building will reinvent some of the floors as residential apartments it might even make the city more attractive and interesting to live in.

Re: Work from home and the office real estate apocalypse

#106

Post by blhack »

WastingMyTime89 wrote: post #100
betwixthewires wrote: post #98

This is just the beginning of a wider shift that will destabilize domestic economies worldwide, particularly in well developed nations, if the trend continues. It's not just urban office buildings. It starts there, then it leads to deurbanization, increased populations in less urban areas, a more flat population distribution. Why live in a city unless your job requires it? All the other perks of a city only really ap…

> Why live in a city unless your job requires it? Huge variety of shops in walkable proximity, great public transport network, vibrant cultural life, plenty of opportunities to socialise. Why would you want to live outside of a city?

>vibrant cultural life

It's so funny that you say this. From my perspective the vibrant cultural life happens outside of the city. In the city everything is permitted and controlled. If you want interesting stuff, you have to get out of the city for it!

Re: Work from home and the office real estate apocalypse

#107

Post by betwixthewires »

ehnto wrote: post #92
IAmGraydon wrote: post #23

I’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…

Covid is basically over and it is still like this. It will probably stay more like this than it will revert. Global paradigm shifts don't usually revert.

The less number of days workers go into the office, the less companies can justify renting the space and paying for the supplies. I think companies will begin to either go 100% remote except for on location workers that have to be there such as data center people, and others will try to go 100% back to office, and the latter will lose because the economic incentives are stacked against them. Increased cost, including a premium on talent willing to commute, make companies that do this less competitive. Unless you believe the water cooler has some property that boosts productivity significantly, in which case you're right. But I doubt it.

Re: Work from home and the office real estate apocalypse

#108

Post by betwixthewires »

cortesoft wrote: post #3

It will be interesting to see what happens to our cities if WFH stays/becomes the norm. So much of modern city design is built around the office, what happens when that isn't the case?

I expect, the crumbling of many cities.

Re: Work from home and the office real estate apocalypse

#110

Post by Morgawr »

Gigachad wrote: post #59
raldi wrote: post #18

Earlier quoted context omitted.

But it wasn't destroyed; it was transferred: WFH-comfortable residential properties went up in value.

Did they? Can we see that the entire value of these properties moved? Sounds like an impossible thing to measure. Considering most people already had space to work from home so they didn't move value anywhere. There is also the problem where the property which is most profitable for local governments has been the hardest hit. When you look at the maps that have been produced on this you can see some serious issues co…

> Considering most people already had space to work from home so they didn't move value anywhere.

This is a very debatable statement. Looking at my coworkers in the past two years, opinions seem to have been pretty evenly 50/50 split between people who had enough space/comfortable home to be able to work from home, and people who had no real good option to work from home (family situation, loud kids, living in a single bedroom apartment with no desk, etc). I know A LOT of people who specifically rented apartments that were only serving the purpose of "a place to sleep, close to the office", because these people's lives revolved around doing 90% of their stuff outside of their house (eat at the office, go out during weekends, travel, etc). These people got gutted when the pandemic hit and we were forced to work from home. I always wanted a large apartment (far from the office, so less expensive) at the exchange of a longer commute. I always wanted my own work/office area. And now that we're started returning to the office I applied for (and was granted) fully remote work. However I know that if this is going to become the norm for a lot of other people, apartment layout and demand is going to change.

My wife is also working from home, and we're expecting a baby. We're likely going to buy a new house and one of our specific requirements is going to be two separate offices for both me and her, plus a room for our baby. This kind of stuff wouldn't have likely happened before.

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