Mandatory Arthur C. Clarke predicting the future in 1964:
Work from home and the office real estate apocalypse
161–170 of 269 posts
Re: Work from home and the office real estate apocalypse
#162Earlier quoted context omitted.
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…
So good riddance? Do you really think someone who was able to buy real estate in Manhattan needs a handout? Also the money didn’t disappear, it went to people smarter or luckier than them who used to own the place before. Money doesn’t disappear.
Always remember teachers pensions and nurses pensions and librarian pensions are tied up in realestate. Saying "someone" like it's a single person is not how investing works.
My mother's pension lost heaps. And now yes.. she could use a handout.
Re: Work from home and the office real estate apocalypse
#163Earlier quoted context omitted.
> But you missed my point. All those perks of living in a city are great, if you need to be there to earn what you earn. without that, the high cost of living simply isn't justified. I am not missing anything. I just deeply disagree. City life is enjoyable in and of itself. I don’t live there because I have to for my work. I live there because I find it inherently better than living somewhere else. If I was living in…
That's a part of it too, moving to smaller cities, but that's still a massive economic reshuffling. I think you're grossly overestimating the number of people that live in cities for reasons other than economic opportunity. That is the entire value proposition of a city, that was the driver that led to urbanization in most countries as they developed. You might be willing to pay 3x as much in rent for the same pay be…
We all know the big dreams of every 16 year old is to run away and move to the country ;)
Just mention this as it is not all economics.
Re: Work from home and the office real estate apocalypse
#164From 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.
The value of buggy-whip stocks was certainly destroyed with the advent of the motorcar.
Re: Work from home and the office real estate apocalypse
#165This 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…
Must be some US thing with its more mobile and dynamic population, but I dont see any real change pre-covid vs post-covid in the city centre we live in (Geneva, Switzerland) or any other bigger cities we saw in past half year. Few moved out, few moved in, maybe rents adjusted a bit but I didnt check that. Same shops, bars restaurants opened, same entertainment going on.
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Re: Work from home and the office real estate apocalypse
#166I’m wondering the best way to invest in NYC property more without directly buying it. I seriously doubt the prices will stay depressed for long. Is finding the right REIT my best bet here?
Re: Work from home and the office real estate apocalypse
#167Earlier quoted context omitted.
So good riddance? Do you really think someone who was able to buy real estate in Manhattan needs a handout? Also the money didn’t disappear, it went to people smarter or luckier than them who used to own the place before. Money doesn’t disappear.
Always remember teachers pensions and nurses pensions and librarian pensions are tied up in realestate. Saying "someone" like it's a single person is not how investing works. My mother's pension lost heaps. And now yes.. she could use a handout.
yeah tied in BS contracts with unrealistic rental values in NY expecting a CVS and a Chase bank on the same building. In every Manhattan building
Re: Work from home and the office real estate apocalypse
#168Earlier quoted context omitted.
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
I have access to a small airport that's an hour flight to a large one. The logistics of going somewhere for leisure are only marginally more difficult for me, and even easier since I don't have to navigate a small city within a city with a million people in it and traffic to get there and all that. And for the most part I have plenty of leisure around me, I don't have to fly anywhere to see wide open spaces for examp…
Less densely populated areas rarely pay for their road maintenance costs. It's actually quite unsustainable. That 10 mile road leading to just a few houses costs way more than is brought in by taxes from those houses.
Public transit helps not having a car. That helps the environment and those that can't or don't want to drive.
Most US cities have pathetic public transit to the point it is impractical (eg: buses running once every 2 hours and stopping at 6pm is not useful)
Bottom line, I think this gets to the debate of car centric society. How do you do less densely populated areas in the american model without cars? I don't think you can. The problem with less dense and car centric is the 100 year upkeep cost is unsustainable
Re: Work from home and the office real estate apocalypse
#169Earlier quoted context omitted.
Agree. The place I work had diverse companies in a 'tech park' - Amazon, Google, and many others inside a gated office space, the total population of which could easily surpass 10K. We used to have a common and very vibrant food court, even though each company used to give free cafeteria food, employees used to walk to the common food court for variety - of both people and food. Also, since there was so much traffic…
It's kind of shocking to read the phrase "vibrant food court". If this was the bar before COVID it can only get better.
You can think of the generic food courts in the typical US mall, but there are also plenty more boutique food malls around.
Re: Work from home and the office real estate apocalypse
#170Earlier 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.
Hmm, comparing flourishing residential neighborhoods in Berlin like Kreuzberg (not every but enough streets have small shops, Cafes, Restaurants, all vibrant and positively living from sunrise to sunset and beyond, enjoyably walkable with a lot of green) vs the more purer City-center office regions like Mitte where you have shops that noone needs (yeah yeah sure someone wants to buy at Dolce Gabbana, biased not me) which just feel awkward beyond usual business hours I find this generally not true.. atmosphere is much more desirable here, and its better for the "small shops" vs Starbucks&McDonaldses also..
Sure, if you think only of residential one family house areas (but which true city centers have those) or poorer skyscraper suburbs that is true, but another story?!