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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

#171

Post by Ekaros »

cortesoft wrote: post #8
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.

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…

More comparably grains market priced dropped. Thus grain in silo isn't worth the same anymore. So we lost food value? Even if the same calories and same utility is there still?

Some utility was lost, more value was lost. But in reality economy only lost some paper valuation, something entirely imaginary...

Re: Work from home and the office real estate apocalypse

#172

Post by Broken_Hippo »

ehnto wrote: post #148
betwixthewires wrote: post #107

Earlier quoted context omitted.

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, a…

I don't know where you live but covid is not over here.

Not here, either: Folks are still getting it and folks are still dying from it. We simply don't have as many restrictions right now - though we are getting those again. Yesterday, some places in California are mandating masks again and I still have to prove I'm Covid-free to visit family in the US, and it doesn't matter than I'm a citizen.

Re: Work from home and the office real estate apocalypse

#174

Post by phpisthebest »

lolinder wrote: post #55
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…

> 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 return to the previous equilibrium. Not necessarily. It's entirely possible that working from home has always been better but that there was enough friction preventing a move in that…

Well some of that is also regional, as the "forced" was a region by region, and job by job type of impact.

For me, my employer only had about 3 mo's collectively from 2019 to 2022 where full time work from home was even an option, and zero months where it was required and the offices where shut down.

I think there is a perception that all employers, everywhere were required to go full time work from home, that simply is not the reality

Re: Work from home and the office real estate apocalypse

#175

Post by dougmwne »

asimpleusecase wrote: post #85

This 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 interesting restaurants and bars, more fun, more interesting. If people are spending more of their day there, I would expect a flourishing of these kinds of business. At the end of the day, some storefront owners will need to move to other areas to take advantage of changes in demand.

Cities are very dynamic things. They are constantly changing and renewing themselves. Neighborhoods come up and go down. There is no stopping it.

Re: Work from home and the office real estate apocalypse

#176

Post by Tade0 »

occamrazor wrote: post #149
tarsinge wrote: post #138

Earlier 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.

Of course they would and they are.

I grew up in a district which has 150k inhabitants and an effective population density of 4.6k people per square kilometre (11.8k people per sq mile) and it was much like a city within a city, with all the shops, services etc. Everything within walking distance.

It even has somewhat of a regional identity and a political movement which capitalizes on that.

To this day I see it as the sweet spot of population density - it's dense enough for the things you mentioned, but at the same time doesn't feel crammed.

Re: Work from home and the office real estate apocalypse

#177

Post by regularfry »

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…

One factor I don't see brought up often: many organisations can't go back now. They've hired too many people to fit.

Re: Work from home and the office real estate apocalypse

#178

Post by dugite-code »

hizxy wrote: post #173

Does anyone really know the impact on productivity? I work for a remote-first company (never had an office) and things move so slow.

I've only seen some articles and no solid research but every indicator is WFH is just as if not more productive than in person work.

If you think about it, it makes a certain amount of sense, workers have more hours in the day due to no wasted transport time, and can do work ad-hoc when ideas strike even outside regular buisness hours. Also meetings are less disruptive, you don't have to get up to go to a specific room and wait for everyone to show up, you open the link and can keep doing minor tasks while you wait or evwn during the meeting if it's not that critical for you.

Really working in an office has a lot of wasted time you can imagine lessening or outright disapearing when done remote.

Re: Work from home and the office real estate apocalypse

#179

Post by Melchizedek »

Good. Work from office should really be made illegal in order to protect the environment and public health. Exceptions can be made of course for occupations where physical presence is actually needed. This madness has to end. Using very finite resources in order to transport people’s bodies daily, while polluting the air and contributing to a climate disaster for no good reason is absurd.

Re: Work from home and the office real estate apocalypse

#180

Post by sveme »

occamrazor wrote: post #149
tarsinge wrote: post #138

Earlier 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.

The difference in perspective in this thread boils down to North American (except NY) vs. European perspectives. My residential area has six floor buildings with lots of residents and ground floor shops and cafes. This setup only rarely exist in the US.
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