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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

#241

Post by spookthesunset »

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…

Totally agree. It will be a few years until things really shake out and we know the actual long term trends.

Nothing fundamental changed between 2019 and today.

Re: Work from home and the office real estate apocalypse

#242

Post by spookthesunset »

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.

It will never be over. We just have to live with it and move on with our lives.

Re: Work from home and the office real estate apocalypse

#243

Post by fnordpiglet »

cookiengineer wrote: post #95
spiderfarmer wrote: post #76

Earlier quoted context omitted.

You’re so disconnected from reality. Ask yourself how many people are unable to work remotely. If you can’t think of enough examples to justify roads, go outside more.

Are factories now built downtown or am I missing something? Do you think that cities of the future rely on cars or on more efficiently scaleable means of transportation - like trains, subways and trams? > Ask yourself how many people are unable to work remotely. Please elaborate. Personally, I don't think there's any elected mayor on the planet that has "moving more factories inside the city" on their agenda. Note th…

You’re missing the fact that Americans like being in their own car and American cities are democracies. Any attempt to remove roads would be voted down. Finally the reality is American cities don’t have good pervasive transit options, reason being even if you built them people prefer their cars. NYC is a very notable exception but I would point out NYC is also covered in roads.

Re: Work from home and the office real estate apocalypse

#244

Post by nomilk »

nomilk wrote: post #104
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.

I take from the downvotes that people thought this was serious. Its absurdity was intended to show how misleading the use of the word "destruction" is when talking about economic costs derived from things that are no longer needed. Being more healthy, or more efficient, is unequivocally good!

Re: Work from home and the office real estate apocalypse

#245

Post by lotsofpulp »

john_the_writer wrote: post #162
ramraj07 wrote: post #28

Earlier 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.

The pension fund could have invested in VOO. No one forced them to invest risky investments.

Re: Work from home and the office real estate apocalypse

#246

Post by morelisp »

raldi wrote: post #217
morelisp wrote: post #190

Earlier quoted context omitted.

In a weird coincidence, I have been trying find a card catalogs or two for home storage for a couple months. These are often incredibly well-made solid wood furniture, and yet most libraries worldwide have just been scrapping them. (Their size and weight makes them extremely difficult to ship - buyers/sellers aren't well aligned.) So, in short, yes. We also got new value, but tons is being unnecessarily destroyed.

Imagine someone were to invent a miracle power source that could be produced easily and cheaply by anyone and allowed all vehicles to be powered for free, completely obliterating the fossil fuel industry. In this situation, would you say value was created or destroyed?

If we just let the fossil fuel infrastructure rust/sink? Lots definitely destroyed.

Perhaps material-neutral "value" is not a particular good measure of anything.

Re: Work from home and the office real estate apocalypse

#247

Post by lmm »

MichaelZuo wrote: post #223
kibwen wrote: post #220

Earlier quoted context omitted.

A 40-story high rise isn't the density we're referring to here, in a discussion of European-style urban living. Obviously one can astronomically inflate the price of any building by stretching it preposterously upwards, thereby requiring exotic materials and building techniques to support its own weight and the increasing winds and seismic concerns. But "dense urban living" doesn't mean "skyscrapers", it can mean fou…

In that case land acquisition costs make it too pricy since attractive downtown plots in a big city like Toronto are easily hundreds of millions per acre. Because they are zoned for 40+ story buildings. And why would any land owner seek to zone for less than the maximal allowance? If you mean forced downgrading of the zoning or replacing existing suburbia with mid density developments, or subsidizing mid density as o…

Earlier you were claiming that those 40+ story buildings are too expensive to build. If that's true the problem of getting people to build mid density there will solve itself. Developers that overpaid for those plots will lose out, but whatever they paid initially is a sunk cost; building something you can get paid rent for beats building nothing.

And yeah, if there are sandwich shops or whatever whose business is only viable at skyscraper-level density and not at 4-6 story density then those will go to the wall. But I doubt that's a big segment. Mid density means proportionately more floor space at street level, which should be friendlier to businesses.

We may see a more pronounced downturn in city centers, and we might see a drop in density below skyscraper level (though personally I'm skeptical of even that much). But we won't see a hollowing out of the cities; at the very least, Vienna-like density still makes sense.

Re: Work from home and the office real estate apocalypse

#248

Post by lmm »

ghaff wrote: post #181
lmm wrote: post #135

Earlier quoted context omitted.

The density itself makes it worth paying a premium to live there. Just being able to not own a car is a huge saving that can go straight into rent, and even if it costs more the quality of life benefits are worth it. And hell, worst case land prices and rents in the city center come down a bit, that's not really a problem.

Many/most people living in a lot of cities still own cars so that they can easily travel outside the city. It's a perfectly valid preference to live in the denser part of a city but it is a preference and not an absolute.

Sure, but not everyone has to prefer that for there to be enough demand to keep prices up.

Re: Work from home and the office real estate apocalypse

#249

Post by nonrandomstring »

naveen99 wrote: post #191
nonrandomstring wrote: post #144

Earlier quoted context omitted.

> Once you start regarding bad news as a loss, very bad stuff happens. I like this. It's insightful, and stated in a plain way. And equally we can say, once we start regarding good news as a gain, very bad stuff happens. The idea of "confidence" rather than measurable, tangible facts as an economic basis has been the road to many bad things. In some ways confidence and pessimism can be seen as the ability to ignore r…

News is gain (of knowledge) good or bad. bad news is an opportunity to fix some weak links. Good news is an opportunity to reduce leverage, replenish reserves. Confidence is useful. It reduces volatility in the market.

We're using two different senses of a word that seem irreconcilable. You offer a very narrow, statistical definition that pertains to the goodness/accuracy of information. I am using a psychological term that reflects the feelings people have irrespective of ground truths. These are almost opposite (at least incompatible) interpretations. And yet semantically I suspect we completely agree - acting on good information is good, and acting on bad judgement is bad.

As I am sure you know, a "confidence trick" is a way to defraud another by influencing their (psychological) confidence (or pessimism) against their better judgement and in spite of the objective facts.

Re: Work from home and the office real estate apocalypse

#250

Post by betwixthewires »

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.

So the disease isn't over. And I hate to break it to you, in case it isn't obvious by now, it never will be.

But the panic and response are over, the public has accepted it as a part of the world now, the world is just the world and life is just life again.

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