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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

#251

Post by ehnto »

betwixthewires wrote: post #250
ehnto wrote: post #148

Earlier quoted context omitted.

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.

I am well aware of the long term outlook of it all. I am fully vaxed, living life as I always used to, and I am all for returning to normal now that we have done all we can with vaccinations. But society globally is still changing and being impacted very seriously by the pandemic and will be for years yet.

Keep in mind that both places, people and policies change state to state, country to country. You are talking like your experience is the only possible one. Where I live is seeing the most deaths it had the entire pandemic, we have still removed all restrictions but that doesn't stop people changing their behavior. Some places are still having lockdowns. Some borders remain shut. You get the idea.

Re: Work from home and the office real estate apocalypse

#252

Post by ehnto »

spookthesunset wrote: post #242
ehnto wrote: post #148

Earlier quoted context omitted.

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.

And I shall, but it turns out my reality isn't the only reality.

Re: Work from home and the office real estate apocalypse

#253

Post by ehnto »

mikro2nd wrote: post #210
ehnto wrote: post #92

Earlier quoted context omitted.

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…

Wearing my Tinfoil Hat: I see a looming, hypnotically-self-induced recession, manufactured precisely so that workers (incl. those who tend to hang on HN) feel more insecure and thus feel less empowered to say "No" to back-to-the-office mandates, thereby rescuing the rent-seeking classes from a Covid hangover. The timing is just too convenient... (Only half joking...)

A potential recession is brewing in the news and likely to take some of the wind out of employees feeling of agency and security. Maybe employers use that to pull people back into the office or maybe it turns out to be the perfect opportunity to ditch their rentals.

Re: Work from home and the office real estate apocalypse

#254

Post by pixl97 »

clucas wrote: post #204
cortesoft wrote: post #8

Earlier 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…

I assume in your analogy the general population is still buying the same amount of grain, so losing a silo of grain to rot is a pure loss to the farmer, and in a way is a loss to grain buyers (prices have to go up slightly). But in the office space scenario, less office space is being used overall . This means that yes, landlords are losing the value of their investment, but (former) tenants are gaining access to cas…

>Housing can’t both be a good investment and be affordable

People see the extremely high valuations of some things like housing and business locations as a good thing. Instead I mostly see them as asset inflation, and the decrease in their values as a good thing for the actual products produced by an economy.

Re: Work from home and the office real estate apocalypse

#255

Post by ehnto »

dkjaudyeqooe wrote: post #189
ehnto wrote: post #92

Earlier quoted context omitted.

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…

The issue isn't so much work from home, which is not the ideal working arrangement for all, it's the commute to a central location. What has happened is people have realised the essential stupidity of it. The future will be much more mixed and more sensible. Some people will work from home and some people will work in offices, but those offices will be much closer to where people live and people who need to work toge…

I hope you are right, but I think America has hamstrung itself already with it's historically terrible zoning bylaws. Rather than end up with office parks again, to enable this type of arrangemen you need better public transit and zoning that allows a bit of commercial intergration into suburbs, so that never going into the city is an attractive lifestyle choice and as workable as it can be.

I live in a suburban desert, and if I had to work at a sattelite near here, I wouldn't be unable to do a lot of things I currently do during the week because it just isn't here.

Re: Work from home and the office real estate apocalypse

#256

Post by ehnto »

betwixthewires wrote: post #107
ehnto wrote: post #92

Earlier quoted context omitted.

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, a…

I actually worked for a company pre-pandemic that had this epiphany and almost went fully remote just based on cost. The reason they didn't was because there were people who couldn't work from home for family reasons and some who didn't want to.

We may find that being able to work remotely becomes a commodity the employee can offer the employer. As it's certainly still true that working from home doesn't fit everyone and we still haven't solved that I don't think. Renters can't build on an office they don't have for one example, and I don't think it's reasonable to expect an employee to work from their living room. But maybe co-working spaces will become more popular for the edge cases.

Re: Work from home and the office real estate apocalypse

#257

Post by betwixthewires »

ehnto wrote: post #256
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 actually worked for a company pre-pandemic that had this epiphany and almost went fully remote just based on cost. The reason they didn't was because there were people who couldn't work from home for family reasons and some who didn't want to. We may find that being able to work remotely becomes a commodity the employee can offer the employer. As it's certainly still true that working from home doesn't fit everyone…

I think co working spaces are going to become popular, but they'll likely get rolled into the hospitality industry. I doubt you'll see pay by the month office spaces, what's probably more likely is bring your own laptop cyber cafe style settings that provide food or drinks.

When the "can you work from home" question gets a high enough incidence of "yes" answers, you'll see diminishing returns on renting office spaces. People that can't answer "yes" to that question will be priced out of the market.

Re: Work from home and the office real estate apocalypse

#258

Post by PestoDiRucola »

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…

> Those very things that make living near or in a city interesting for many people

Most of the time, the types of bars and restaurants that rely on office workers as customers are not going to be the type of bars and restaurants you'd go in your free time when going out with friends.

Re: Work from home and the office real estate apocalypse

#259

Post by MichaelZuo »

lmm wrote: post #247
MichaelZuo wrote: post #223

Earlier quoted context omitted.

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 on…

You were not carefully reading. Land costs are different from construction costs.

EDIT: And in any case there is no real benefit for the city council to stop upzoning at mid-rises only. If they’re expending the political capital to upzone they have every reason to go all the way.

Re: Work from home and the office real estate apocalypse

#260

Post by lmm »

MichaelZuo wrote: post #259
lmm wrote: post #247

Earlier quoted context omitted.

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 on…

You were not carefully reading. Land costs are different from construction costs. EDIT: And in any case there is no real benefit for the city council to stop upzoning at mid-rises only. If they’re expending the political capital to upzone they have every reason to go all the way.

Land costs are a sunk cost as I said. If it's too expensive to build skyscrapers then it will make sense to build midrise. If it's not too expensive to build skyscrapers then it will make sense to build skyscrapers. There's no scenario where "it's upzoned so we'd better leave it empty instead of building midrise" makes any kind of sense.
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