Redevelop the office space as residential space. Our cities are flush with office space but are squeezed for housing. Sounds like a win / win.
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Work from home and the office real estate apocalypse
91–100 of 269 posts
Re: Work from home and the office real estate apocalypse
#92I’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 to come into the office twice a week you get a similar dynamic to traditional in-office work.
I think we are currently underestimating the desire to get back to the status quo and overestimating our leverage long term. Right now is a very unique time, sure to have lasting impacts, but I don't think it will stay like this.
Re: Work from home and the office real estate apocalypse
#93I'm hearing it already start to reverse in Sydney at least. So a bunch of people bought houses up the coast thinking they could work from home after covid pushing value of houses up and commercial down. But turns out people can't be trusted and and companies want people back in the office and they can't sell these coastal houses for same price they bought them for. Anecdotal of course. I have no data.
Re: Work from home and the office real estate apocalypse
#94I'm hearing it already start to reverse in Sydney at least. So a bunch of people bought houses up the coast thinking they could work from home after covid pushing value of houses up and commercial down. But turns out people can't be trusted and and companies want people back in the office and they can't sell these coastal houses for same price they bought them for. Anecdotal of course. I have no data.
All of the non tech people I know in Australia are now back in the office. I think we might see a halt in new office construction, but existing offices do look like they will eventually fill up. And a lot of the big names like Apple and Tesla have signalled that in office work will resume.
Re: Work from home and the office real estate apocalypse
#95Earlier quoted context omitted.
Ask yourself how much infrastructure exists only for the purpose of commuting. You'll be amazed by the statistics. There's also lots of interesting satellite data about how clean the air in cities world wide got when COVID lockdowns started. [1] We don't need roads in cities. And definitely not multi-lane roads. [1] https://maps.s5p-pal.com/
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 that I was specifically arguing about office spaces. And everyone in an office space can work remotely.
I'm not arguing about politics, I'm arguing that technologically there's no need for office spaces inside the city. It's a societal expectation that doesn't make sense anymore and isn't necessary. What COVID showed us is that most if not all of the tasks that were done in offices before can be done remotely just fine. Additionally it showed us how quiet and livable cities can get when there's no traffic jam of commuters.
Re: Work from home and the office real estate apocalypse
#96Section 3.4, "Identifying the Persistence of Work From Home", is weird. They are trying to calculate the persistence of work from home based on data about what rents on high-quality office space did during the pandemic:
"A key parameter in the calibration is p, which governs the persistence of remote work. 13 We identify this parameter as follows. We assume that the economy transitioned from the no-WFH expansion state (the E state) in 2019 to the WFH state and a recession (the WFH-R state) in 2020. We compute the model-implied return on the NYC A+ office market in this transition (using the A+ calibration)."
Why this should be a valid predictor for post-pandemic / endemic periods is not clear at all.
These guys have a data set of office rental data, and seem to be trying to infer way too much from it.
Re: Work from home and the office real estate apocalypse
#97From 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…
The value was transferred to the companies who no longer pay that rent, no?
Re: Work from home and the office real estate apocalypse
#98This 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 apply if you actually need to be there to sustain yourself.
It will lead to several big cities filing bankruptcy, most service businesses in dense cities going broke, city services unable to continue to function. Information workers are the core of a city's economy, all service oriented businesses cater to them. Once they're gone, the service workers go too, it's a cascading process of the collapse of big cities. When they said the internet was going to revolutionize humanity they weren't kidding around.
Overall it will be a good thing, but the process will be very painful.
Re: Work from home and the office real estate apocalypse
#99This 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 know a few areas that were gentrified in earlier times and ended up with things more suited for residents of a certain class than commuters. I also know of other downtown locations that became terrible to live in because a grocery store was uneconomical use of space. I'd generally say that if they can fill it to a good density it can have a good local market compared to suburbs with poor density.
But how do you fill it to a good density when the cost to live there is higher and there's no need to live there to earn a living anymore?
Re: Work from home and the office real estate apocalypse
#100This 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?