Oh my god, what an opportunity! What will we do with all this space? Homeless shelters? Indoor skate parks? Performance venues? So many options!
This is one of the most overlooked aspects of the economic impact of COVID. According to a few sources, the average office rent is around $60-85 in NYC and $65-90 in SF. Meanwhile all of these businesses have retooled their entire workforce for remote work with the added bonus that they can attract more talent from nearly anywhere and not have to pay relocation costs or adjust salaries for cost of living in NYC/SF.
You don’t have to play with those numbers very long to see what a massive burden office costs are and how they’ve become obsolete for a lot of companies.
Yes, and all that empty office space is still gaining “value” as a commodity in the real estate market.
Even moreso now that you don’t have humans occupying it.
How fucked is it these buildings are worth more empty just taking up volume in a city with no actual productivity or use?
If humans were occupying it, the value would go down because they’d damage the property with dirt and wear.
Damn; someone’s going to be down a lot of eels on this one.
But what about my hovercraft?!
I’m so old I remember when banks had buildings.
In Europe, there’s enough retail space to serve everyone using about 1/3rd the square footage. (Proportional to population). I have a hunch that the US has a similar bloat for office space.
I am confident that capitalism will invent a way to take up all that space that doesn’t lower residential rents payed to the owner class.
I haven’t read the comments but I’m sure I won’t be the first to say: Convert them to living spaces?
They’ll probably just be left empty for tax purposes.
Same as it ever was.
Obviously, to some degree, how people do business will change even after the pandemic - more work from home, people living more distantly from their employers as a result, etc. But there’s still going to be companies needing office space, and I wonder if the increase in available space/decrease in rents will change where they’re located.
I’m thinking of companies I’ve worked for, which would have liked to be in San Francisco, but the difference in cost in office space between the city and some suburban office park down the peninsula meant we ended up in someplace like San Mateo, instead. Will office space become cheaper over all, or will it drop more in the cities? Will it become more attractive to be located in the cites as a result (because you have workers coming in who can make use of those public transport options)? Will suburban office space empty out?
There’s a need to come into the office now and again, but when I was a BigLaw lawyer in SF, 15ish years ago, the expectation was that you needed to be in the office. It wasn’t a raw face-time requirement - no one cared too much if you showed up at 8 or 10 - and some days its fine, but even 1-2 days a week at home when you are just cranking on documents would have been a welcome relief.
You forgot the special sauce for us breeders: who the hell has enough money to all of a sudden pull out a few hundred a month and think “Oh jeez! I can get a nanny!”. As opposed to just checking in every hour to make sure the youngin’s are still watching their class and not their iPad.
I’m lucky: SW dev so WFH not too tough. Wife’s in retail so it really sucks for her so the kiddos and I are doing our best to help her out. But if we could move to a huge place in a fun small town for the same price as a shoebox in Boston or Cambridge…
With fed stimulus funds gone or delayed, isn’t this creating an enormous commercial real estate, REIT, and mortgage bubble? Have I somehow missed news coverage of this? Is the Fed silently hoovering this up along with everything else?
Yeah, I think what’s going on is the current situation is finally proving to businesses (and employees) that at least in some circumstances, this works. They’ll realize, if they haven’t already, that if they keep doing it, it’ll save them money. Even if businesses transition from “everyone at the office, all the time” to “you can work from home every now and then,” it means a reduction in required office space and fewer commutes (and associated expenses). I think they’re also realizing a number of jobs can be done remotely all the time.
To some degree, (but to what degree, I guess we’ll find out), all this is a change that’s going to stay, post-covid. (Assuming there is a post-covid period.) It’ll be interesting to see how this all shakes out. I’m reminded of the last recession, where there were a number of relatively minor changes that many businesses instituted (e.g. relying on HR services rather than having in-house HR) to save money, which were kept after the recession ended.
Eventually, these empty buildings will be seen for the tulips they are.
In the past, working from home was always far more productive for me than being in person and putting out a million little fires. The real threat in all of this is to middle management; that class that exists in many circumstances merely to keep up the myth of a productive office.
It’ll be interesting to see what the knock-on effects are for e.g. middle management - if this’ll be like the HR jobs in the last recession, i.e. getting rid of job positions by automating some of the tasks and distributing the remaining tasks to existing employees (who do more work at the same salary, no doubt).
Yeah, the only people who will benefit from this are the investor class.
They will, but only if the downturn is large and sustained. The costs of conversion are relatively high and residential tenants have a bunch of legal protections that commercial real estate forms would rather avoid. You need time for existing leases to largely run out, then a price drop, then a period of panic, then some construction time. A lot of cities had an office bust in the late 80s and you didn’t see large scale conversions to residential for about a decade, longer in markets that had some other underlying market issue.