Working from home could wipe $800 billion from office values globally

spaceghoti@lemmy.one to politics @lemmy.world – 534 points – Working from home could wipe $800 billion from office values globally | CNN Business
cnn.com

McKinsey said cities could adapt to the declining demand for office space by “taking a hybrid approach themselves,” developing multi-use office and retail space and constructing buildings that can be easily adapted to serve different purposes.

161

So what? The market decides what is needed or not. Business need to stop whining, stop with the silly 'return to office' mandates that are killing their productivity and reducing their quality of talent, and adapt.

It's business. Adapt or die.

I (don't really) like to imagine how if someone were to invent a star trek-esqe teleportation device that beams people from place to place, how the auto manufacturers, road infrastructure organizations, and a probably countless other industries would be up in arms about their "losses" without realizing how stupid and short sighted that stance would be.

It's like we're unable to outgrow anything as a society without toddler-tantrum-like backlash from those who have benefitted from us being beholden to the current status quo.

You should look at the history of public transit in Detroit, and trains more broadly in the US. Its the same thing.

I feel @glitches_brew is sooo close to getting orange pilled. While it's not teleportation, we have the technology for high speed rail. Even my weekly commute of ~110km on conventional rail is about the same time as driving and I can get work done/watch videos/sleep instead of focusing on driving!

Most of the people I see commuting by car, at least in America, are also not focused on driving.

I saw someone eating a bowl of cereal in the driver seat a few days ago. It's terrifying out there.

I’ll take that over the guy watching porn in stop and go traffic on a busy, high speed, narrow road outside Boston…

The Great American Streetcar Scandal comes to mind.

I used to live in a tiny rural town of about 3,000 people, and even it used to have a trolley line. They tore it up when they built the highway, and now the only public transit available is one bus twice a day, and only for people who are disabled.

One of the old trolleys is still sitting next to the fire station, mocking everyone who drives by.

The internet largely killed high speed commercial flight.

It should’ve kill the cubical a long time ago. But middle management culture is so entrenched it took a deadly highly contagious virus to kill it.

Teleporting is just one small conceptual step beyond (and unlikely large technical leap) what we already have.

Given that the star trek teleporter most likely atomizes and simply copies the individual. Id have to agree with the auto manufacturers on that.

I don’t think that is settled science amongst the fanbase.

It may not be "settled science" in the series' canon but it's the only logical conclusion one can come to when applied to the real world. That's how all our current information transfer works. It's dissected and a copy is sent bit by bit.

The argument against it is that if you believe in philosophical materialism, and the transporter reconstructs the person exactly as they are on the other end, then they are exactly the same person as before. They may be "dead" in the medical sense in between, but people do get resuscitated from being technically dead, and we don't consider them to be separate people afterwords. Without invoking some kind of soul that's separate from the body, it's difficult to argue that they are anything but the same person.

3 more...
3 more...

The market decides what is needed or not.

Silly thing. Capitalism only matters when it's good for business.

Business is risk, highness. Anyone who says different is selling something.

And business is always selling something. They'll never admit they're bad for us.

3 more...

What about how much pollution, stress, accidents leading to insurance claims, that will eventually be saved by not having millions drive and live in traffic everyday?

What about that McKinsey?

We don't care about that because that doesn't make rich companies happy.

Ok so for the pros of working from home that's:

  • lower demand for prime real estate downtown
  • less environmental impact due to daily commutes
  • less employee time wasted due to daily commutes
  • more comfortable and familiar work environments
  • less business overhead associated with running a permanent office
  • more reasons to do company events or retreats in interesting environments
  • better accesses to a broader pool of talent
  • more/cheaper housing options for people to live outside of cities
  • less traffic and traffic accidents, with lower demand for cars and parking in city centers

But let's not forget the big cons of work from home too!

  • your inferiority complex-having superviser/boss/manager doesn't get to feel powerful and important by performing workplace theater while breathing down your neck constantly or counting your keystrokes.
  • you don't have to pretend to like the people you work with every day, but only some days.

There are pros for working in the office. They don't outweigh the cons, but let's not pretend there are 0 benefits.

I could see a day-a-week thing being positive, but why the hell would we pay for the real estate? Just can't see it working out for a net positive.

Maybe shared office space that's network/security agnostic? We had a thing going like that in Seattle for a bit. Not sure how it worked on the ground, wasn't there.

There are coworking spaces that facilitate this quite well and they could absolutely be scaled up for mid to large organizations.

I do 3 days a week in the office, 2 from home which works pretty well for me. I do enjoy going to the office because it gives me an excuse to leave my miserable apartment. They also have snacks and such, and it's easier to plan with colleagues over coffee than setting up a virtual meeting.

But then I still get the benefits of wfh two days a week

Another con to add to your last paragraph. Acting skills will dip, dashing the hopes of some Apple employees that wanted a part to the snuff film.. Rust 2.

They could use them for retail or…they could re-zone these areas for residential housing and reduce the cost of renting or buying a home, but that would make too much sense.

To be fair, commercial and office spaces often lack a lot of amenities that residential spaces have (lots of access to natural light, sufficient water supply and sewage capacity, etc.) but that will be incredibly dependant on the building for how much that complicates the conversion

sleeping in the street has plenty of natural light. I think you'll find some people are willing to make the sacrifice.

I would imagine there are a lot of challenges around converting high rise commercial buildings into housing. Many buildings only have a handful of toilets per floor, maybe a few sinks, and no showers. I'm also sure there are no gas lines in many of them (electric heating and cooking might suffice). But for sure, water delivery will be one of the biggest challenges.

Then there are even lame laws regarding parking requirements for a building with so many residents.

I imagine these would end up more like condos that tenements. Maybe 3-5 large units per floor. I dont think the plumbing retrofit would be a huge deal...nor the parking since an office that large would likely have had parking already. Mixes use zoning could lead to some pretty cool buildings potentially. Imagine living in a condo that had a grocery store and maybe some bars or restaurants on the lower floors.

Imagine living in a condo that had a grocery store and maybe some bars or restaurants on the lower floors.

That'd be pretty cool.

Live on the 10th. Coffee shop on the 5th and groceries on the 12th. A bar on the 15th and a 24h gym (open to anyone gym) on the 3rd.

I wonder how many floors you'd need to convert to residential to support the remaining commercial.

electric heating and cooking might suffice).

It would easily suffice. All these buildings have heating already so that's no issue, and electric cooking is safer anyways

If they can split old churches into apartments, I'm pretty sure they can do the same to abandoned office buildings.

You can't turn them into accomodations unless there's at least one egress window in the bedrooms

Of course it could. I guarantee if you look at all the “return to work or else” CEOs they are all heavily invested in commercial real estate.

I don't understand why corporates are so against the idea of savings millions of dollar in office spaces. More people working remotely mean smaller office required, cut on office supplies and utilities bills. Higher employees moral, motivation, and productivity.

What are so bad about all that? Just because the boss can't spy on their employees and assert their authority ?

The guy next to them in the circle jerk is a commerical real estate Holder and they don't want they dick goin soft

Just because the boss can't spy on their employees

Even this is no longer a valid justification. Activity monitoring software installed on companay provided computing devices used by remote employees has been around for a while and is gaining in popularity. They don't even need physical presence to spy on employees.

So, its even more confusing why corporations are so against the idea of remote work.

Yea that software means a hard pass from me taking a job offer.

It demonstrates a fundamental lack of trust unless they are gonna let me spy on everyone above me on the ladder as well.

Sunk cost fallacy. They have the space, and dammit, they need to use it. This will continue for the next few years when the leases begin to expire.

Definitely true for the company I work for. They own the buildings. Great idea when people can't in an the time. No dealing with lease increases and other landlord BS. Not so great when everyone is WFH and is difficult to sell.

And this is exactly why board rooms are demanding a return to office. The wealthy people who run companies are invested in commercial real estate.

"So yeah, if all you peasants could get back in the office, that'd be greeeeeeat."

Do they really still have that value if we have to reorganize our comfortable lifestyle in order to keep it? Seems like that value was already lost during the pandemic and they are trying to pass the loss on to the workers

The issue is who they have value to. Investors? Companies? Cities? Society as a whole?

The fact is that the absurd real estate prices in big cities really serve nobody except developers and landlords and real estate investors. For everyone else, they're just a useless tax- the people can't afford the quality of life their salary should command, companies pay through the roof for office space they don't need, support business (IE starbucks) pay through the roof for their own locations, etc.

The fact is real estate as a whole is LONG overdue for a SERIOUS correction. Actually it should have years ago, but a lot of people were hoping/pushing for pandemic to be a temporary blip. So you have empty buildings with sky-high rents because the landlord doesn't want to sign a 20yr lease at anything below top dollar, makes more sense to wait for the blip to end than accept a lower rate for 20 years.

But sooner or later those landlords are gonna have to accept the new reality. And so will developers and investors.

If businesses can run without $800 billion tied up in assets, not only should they, the market dictates that they have to. Sorry landlords, sucks to suck.

There is no value lost unless you're an owner being forced to sell. Employment space is not worth anywhere near what the value of housing is. Call this what it is, a market correction.

That's right all the money and time we've all spent on commutes was a subsidy for commercial real estate out of our pockets.

I never thought about that way …. but yes that makes total sense.

Good. Capitalism dictates they adapt or die.

Adapt into apartment buildings maybe?

Nice, drive up housing supply while correcting an excessive office supply. Sounds good to me.

So what's the downside?

The downside is that WFH is an extremely competitive market. It is incredibly difficult to snag a remote job for a company you do not currently work for or have never worked for.

My friend has switched jobs twice, both WFH gigs, since the pandemic. She didn't seem to have too much trouble. IDK his good she is in her field though. She handles hiring people.

She likely has had experience with WFH before which makes it easier, but I can still tell you that she probably applied to like 500+ different places to get those interviews.

Sadly true. It is telling that there are so many more people wanting 100% remote over in office. I wonder if HR has cottoned on to the reason for the difference in application rates?

So you're saying WFH both reduces carbon emissions and frees up real estate for affordable housing?

Sounds like the march of technology continues. When cars became common, did Big Horse whinny about it? When the printing press hit the scene, did we mourn for the loss of monk jobs? Why should we care about people caught holding the bag when we no longer need a building? That's their gamble and they lost.

That's my favorite thing to bring up when gas driving people complain about electric cars not having enough infrastructure, etc to be feasable. Cars didn't always exist fucko, all those gas stations weren't always there. Give it a hot fucking second.

When cars became common, did Big Horse whinny about it?

There was no 'big horse,' but there was a lot of fearmongering about cars in regards to how they would take away jobs.

When the printing press hit the scene, did we mourn for the loss of monk jobs?

No, but the church tried to suppress it.

Technology has always been opposed by those who it can replace. Sometimes for good reason. The luddites saw their jobs being replaced by machines that didn't do a better job or even a faster job, only a cheaper one. And a more dangerous one. So they sabotaged the looms.

Yeah but now we live in a world where corporations are better than people. Won't anyone think of the poor corporations! Where's their government handout!

Most companies are trying their best to get people back in the office, but this strategy is tough to pull off with other companies poaching talent by just not caring.

I've noticed many more job listings are prominently promoting that they are 100% remote and plan to stay that way. When I'm looking around for the next opportunity they are on the top of the pile.

Any company even hinting at "in office" is going straight in the bin. Unless they are gonna pay for a car, parking, gas, insurance, travel time, and lunch.
Even then it would STILL need to be a hell of a lot more $$ than a100% remote to make me want to deal with office people and not be able to wear comfy clothes.

Companies that are fully remote will have their pick of the best people from around the world, while companies that insist on being in the office will have to deal with whatever leftovers are close enough to commute.

Of course, the companies that make people come into the office will no doubt complain to the government about this and get laws changed to force people to work for them. Because we aren't in a market economy anymore, we're in a corporate feudal state.

Yeah, what a terrible way to hamstring your recruiters from the competition, it literally costs nothing to make your company and environment way more attractive to candidates.

This. I was part of two mass walkouts from two different companies, both of which were over-invested in office space and decided to try to force employees back to the office despite productivity gains from WFH. One had signed a 10 year lease on an office space in Jan 2020 and had been paying rent for two years for an empty building, the other owned the parking garage next to their office and was trying to bilk employees for $12/person/day to park.

Now I work for a company that doesn't have an office. I'm told some employees live close to one another and occasionally meet up at their apartments, but I've also been promised that I'll never have to do that. If they reneg, I'll walk again. It's as simple as me never setting foot in an office again under any circumstances.

What gets me is that there is every likelihood that the productivity increases cause a larger increase in profits than the losses they are taking from the bad real estate deal they made. Financially, they could probably eat the 10 years of rent or sublet it and reap further productivity gains as the organization continues to adapt and come out so far ahead. Fucking management myopia.

in the short term, increased productivity will offset the rent. hell, baseline productivity was supposed to be enough to offset the rent or they would have never signed the lease in the first place. in the long term, the lease expires, they don't renew it, they get increased productivity and decreased costs, along with their pick of the best and brightest employees worldwide rather than just those within commuting distance who couldn't get remote work.

Thing is, while we're waiting for all of these smart plays to pay off the stock price has gone up, but by 10% less than projected so c suite has fired all the mid and upper level managers.

Think of how much value was wiped off the horse industry after the horseless carriage.

Too bad it's not doing the same to Residential Real Estate. Seems like every country around the world is getting absolutely fucked by old people.

No they're not. It's a complex and multi-facetted answer that people don't like hearing.

  • Immigration
  • Poor zoning
  • AirBNB
  • Speculative real estate

Could go on and on

It's all poor planning coupled with abject greed and on those points we are all guilty.

But of course everyone wants to point a finger at one simple person.

Millenials own around 4% of the wealth in the U.S.

The younger generations have less.

Dunno what you see that as, but I see it as older generations having too much money. That means they're a problem.

Airbnb and Speculative Real Estate, sure, but in the US, Canada, and the Central EU countries, all the existing real estate is largely owned by the older Baby Boomer generation and their kids. Millennials have zero chance to buy any of that due to their lower ownership of total wealth in these areas, and the speculative pricing BS that is overvaluing the entire market BECAUSE of bullshit like Airbnb potential being factoring. It's a losing proposition.

Found the old person

What do you mean by this? I think they're correct, partially because what they said is so broad.

Just making a joke lol is really not that deep.

What's the joke?

One guy blaming "the old people" and the one coming to their "defence" being one of them. Idk man is really not that deep

Working from home is a net cost cutter, if done right. It will take a while for us to adjust though. Workers who game the system from home are the same ones who game the system in offices. Then too, boss suck-ups will have a bit harder time getting ahead while working from home.

Listen, we bailed the banks out once.

If you make a bad investment, you make a bad investment. Literally, eat it.

Lol, they decide who gets bailed out and when. Spoilers: They pick themselves every time.

The Fed exists to make the rich richer at everyone else's expense. Every decision they make is self-protection, and it will always work, because they have all the power, and you and I none.

People should put pressure on employers to let them choose if they want to work from office, or home. Homeoffice FTW!

Working from home has been both amazing and isolating. However, say I was close enough to an office, my entire team is spread out so I still wouldn't be around my team in person to collaborate.

Nothing beats using my breaks and lunches for things like laundry, exercise, weeding my garden, etc.

But I need to be in the office to collaborate with my teammates who are in the other side of the planet via Teams!! /s

Isn't that the truth. I have colleagues in Washington, Oregon, California, New York, New Jersey, and Texas. Zero in-person collaboration potential.

Hey, are you my former employer? Only it wasn't the other side of the planet, it was just Texas.

That's the thing. Flexibitlity of choice doesn't work. If you want to have a productive office culture, teams need to be in the office. My ideal would be 3.5 days in the office. 3 days for the general policy, .5 days for those ad hoc things like meetings or other things. But working in the office sucks and is equally isolating when you have no team in the office and are on hours of back to back video calls with headphones on the entire time because there are no conference rooms. I think 3 days let's you have 2 days at home to do the laundry, exercise, etc.

McKinsey expects landlords to do real people work and innovate?

Have they met landlords?

Well the report is from McKinsey so take it with an office building sized grain of salt.

Converting such buildings to affordable housing would be a great start.

Working from home could create massive value for people that matter while forcing a bunch of people who don't matter to accept lesser status symbol items like smaller yachts and less splendorous vacations that they wont be able to feel as proud as they are bragging to their friends.

I don't think the various stakeholders will allow it to happen in any significant way (see the article), but I've been hoping for an office rent crunch for a while.

I've always wanted a dedicated home theater that's just big enough for me and maybe 1 or 2 others. Upsizing my current living situation isn't feasible, but I could make a wee little 150 or 200 sq. ft. office space work!

NMP.

Maybe they should have built buildings that could be easily converted to residential or maybe they should have not signed 20 year lease or whatever. IDGAF NMP IDC FU.

What if we turn office buildings into homes and allot some of that space to the homeless?

I am not sure what they are crying about now. We knew paces in automation and AI were going to render jobs obsolete.

They are only worried about that NOW that they realize the people were the ones buying the products?

They don't talk about the increased value of commercial space outside of city centers though, weird right?

This is the best summary I could come up with:

The research adds to a string of recent signs that lasting changes to working habits because of the pandemic are hurting the value of commercial real estate — a market also under strain from rising interest rates.

(HBCYF) announced plans to halve the size of its global headquarters, giving up its imposing tower in London’s Canary Wharf business district for a much smaller building close to the city center.

McKinsey looked most closely at nine “superstar” cities with a disproportionate share of the world’s urban gross domestic product, namely Beijing, Houston, London, New York, Paris, Munich, San Francisco, Shanghai and Tokyo.

Waning demand for office space has driven down landlords’ asking rents, with US cities suffering the sharpest falls, McKinsey found.

Foot traffic near stores in urban areas remains 10-20% lower than it was before the pandemic, partly driven by growth in online shopping.

In an interview at Bloomberg’s Technology Summit last month, San Francisco Mayor London Breed proposed remaking the struggling city’s downtown by tearing down abandoned retail space, including Westfield mall.

The original article contains 534 words, the summary contains 173 words. Saved 68%. I'm a bot and I'm open source!