Working-from-Home May Start an Office Real Estate Crisis - But Banks May Adapt -...

Working-from-Home May Start an Office Real Estate Crisis

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• It is way less pronounced in Europe, the only companies that try to force workers back into offices is actually the large corporations that own their offices. Restaurants aren't hit as badly because offices and residential buildings are pretty much next to each other, so if you want to go for lunch, you still can. Often to the same restaurant. Or the restaurant loses the worker from the office but gains the one living next to it who is now also WFH.

  Which basically proves what's the real reason behind that back-to-office push.

  • Which basically proves what's the real reason behind that back-to-office push.

    If you really want to trigger the corporate real estate hoarders, have the city buy, at a terrible loss to their poor foresight, large swaths of dense urban land. Then simultaneously increase the residential dwelling density, utilities, and viable public transport at the same time making all much easier when you have less unknowns. Even better the new dwellings could have collective ownership agreements like a co-op so that anyone there also benefits from the investments in terms of a long term asset. It would be a huge boost to removing negative aspects of gentrification by inclusivity. Even the restaurants would be happy.

    • Re:

      You know a city that isn't already completely broke that could buy those real estates?

      • Re:

        Funny part is it'd probably help save the finances of many of these cities, who currently have to pay for inefficient infrastructure thanks to the absurdity of low density zoning. The issue would be that in-between step of buying up land to rezone, redevelop, and lease.

        • Missing the point

          Buying the real estate takes it out of the tax base. Having to manage it (inefficiently with government employees) is hardly something that is going to improve their books. This is very much not a win for cities in deficit already.

          Now if you proposed a private entity to buy them, or alternatively having the government do an eminent domain seizure of the troubled properties and then turn them over to a private manager to run, that could work. But it'd be dumb for the private entity to buy them at the infl

      • Re:

        It could be funded by additional property taxes or by selling bonds like many city projects are. Hell, cities always seem to find a way to pay for sports stadiums, why not this?

        Also this could (and imo should) be funded as a general concept federally since they do have the money and put up as a grant program for cities.

        • Re:

          That's how our "social" apartment building works. I have to admit, I only understood part of it, but the gist is that the city is building this apartment complex and acts as a bondsman for the people "buying" those apartments who take out loans for them. The security doesn't come from the people but from the city, who is also technically the original owner (please don't ask how that works, you get a headache trying to understand our kinda-sorta-shady-but-still-legal social building shenanigans), while the p

      • Re: Exacerbated by poorly designed cities

        Taxes. They are a bottomless pit of revenue. It's like having a forest of money trees next door. Let's start clear-cutting right now!

        It's not like the residents are going to move beyond the reach of the revenue department or anything.

        • Re:

          Taxation isn't easy in Europe, you can't just invent city taxes here for no reason. There's actually a pretty complicated move of money between states and federal government and cities, where everyone gets to keep certain portions of taxes and then there's an "equalizing movement" between them... quite complicated and I frankly never really wanted to look into it because it sounded really shady.

          But the bottom line is you can't just tax whatever you want as a city here.

          • Understanding the US

            Essentially, no one wants to be taxed by a city, so they move out of the city limits. COVID made this all easier. That's it.

            NYC tries its best to extract tax from commuters - and this is assisted by the fact that a lot of commuters are from neighboring states and therefore the NY state government assists with this. My experience elsewhere in the US is that most cities do a piss-poor job of it and their tax bases are hollowed out by people voting with their feet, and are getting more hollowed out. Now th

      • Re:

        They could just take it with Eminent Domain. I would not expect the current administration to do anything to stop them.

      • Re:

        Cities issue bonds all the time to pay for infrastructure improvements.

      • Re:

        Look up the Atlanta Beltline. They are building a strip of park around the city on old railroad rights of way. The project is also buying up blighted property nearby and offering it to developers with strings attached as far as density, walkability, etc. People want to live near the amenities, so it is working out well.

  • Re:

    Most European countries are near pre-COVID office occupancy rates... workers aren't as antisocial as in the US and don't mind going back to the office as much. Then again, shorter hours and WFH was slightly more common than in the US pre-COVID.

    • Re:

      I am in Europe.

      And as much as I like my coworkers, we all agree that we do like working from home and that the attempt to force us back into office 100% will result in 100% of us quitting because there is plenty of offers of 100% home office work available.

      We're currently at kinda-sorta-maybe-couldya 30-40% office presence. Which is also what we support because we don't want our company to get the idea that selling that office would be a good idea and we couldn't have our weekly office BBQ anymore. We just

    • Re:

      Maybe they have offices instead of huge loud rooms?

  • Re:

    Our economy depends on people spending huge chunks of their lives wearing out cars to go to expensive offices they don't need to be at.

    I wonder what other stupid shit it depends on that we haven't identified yet?

    • Re:

      That might be the reason our cities are way less dependent on you wearing out your car: Our country has no car industry whatsoever.

      Actually, our "socialist" capital (seriously, the socialists ran the show ever since the war) is very big on public transport and the mingling of commercial and residential, with the only exception being any kind of polluting industry that is kept from either of them, but we don't really have any kind of "commercial" district here, offices are pretty much in between apartment co

      • Re:

        Allow me to illustrate what I mean [google.com].

      • Re:

        Actually, our "socialist" capital (seriously, the socialists ran the show ever since the war) is very big on public transport and the mingling of commercial and residential

        I just... can't.

        You guys are completely out of touch with reality aren't you? You don't even try any more.

        Anything else those socialists have done lately? We all presumably have Single Payer healthcare right now, right? I mean, the socialists have been running the show since the war, and that's another thing we support, so...?

        • Re:

          I frankly have no idea what it's like in America. Then again, I am nowhere near there.

        • Re: Exacerbated by poorly designed cities

          I wonder if I'm the only one left attempting to figure out who the hell you're replying to? As far as I can tell, OP stated be was in Europe? To me it reads like you already had a problem and were waiting for someone to use the "s word" so you could correct them.
          Who knows, maybe I'm utterly off base here.

• Re:

  Only to a degree; many businesses would not work without the concentration of customers in both time and space. The Taco Truck business might not work if it wasn't for the Kebab Truck next to it, and neither would necessarily work if the revenue was spread over 10-12 hours rather than heavily concentrated over two hours.

  • Re:

    I rarely see food trucks ganged up. Most towns haven't made a space for that (they are usually short on parking, not flush with it) and they have to get space from other businesses. Back in the day you'd have the trucks come to specific concentrations of workers during lunch times, I've worked in a couple of places where a food truck appeared about ten 'til noon. But I guess fuel costs make that prohibitive now.

    • Re:

      I see food trucks gang up. They're not as often roving around to remove business parks solo. Sometimes they all get into the same parking lot, especially the upscale ones (not roach coaches). Not every day, but there are some days of the week when you know that a certain place will hae 4+ trucks at it and people will actually drive there.

• Re:

  The banks created this problem by funding office space we didn't really need. It's literally part of their responsibility to determine whether the loans are going to cause them problems because they don't make sense. They should have been on top of this, as it was already becoming a thing before Covid. Instead they knew they could just pretend nothing was changing and expect to be bailed out.

• You end up that way because the costs of commuting are borne by the employee and not the employer. They don't care what effect having an office in a commercial district where the closest residential property any of their employees can afford is more than an hour away.

  Make companies responsible for the costs and consequences of commuting and they might start considering employee convenience when choosing their locations.

  • Re:

    Well, you start requiring that, and then companies start hiring based on how close people live to the office. If the office is in the suburbs, they will then discriminate against people in the inner cities, and vice versa.

    • Re:

      Density differences makes that more complicated than you think.

      An office that opens in the suburbs is going to have to hire people from the inner cities as well as distant suburbs, because the chances it'll find enough people who live within that same suburb cluster with less drive time than it'd take for someone in the city to drive there is slim to none.

      An office that opens in a real city... maybe? Temporarily? But even temporarily it'll limit itself if it can only get people living in a real city pa

    • Re:

      That is a possiblity but also companies might also think about locating their offices to areas with residential housing that is afforable for the wages they are paying, or the companies encourage their local areas to build more housing whereas now they have no reason to move out of purely commercial districts.

      It's an interesting idea and I am sure there are positive and negative knock-on effects but it's not like the system we have now is free to negatives, in fact there are lot's of negatives including the

  • Re:

    A lot of employers don't get much choice either. They can't pick and choose a location unless they're rich. So they find what they can lease within their budget while also being reasonably close to most of their workers. And if the workers are all in a 50+ mile radius and they want to be central, it means everyone has a terrible commute. Even a relatively short change in distance can make some employees quit.

    The companies do care about this, because even their C-level employees have to think about commu

• Re:

  Americans like to live in communities that are their same ethnic and racial group, but work with people who are diverse. 1910 America was only the way you describe for white people.
  
  That's why it works in Europe, where almost everyone is white, and not in America. As Europe becomes more diverse, you should expect to see it change to be more like the U.S. This really is the best solution.
  
  Thomas Friedman's book, Thank You for Being Late, describes a Jewish community near Minneapolis that launched a cohor

  • We were hosting some technicians at my work from Europe (Croatia and Austria) and something intersting about Europe they described was the fact that "white" isn't really a race or group like it is in the US, due to our diversity. Ethnic lines among "white" people are far more pronounced in peoples minds, IE, Croations, Russians, Ukranians, etc, while all "white" people have much stronger opinions about eachother than Americans do, we just have those ideas about black, hispanic, etc. Hell, Roma people iun the US would be classed as "white" but look at how they get treated in Europe.

    People are still pretty tribal, it's just a matter of what you are raised around.

• Re:

  Ahh yes. Every country should be like Europe.

  70 percent taxes...or is that 70 percent of the population works for the government.

  30 to 35 hour work weeks. 4 to 6 weeks of vacation in the summer. Endless strikes and roadblocks. Shortages at the pump & market.

  Freezing in your own home in the winter because Euro governments sucked up to Putin for natural gas and got shafted by Putin because of politics.

  Unelected bureauCraps, mostly on the take, rule from Brussels or Strasbourg or Luxembourg; pick an EU age

  • Re:

    When you take state, local, property taxes and hellth in$urance into account, taxes in Europe tend to be similar to the US. 35 hr work weeks and 4-6 weeks of vacay sound like features, not bugs.

• Re:

  Not sure why you say that. It's certainly not true in my corner of the US, at least.

  I live in a semi-rural area near a small town (10K people, western Washington state). There are a number of non-fast-food restaurants within 10 minutes of my house from where I can grab lunch. There are also several taco trucks that do a brisk business in the town.

  Heck, in the small isolated farming town (roughly 2K people) where my wife comes from, there are quite a few places that seem to do a booming lunch business, from

• Re:

  I expect urban centers will adapt over time to add more residential and less office. For example, hotels can convert single rooms to suites and rent them out long-term. Overhead would drop as they don't need as much hotel staff to clean rooms every day.

  Office to residential conversions are harder because the plumbing is laid out differently, and they may not have enough parking for residents.

  In Atlanta we are already seeing more mixed-use development. That puts residential, office, and retail on the same

• Re:

  And many places are doing that. Many places have decided that new buildings going up should be work-live-play buildings - the building will have retail shops and recreation facilities on the lower floors, and then offices in the mid-floors and residential on the higher floors. You likely won't be able to work in the same building, but perhaps within walking distance is your office, and also within walking distance is stuff to do, restaurants, supermarkets, etc.

  Thus, "Work From Home" really doesn't have a me