Why do people say that "return to office" is about raising commercial real estate prices?
Why do people say that "return to office" is about raising commercial real estate prices?
A lot of times, when people discuss the phenomenon of employers ending work-from-home and try to make their employees come back to the office, people say that the motivation is to raise real estate prices.
I don't follow the logic at all. How would doing this benefit an employer in any way?
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It's simple supply and demand. If lots of white collar workers are WFH, then hiring new people doesn't require more office space. If you can grow your company without leasing office space, or by leasing a smaller office, demand for office space goes down.
Office space owners who use that for income suddenly don't have (as much) income. So maybe they lower lease rates to attract new tenants. Well, now tenants stuck in higher rate leases start doing the math on penalties for breaking their existing lease vs the new prices.
If remote work stays popular or grows (hint: it's growing), this CAN result in a race to the bottom on commercial real estate leases, which makes them less valuable investments, which could lead to a massive sell off.
All of this makes CEOs itchy. So they try to justify return to office policies. This just chases their best people into the arms of competitors who will support WFH (and naive pay more without high office space leases to pay).
I think the era of regular office work for white collar workers is over. Maybe a couple days a week for client meetings. But why not just go to the client site?
Office work was killed by COVID. Good riddance.
So maybe they lower lease rates to attract new tenants.
The golden rule of commercial leasing is that you never, ever, reduce the lease cost because the value of the property is calculated directly from lease value. Reduced lease cost is reduced property value. In valuing a commercial property the lack of a tenant is not important.
tenants stuck in higher rate leases start doing the math on penalties for breaking their existing lease vs the new prices.
Generally with a commercial lease your only real options to exit are to find someone to take on your lease. If lease prices have dropped then no one will want to take on your dud lease.
All of this makes CEOs itchy.
Why? Not all CEOs are in the same industry. Why should the CEO of Google give a fuck what the CEO of Boston Properties thinks? Google is just leasing a space from them. You would think the CEO of Google would be happy for an excuse to offload some real estate expenses.
Considering that the Muskrat can apparently be the full time CEO of 3 companies simultaneously you might be surprised.
CEOs think they're different from us normies, and have a lot in common with other
superstarsCEOs such that their interests seem more shared.It's complex, for sure, but yes to some extent the "back to office" CEOs care that the commercial property market stays "healthy."
Muskrat is not the typical CEO.
Unfortunately nearly every job posting I see (software developer in the US) is either in office or hybrid 3 days a week. I wish the in-office era was over but I don’t see that as a reality just yet, at least not for people with less than 10 years of experience
there is a lot of full remote software dev jobs in the US, but they advertise them here in South America and India, for 20% to 50% of what they pay for americans