‘Zombie Offices’ Spell Trouble for Some Banks - The New York Times
‘Zombie Offices’ Spell Trouble for Some Banks - The New York Times
Bank tremors serve as a reminder: Just because a crisis hasn’t hit immediately doesn’t mean commercial real estate pain isn’t coming.
This is the real reason for companies wanting people back to the office.
All this talk about collaboration and team spirit is just the publicly given reason for wanting people back to the office.
The real reason is that now the owners of the buildings are losing money.
Cry me a river.
Yep, been saying this for years now, the vicious and irrational hatred against work from home employees is driven by two main factors:
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At a systemic level, despite work from home being obviously less costly in the long run than maintaining an office space, if work from home were allowed to proliferate it basically pop the commercial real estate bubble and then basically every corrupt mayor and idiots in upper management would be shown to be corrupt idiots.
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At a more personal level, upper and middle management people essentially get their kicks from seeing busy little worker bees near them, and they would personally have existential crisis when they realize that 90% of what they do is negging and then ommitting or misrepresenting that in actual meetings. Actual meetings which can easily take place in zoom, or often replaced with just an email.
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Oh won't somebody think of the shareholders.
Oh wait, I'm doing it right now. Mua ha ha ha ha ha ha!
It's sad that problems for banks are never problems only for banks. They always turn into problems for everybody else
This is simply sunk cost fallacy. Companies signed leases. Now they regret it but can't back out so they've got to try to pretend it's worth it even if it costs their employees money out of pocket.
It's not really about owners it's more about leases and the company leasing the property "not getting their money's worth"
I had to start going back to the office today. I'll eventually split time between two buildings, but my main office is practically empty. Been here 3 days in a row, and I'm the only one in my area that stayed the entire day. The first day 4 of 5 other people left at lunch. The last person left about 4:15pm.
Yestersay I was by myself until about 10am and that person left at 4. I'm here by myself today and I don't suspect anyone will show up late.
On the other side of the floor where the breakroom is, there's maybe been 7 people total across the 3 days I've been here lol.
lol I wrote this over a year ago
So more or less, since many businesses are only keeping their offices because they have multi-year leases preventing them from simply packing up and going fully remote or downsizing to a smaller office, we can expect occupancy rates to continue falling and slow-burn exacerbating the commercial real estate crisis. And really, the problem here is just that banks are overinvested in commercial real estate, not knowing that a pandemic would alter work patterns in a lasting way. So again, we're all in for a fun ride on the roller coaster that is capitalism, literally because of problems caused by real estate speculation.
If you're holding onto something useless and eating up your budget, like, that's on you, bro.
I'm a union commercial electrician where I spent a decade building and improving tenant spaces in commercial towers in Seattle and Bellevue. There's a huge dip in our work now that there aren't high rises being occupied. I'd like people to work from home, but my blue collar job can't be done from home. If we can change what these buildings are used for I wouldn't be worried.
Google here in Fremont area on the other hand is expanding their space by occupying a larger foot print with a smaller work force per square foot. That's a good way to keep us working.
Oh no.
Anyway.
This is the best summary I could come up with:
Employees sent to work from home at the start of the pandemic have not fully returned, a situation that, combined with high interest rates, is wiping out value in a major class of commercial real estate.
The past week brought a taste of the brewing problems when New York Community Bank’s stock plunged after the lender disclosed unexpected losses on real estate loans tied to both office and apartment buildings.
When a string of banks failed last spring — partly because of rising interest rates that had reduced the value of their assets — analysts fretted that commercial real estate could trigger a wider set of problems.
In other cases, banks are using short-term extensions rather than taking over struggling buildings or renewing now-unworkable leases — hoping that interest rates will come down, which would help lift property values, and that workers will return.
The value of bank assets has taken a beating amid higher Fed rates, Mr. Piskorski and Ms. Jiang found in their paper, which means that mounting commercial real estate losses could leave many institutions in bad shape.
“Commercial real estate is an area that we’ve long been aware could create financial stability risks or losses in the banking system, and this is something that requires careful supervisory attention,” Treasury Secretary Janet L. Yellen said during congressional testimony this week.
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