How Is The Trend Towards Stay-At-Home Work Going TO Affect The Office Space Market?
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[{"id": "gnwt94u", "text": "Please fix the last two poll-options because they\u2019re literally the same thing.", "replies": [], "depth": 1}, {"id": "gnxdcs9", "text": "Let me offer some insight as a top broker in the US and the West coast, specifically. From the start of the pandemic the office market pretty much died, save for the massive multinational companies who can afford to lease or buy space as part of their 10-20 outlook. \n\nSmaller users have nearly halted leading activity except where necessary and those necessary deals look very different than before. We're looking at smaller space, shorter leases, and the low demand means lower prices as well. \n\nFortunately, the sentiment is that this impact is certainly not permanent. At least not at this level. What's important is human nature, realized benefits from working from home and job requirements. \n\nBy nature we ended up packing ourselves into skycrapers as part of our model for work. The proximity, relationships, ability to communicate, socialize and maintain confidentiality. Are there benefits to working from home? Absolutely. The privacy, comfort, and sometimes efficiency have often improved. Not to mention the cost of real estate reduced for the company. \n\nSo, despite some jobs having an absolute requirement to be in person, we try to identify the new middle point between the value of working from home vs. working in office. From our surveys we expect normal office occupancy to return (assuming previously a 5 day work week in the office) to at least 3 days in the office. Part of this sentiment is from the large number of boomers in the work force who value traditional work habits, as well as entry younger generations who need to build relationships and benefit from hands on learning. So that's why the average might be slightly favored towards returning instead of 50/50. \n\nLet me point out some opinions on your statements about rowdy cities and the value of them. LA has one of the largest concentrations of high quality education (also it's comical you didn't mention San Francisco / Silicon Valley). Not to mention cities are generally concentrated because it offers much more than just proximity to work. It gives a foundation upon which International airports are profitable, large scale entertainment in sports or music, high diversity in food, activities, socialization, it's also cheaper in terms of transportation. I think the number of people who feel \"bound\" to a city due to work who are desperately seeking to work remote away from it are going to be absolutely minimal or even replaced by others looking to come into the city, if we do see an exodus. So.. I don't see the long term value dropping due to the factors you described. However, if the point of your post is find if there is a potential market for those specifically looking to live more remotely, there's absolutely an argument for that. \n\nOften real estate is used to attract talent. That's partially why corporations seek out cities for their space. It's the universities, the attractions, the night life, etc. that gives their workers the quality of life they seek. I think it's easy to concur that more people prefer these amenities than not.", "replies": [{"id": "gnxl4t6", "text": "This is a pretty well thought out assessment.  I have no clue about the west coast market, but do many a fair number of those high paying tech employees that have relocated outside CA because their jobs went completely remote.  Some said there were working from home part time already prior to Covid and they decided to leave with all the fires last summer.   There will be some level of inevitable change, but I don't know if it will be drastic.", "replies": [], "depth": 2}, {"id": "gnxm1pn", "text": "While I think many are getting caught up in the headlines of big tech going WFH permanently and thus predicting the death of the office, the majority of companies I believe will see negative long term impacts if they adopt the same approach. It\u2019ll be easier for workers to jump from company to company if the whole hiring/on boarding process goes remote. \n\nEven bigger I think companies are overlooking is how much innovation occurs during collaboration? When all we see each other is through zoom calls for regularly scheduled meetings, I think a lot the \u201cunplanned\u201d innovation that happens through face to face collaboration gets missed and will hit the bottom line in immeasurable ways. Obviously the workers wants will determine company strategy but I think most workers will prefer the hybrid model over entire WFH. Many will not feel as engaged or able to move in their careers without interacting with their superiors and coworkers on some intimate level.\n\nI do think there will be some downward pressure on demand with any type of hybrid model, but the office apocalypse is overblown. I do question some of the arguments saying how the pandemic will require companies to lease more space for social distancing (not just in office - I\u2019m in industrial, many reports on companies will increase inventory levels at the sake of short term profits. I do think companies could regret making decisions that prevent another disaster that may happen 100 years later). Similarly I don\u2019t see companies willing to spend anymore on office space than they do now, any increase in office space leased for just the sake of social distancing will either come out of the lease rate or adoption of a hybrid model will net out any of that additional space. We\u2019re not out of the pandemic, which is not to be taken lightly, but I tend to be suspect of the overreactions to just how much this will cause companies to change their real estate planning strategies.", "replies": [{"id": "gnxpo7e", "text": "I like that you brought up innovation in collaborating. You're absolutely right. As well as cohesion, trust, teamwork, efficiency... It's almost irreplaceable. \n\nFurther, I do think the hybrid model will benefit office in the deep long term as companies will generally be overcapitalized with reduced real estate costs to companies, offering perhaps an opportunity for landlords to adopt more of a service industry layer on top of ownership. \n\nWhat is one of the biggest office trends in recent years? Co-working. Or big tech/media/Entertainment converging and leasing entire campuses for themselves. WeWork has some of the biggest most expensive leases in 2019. We're talking about 10-15 deals. But the benefit of this is actually lowering the barrier of entry for workers to have their own office space. I see the demand continuing to increase if these types of spaces are adopted. The main benefit being less capital requirement for the end user, more flexibility, short term leases, expansion and reduction opportunity, etc. \n\nI think once the pandemic subsides and people start realizing this opportunity it will fully and then some, counteract the short term downward pressure.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]