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Doesn't the office tenant profit while they are occupying the space? They profited more by having more employees and filling more space. (butts in seats, a co

Doesn't the office tenant profit while they are occupying the space? They profited more by having more employees and filling more space. (butts in seats, a common measure of corporate size/growth) The building owners built the buildings to suit the demand of their tenants. The office tenant is paying someone else to take care of the details of managing real estate, which is a task requiring real managerial skill and should be compensated. The tenant is willing to pay for this because they do not want to spend time and resources dealing with it themselves, their time is worth more doing something else. So who should pay? The property owner/manager? They are wholly dependent on the commercial real estate industry for their profit. The tenant who was previously dependent on property owner/manager to provide space? Is the tech industry to blame for making WFH a viable alternative, should tech share in the cost? Should the pensioner invested in corporate bonds fairly take a haircut? EDIT: Not arguing your point, but there is some nuance that should be brought to light.

version_five 5y ago
I think this is a fair point: say I sign a 5 year lease (no idea what industry norm is), I am presumably getting a discount over whatever the month-to-month or daily rate for rent would be, and accepting the risk that I need to find a way to use the property to make money throughout the lease period. If I'm the building owner, i probably debt financed the building, and I'm taking on the risk that i can get enough cash flow from tenants to pay my mortgage. If I'm the mortgage holder (this is my basic understanding) I've turned rue mortgage into some kind of security and sold that to an investor who is taking on the risk that the property owner will pay the mortgage. And there may be shareholders or other parties taking on the risk that whoever owns the securities will remain solvent and pay their pension or whatever. So it's not super obvious where and how the buck should stop. I own an condo that I rent out. Guaranteed I am in the hook for it - i have no recourse for a tenant that doesnt pay other that maybe an eventual eviction, and the bank will make me sell it if I dont pay my mortgage. I'm the weakest point in the chain above, and that's why I'll have to be responsible. I suppose in exchange for that I'm exposed to more upside than the bank or the bondholders. But it's not clear to me that I'm the one beneficiary who should bear all the risk.

version_five 5y ago

I think this is a fair point: say I sign a 5 year lease (no idea what industry norm is), I am presumably getting a discount over whatever the month-to-month or daily rate for rent would be, and accepting the risk that I need to find a way to use the property to make money throughout the lease period. If I'm the building owner, i probably debt financed the building, and I'm taking on the risk that i can get enough cash flow from tenants to pay my mortgage. If I'm the mortgage holder (this is my basic understanding) I've turned rue mortgage into some kind of security and sold that to an investor who is taking on the risk that the property owner will pay the mortgage. And there may be shareholders or other parties taking on the risk that whoever owns the securities will remain solvent and pay their pension or whatever. So it's not super obvious where and how the buck should stop. I own an condo that I rent out. Guaranteed I am in the hook for it - i have no recourse for a tenant that doesnt pay other that maybe an eventual eviction, and the bank will make me sell it if I dont pay my mortgage. I'm the weakest point in the chain above, and that's why I'll have to be responsible. I suppose in exchange for that I'm exposed to more upside than the bank or the bondholders. But it's not clear to me that I'm the one beneficiary who should bear all the risk.