8 ms·

i don't understand why it's not needed? >can't have f2f meetings all day i have zoom 1:1 meetings all day with managers. going remote doesn't obviate the need

i don't understand why it's not needed? >can't have f2f meetings all day i have zoom 1:1 meetings all day with managers. going remote doesn't obviate the need for team planning and management. bottom line is commercial real estate (CRE) is screwed and the sole driver of all of this. if a behemoth like dell, amazon, etc can go fully remote and still be profitable, then what does that say for any smaller company? and then what does that do to all of the CRE holdings of said behemoths? tough situation and it may not resolve in our favor

mft_ 3y ago
> bottom line is commercial real estate (CRE) is screwed and the sole driver of all of this I suspect that alongside the obvious reasons (inflexible management styles, micromanagement, etc.) always discussed, this is a major driver: ongoing spend on office buildings needs to be justified, and is probably very difficult to get out of - e.g. long-term building projects, or ownership of buildings which would be difficult (or a big loss) to resell, or long-term leases signed when obviously the offices would be needed for decades, or senior leaders feeling personally invested in particular building projects, etc.
- jon-wood 3y ago
  I'm not sold on this one, although I see it pretty regularly. Its got the whiff of conspiracy theory to me in that it provides a simple answer to a complex question by having two faceless entities colluding with each other for unknown reasons. Dell has no incentive to support the real estate industry, and while I'm sure facilities departments are feeling pretty unsettled by the move to offices being unneeded I know of very few companies who don't consider facilities to be a liability they'd like to reduce the need for. About the only bit of this I buy to some extent is very senior managers who've been closely involved in building out new office space only to find it's empty.
  - deleted 3y ago
    [deleted]
  - medvezhenok 3y ago
    I think it's not a drive to support CRE per se. There are some state-level subsidies that companies get if they bring a certain amount of jobs into an area. Employment and showing up at the office can be a part of the deal there; if your employees don't show up at the office, your company would have to pay back the subsidies.
  - jonfw 3y ago
    Think of it this way- a company has a CRE portfolio originally worth a hundred million dollars on their balance sheet. If they sell it and take a massive loss, they'll take a big hit on the balance sheet. So, they want to hang on to it until times are better. But, people will criticize the company for hanging onto unused real estate if nobody shows up. So now the company wants to show people in the office. I'm not sure that this is true, but it's the only realistic way I can see CRE holdings driving returns to the office
  - ClumsyPilot 3y ago
    > whiff of conspiracy theory to me Literally news from yesterday: Three compies conpired to impersonate millions of voters to influence federal policy How many times do companies have to conspire to commit fraud before people stop claiming conspiracy and corporate fraud never happens?? https://news.ycombinator.com/item?id=35934504 https://news.ycombinator.com/item?id=35934504
  - pwg 3y ago
    > Its got the whiff of conspiracy theory to me in that it provides a simple answer to a complex question by having two faceless entities colluding with each other for unknown reasons. There's no need for a "conspiracy theory" to explain it. The better way to look at it is: Some VP at Dell leased X million sqft of office space on a long term lease that does not expire until the year 2030 (thereby getting a good deal and locking in a lower rent until that time) sometime before the pandemic flipped things to "WFH". Now, post pandemic, with most employees in WFH status, Dell, the company, is paying $Y million/month for X million sqft of office space, which is going unused -- and they can't get out of their 2030 leases early without taking an even bigger loss. So from Dell executive's viewpoint's, this is office rent going to waste, so if it is going to be paid for anyway, we might as well force employees back to the office so we don't have to report the rental costs as pure losses on our quarterly reports to the SEC.
    - LorenPechtel 3y ago
      Yup, I think what's happened is we have a lot of upper level people are going to have bad numbers from WFH becoming the norm and thus they are fighting it. No need for a conspiracy, they're just a bunch of people responding to the same forces.
- dehrmann 3y ago
  I'd hope business leaders wouldn't fall for the sunk cost fallacy.
  - dickersnoodle 3y ago
    Hah. Have you met many business leaders? They could be poster models for the Dunning-Kruger effect.
captainbland 3y ago
At the end of the day I think office space is a dead weight around most companies. Any drive to return to the office on the basis of propping up real estates is ultimately going to be undermined by newer players with no skin in that game, for whom not having to pay massive real estate costs is going to be a real competitive advantage. While we seem to be on a backswing a bit from it, eventually supporting WFH will be a matter of competitive survival. Office mandates will be the next hallmark of legacy firms who have become inefficient and wasteful in their spending.
- Nasrudith 3y ago
  Next hallmark? I would argue that a need to mandate it is a sign we are there already. I mean there is no reason to mandate in a Shannon Information Theoretic sense to mandate a general practitioner's office (even though it is arguably an office in a different sense) because the necessity is already implicit and obvious. Going into the office when you need to take biological samples and lack proper droneage or telemedicine is a clear necessity for the job.
- danaris 3y ago
  > Any drive to return to the office on the basis of propping up real estates is ultimately going to be undermined by newer players with no skin in that game, for whom not having to pay massive real estate costs is going to be a real competitive advantage. The question is whether that competitive advantage will outweigh the incumbency advantage of the massive current players in various industries. Sure, the small fry ABC IT Consultings of the world might get their lunch eaten by sharp new outfits that don't have to foot the cost of a floor full of downtown offices, but a behemoth like Dell, particularly one that has already been paying those costs as long as they've existed and has them built right into their structures, isn't going to be nearly so easy to dislodge. This is one of the huge downsides of allowing so much consolidation across the board for decades. The incumbent players become much more resistant to disruption through changes like this—it will take a huge percentage of us, the tech workers, firmly saying "no, we will not accept on-site-only jobs anymore," to make a real difference.
  - 3y ago
steveBK123 3y ago
CRE is very clearly a driver of which banks are RTO, how often, and how strictly. No surprise JPM leading the charge on draconian RTO measures, given their CRE exposure..
- hrunt 3y ago
  I don't understand this thinking. JPM is in long-term arrangements with CRE landlords whether employees come into the office or not. If employees come in to the office, JPM actually pays MORE, because the buildings will need the lights on and the HVAC running to keep those employees comfortable. Worst case scenario is that JPM pays exactly the same amount for CRE in both the RTO and WFH scenarios. So how does CRE drive them to bring back in employees if, as WFH advocates say, people are as productive or more at home than at the office. I suspect that JPM is telling the truth about their internal productivity numbers being better in the RTO scenario, but I also suspect that these numbers are based on "doing things the way they were always done" and don't take into account scenarios with a JPM that is structured differently for WFH scenarios (e.g. reducing middle management and its proclivity for in-person meetings).
  - steveBK123 3y ago
    JPM is not simply a company that leases CRE space. That describes a lot of hedge funds, which is why they haven't cared about RTO to the extend the big banks have. JPM is a huge lender in the space. If CRE falls, JPM has a tougher time than the average big bank. They are also building a huge tower on Park Ave that was started pre-COVID and still not done. https://www.marketwatch.com/story/deutsche-bank-goldman-and-jp-morgan-top-commercial-real-estate-finance-despite-covid-19-cracks-11602250715 https://www.marketwatch.com/story/deutsche-bank-goldman-and-...
inconceivable 3y ago
> bottom line is commercial real estate (CRE) is screwed and the sole driver of all of this as a former business owner (good exit, so no bitterness here) all i can say is good riddance, and i hope they take a massive haircut as an industry. they're the biggest pricks i've ever dealt with in running my business. 'arrogant' doesn't even begin to describe the attitude they had in the 2015-2020 time period. and they are literally no fun at parties. even the front desk receptionists were arrogant, WHILE I WAS LITERALLY HANDING THEM CHECKS. mind blowing. example in another industry - think of all the restaurants you've ever loved that have had to close their doors because of asshole corporate landlords, for no other reason than to avoid setting a precedent for lower rents even when it wasn't financially necessary. https://finance.yahoo.com/quote/dei https://finance.yahoo.com/quote/dei look at that beautiful, beautiful drop. it brings a tear to my eye. a tear of joy.
- bsder 3y ago
  > for no other reason than to avoid setting a precedent for lower rents even when it wasn't financially necessary. I agree with your virtiol, but this isn't quite correct. You can tack "missing" rent onto the end of your financial agreement without penalty. "Lower" rent causes a reevaluation of the financial agreement basis which will almost always require a cash outlay. This is what is causing commercial real estate to be empty for 5+ years rather than lower the damn rent. Municipalities need to implement an (in?)occupancy tax to stomp this crap out. If real estate isn't generating rent for 12+ months, tax needs to start going up on the space.
  - smugma 3y ago
    SF has a Commercial Vacancy Tax, for properties unoccupied for 182+ days a year. My guess is that it is not well-defined and therefore generates minimal revenue. I also can't tell if this applies to office buildings or is more for street level commercial real estate.
chadash 3y ago
> bottom line is commercial real estate (CRE) is screwed and the sole driver of all of this I've seen several people point to this narrative on HN and it just doesn't make any sense. There's three possibilities as I see it: 1) There's some secret cabal of people who run the world and they've decided that commercial real estate needs to thrive, for some reason. So these overlords go to their puppets running major companies like Microsoft, Amazon and Dell and tell them they must make their workers return to the office in the name of propping up commercial real estate. Apparently some people on HN think this is likely? 2) The managers at Dell/Amazon/etc. feel the need to prop up commercial real estate as an act of charity. Rather than focusing on their own businesses, they are worried about their friends in commercial real estate. This seems even less likely than 1. 3) Managers at major companies believe that there are benefits to working together in person. Why are people so reluctant to accept option 3? You don't even need to accept the premise that working from the office is better. You just need to accept that premise that management believes it's better to be a proponent of this option.
- coredog64 3y ago
  Allegedly, Amazon forced RTO because there were tax incentives that required butts-in-seats. I don’t think they are a cabal of puppet masters, but that does go some ways towards point #1.
- Kerrick 3y ago
  Couldn't there be an Option 4 like this? 4) Some companies have a significant amount of capital tied up in CRE. Preventing its value from going to from $X to $0 is valuable to the tune of $X. There is no apparent cost to the C-suite in enforcing RTO. So for no cost, you can save $X. It's simple, non-complex, and tied to obvious incentives.
  - bityard 3y ago
    Dell probably owns SOME real estate but their business is making computers and shit, not renting and selling property. They have no incentive to increase the value of any property they hold. Like most large businesses, they likely rent the vast majority of their offices so falling rent would actually benefit them. I'm as much of a WFH proponent as the next guy but blaming CRE on the latest return-to-office movement is some crazy conspiracy theory stuff.

mft_ 3y ago

> bottom line is commercial real estate (CRE) is screwed and the sole driver of all of this I suspect that alongside the obvious reasons (inflexible management styles, micromanagement, etc.) always discussed, this is a major driver: ongoing spend on office buildings needs to be justified, and is probably very difficult to get out of - e.g. long-term building projects, or ownership of buildings which would be difficult (or a big loss) to resell, or long-term leases signed when obviously the offices would be needed for decades, or senior leaders feeling personally invested in particular building projects, etc.

jon-wood 3y ago
I'm not sold on this one, although I see it pretty regularly. Its got the whiff of conspiracy theory to me in that it provides a simple answer to a complex question by having two faceless entities colluding with each other for unknown reasons. Dell has no incentive to support the real estate industry, and while I'm sure facilities departments are feeling pretty unsettled by the move to offices being unneeded I know of very few companies who don't consider facilities to be a liability they'd like to reduce the need for. About the only bit of this I buy to some extent is very senior managers who've been closely involved in building out new office space only to find it's empty.
- deleted 3y ago
  [deleted]
- medvezhenok 3y ago
  I think it's not a drive to support CRE per se. There are some state-level subsidies that companies get if they bring a certain amount of jobs into an area. Employment and showing up at the office can be a part of the deal there; if your employees don't show up at the office, your company would have to pay back the subsidies.
- jonfw 3y ago
  Think of it this way- a company has a CRE portfolio originally worth a hundred million dollars on their balance sheet. If they sell it and take a massive loss, they'll take a big hit on the balance sheet. So, they want to hang on to it until times are better. But, people will criticize the company for hanging onto unused real estate if nobody shows up. So now the company wants to show people in the office. I'm not sure that this is true, but it's the only realistic way I can see CRE holdings driving returns to the office
- ClumsyPilot 3y ago
  > whiff of conspiracy theory to me Literally news from yesterday: Three compies conpired to impersonate millions of voters to influence federal policy How many times do companies have to conspire to commit fraud before people stop claiming conspiracy and corporate fraud never happens?? https://news.ycombinator.com/item?id=35934504 https://news.ycombinator.com/item?id=35934504
- pwg 3y ago
  > Its got the whiff of conspiracy theory to me in that it provides a simple answer to a complex question by having two faceless entities colluding with each other for unknown reasons. There's no need for a "conspiracy theory" to explain it. The better way to look at it is: Some VP at Dell leased X million sqft of office space on a long term lease that does not expire until the year 2030 (thereby getting a good deal and locking in a lower rent until that time) sometime before the pandemic flipped things to "WFH". Now, post pandemic, with most employees in WFH status, Dell, the company, is paying $Y million/month for X million sqft of office space, which is going unused -- and they can't get out of their 2030 leases early without taking an even bigger loss. So from Dell executive's viewpoint's, this is office rent going to waste, so if it is going to be paid for anyway, we might as well force employees back to the office so we don't have to report the rental costs as pure losses on our quarterly reports to the SEC.
  - LorenPechtel 3y ago
    Yup, I think what's happened is we have a lot of upper level people are going to have bad numbers from WFH becoming the norm and thus they are fighting it. No need for a conspiracy, they're just a bunch of people responding to the same forces.
dehrmann 3y ago
I'd hope business leaders wouldn't fall for the sunk cost fallacy.
- dickersnoodle 3y ago
  Hah. Have you met many business leaders? They could be poster models for the Dunning-Kruger effect.

captainbland 3y ago

At the end of the day I think office space is a dead weight around most companies. Any drive to return to the office on the basis of propping up real estates is ultimately going to be undermined by newer players with no skin in that game, for whom not having to pay massive real estate costs is going to be a real competitive advantage. While we seem to be on a backswing a bit from it, eventually supporting WFH will be a matter of competitive survival. Office mandates will be the next hallmark of legacy firms who have become inefficient and wasteful in their spending.

Nasrudith 3y ago
Next hallmark? I would argue that a need to mandate it is a sign we are there already. I mean there is no reason to mandate in a Shannon Information Theoretic sense to mandate a general practitioner's office (even though it is arguably an office in a different sense) because the necessity is already implicit and obvious. Going into the office when you need to take biological samples and lack proper droneage or telemedicine is a clear necessity for the job.
danaris 3y ago
> Any drive to return to the office on the basis of propping up real estates is ultimately going to be undermined by newer players with no skin in that game, for whom not having to pay massive real estate costs is going to be a real competitive advantage. The question is whether that competitive advantage will outweigh the incumbency advantage of the massive current players in various industries. Sure, the small fry ABC IT Consultings of the world might get their lunch eaten by sharp new outfits that don't have to foot the cost of a floor full of downtown offices, but a behemoth like Dell, particularly one that has already been paying those costs as long as they've existed and has them built right into their structures, isn't going to be nearly so easy to dislodge. This is one of the huge downsides of allowing so much consolidation across the board for decades. The incumbent players become much more resistant to disruption through changes like this—it will take a huge percentage of us, the tech workers, firmly saying "no, we will not accept on-site-only jobs anymore," to make a real difference.
- 3y ago

steveBK123 3y ago

CRE is very clearly a driver of which banks are RTO, how often, and how strictly. No surprise JPM leading the charge on draconian RTO measures, given their CRE exposure..

hrunt 3y ago
I don't understand this thinking. JPM is in long-term arrangements with CRE landlords whether employees come into the office or not. If employees come in to the office, JPM actually pays MORE, because the buildings will need the lights on and the HVAC running to keep those employees comfortable. Worst case scenario is that JPM pays exactly the same amount for CRE in both the RTO and WFH scenarios. So how does CRE drive them to bring back in employees if, as WFH advocates say, people are as productive or more at home than at the office. I suspect that JPM is telling the truth about their internal productivity numbers being better in the RTO scenario, but I also suspect that these numbers are based on "doing things the way they were always done" and don't take into account scenarios with a JPM that is structured differently for WFH scenarios (e.g. reducing middle management and its proclivity for in-person meetings).
- steveBK123 3y ago
  JPM is not simply a company that leases CRE space. That describes a lot of hedge funds, which is why they haven't cared about RTO to the extend the big banks have. JPM is a huge lender in the space. If CRE falls, JPM has a tougher time than the average big bank. They are also building a huge tower on Park Ave that was started pre-COVID and still not done. https://www.marketwatch.com/story/deutsche-bank-goldman-and-jp-morgan-top-commercial-real-estate-finance-despite-covid-19-cracks-11602250715 https://www.marketwatch.com/story/deutsche-bank-goldman-and-...

inconceivable 3y ago

> bottom line is commercial real estate (CRE) is screwed and the sole driver of all of this as a former business owner (good exit, so no bitterness here) all i can say is good riddance, and i hope they take a massive haircut as an industry. they're the biggest pricks i've ever dealt with in running my business. 'arrogant' doesn't even begin to describe the attitude they had in the 2015-2020 time period. and they are literally no fun at parties. even the front desk receptionists were arrogant, WHILE I WAS LITERALLY HANDING THEM CHECKS. mind blowing. example in another industry - think of all the restaurants you've ever loved that have had to close their doors because of asshole corporate landlords, for no other reason than to avoid setting a precedent for lower rents even when it wasn't financially necessary. https://finance.yahoo.com/quote/dei https://finance.yahoo.com/quote/dei look at that beautiful, beautiful drop. it brings a tear to my eye. a tear of joy.

bsder 3y ago
> for no other reason than to avoid setting a precedent for lower rents even when it wasn't financially necessary. I agree with your virtiol, but this isn't quite correct. You can tack "missing" rent onto the end of your financial agreement without penalty. "Lower" rent causes a reevaluation of the financial agreement basis which will almost always require a cash outlay. This is what is causing commercial real estate to be empty for 5+ years rather than lower the damn rent. Municipalities need to implement an (in?)occupancy tax to stomp this crap out. If real estate isn't generating rent for 12+ months, tax needs to start going up on the space.
- smugma 3y ago
  SF has a Commercial Vacancy Tax, for properties unoccupied for 182+ days a year. My guess is that it is not well-defined and therefore generates minimal revenue. I also can't tell if this applies to office buildings or is more for street level commercial real estate.

chadash 3y ago

> bottom line is commercial real estate (CRE) is screwed and the sole driver of all of this I've seen several people point to this narrative on HN and it just doesn't make any sense. There's three possibilities as I see it: 1) There's some secret cabal of people who run the world and they've decided that commercial real estate needs to thrive, for some reason. So these overlords go to their puppets running major companies like Microsoft, Amazon and Dell and tell them they must make their workers return to the office in the name of propping up commercial real estate. Apparently some people on HN think this is likely? 2) The managers at Dell/Amazon/etc. feel the need to prop up commercial real estate as an act of charity. Rather than focusing on their own businesses, they are worried about their friends in commercial real estate. This seems even less likely than 1. 3) Managers at major companies believe that there are benefits to working together in person. Why are people so reluctant to accept option 3? You don't even need to accept the premise that working from the office is better. You just need to accept that premise that management believes it's better to be a proponent of this option.

coredog64 3y ago
Allegedly, Amazon forced RTO because there were tax incentives that required butts-in-seats. I don’t think they are a cabal of puppet masters, but that does go some ways towards point #1.
Kerrick 3y ago
Couldn't there be an Option 4 like this? 4) Some companies have a significant amount of capital tied up in CRE. Preventing its value from going to from $X to $0 is valuable to the tune of $X. There is no apparent cost to the C-suite in enforcing RTO. So for no cost, you can save $X. It's simple, non-complex, and tied to obvious incentives.
- bityard 3y ago
  Dell probably owns SOME real estate but their business is making computers and shit, not renting and selling property. They have no incentive to increase the value of any property they hold. Like most large businesses, they likely rent the vast majority of their offices so falling rent would actually benefit them. I'm as much of a WFH proponent as the next guy but blaming CRE on the latest return-to-office movement is some crazy conspiracy theory stuff.