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Remote Work to Wipe Out $800B from Office Values, McKinsey Says

111 points by eatonphil 3y ago

bugglebeetle 3y ago
Since the value was never created by the real estate investors themselves, honestly, who cares. Housing as a speculative asset is bad enough, let alone rewarding somebody trying to get rich off being a cubicle landlord.
kkfx 3y ago
I suggest a large reasoning: why big&powerful seems to want people back in offices? IMO the primary reason is their own economic model. Office means city. City means services. Services means profit for those who run them. If inflation keep going and there is not much space for the New Deal in cities, too dense to change, people get poorer, so try cheaper solution, meaning owning less, witch indirectly means using more services. Let's say some try to go to smaller apartments, then they have not much space for keep foods and cook at home, not much space to washing clothes at home, and that means services. No cars? Well, collective transportation service (improperly named public, since they are private companies in most of the cases) are there. They start to be toll free? Oh, someone pay, it does not matter if it's the transported human or the State. The point is that the SOLE way to realistically reach the famous "in 2030 you'll own nothing" is pushing people to total poverty and doing so without massive revolt means substituting what people loose with something else, services. In cities people can be impoverished while kept calm giving "aids" and services. Once their are trapped is just a matter of time to pushing services economical entry barrier a bit higher and de-facto imposing jobs people's can't refuse to earn enough to pay for all the services they need. If WFH became the norm, in the western countries where tertiary sector is largely dominating other jobs many people would go out of the city, looking for large homes in nice places, homes large enough to have a personal office per adult, at least, so they have also space for cars, for fridge, kitchen etc and since perhaps they are in an area not so well serving they would prefer some redundancy and they learn how to repair stuff and so on => they would value their properties and they do want to posses, not to lease, not to externalize, less services. Owning means also have valuable assets, witch means an economic reserve that allow for life changes without being so tied to a 24/7/365 jobs and services, they be less blackmailable than someone who own nothing and spend anything in services. Such ownership also means people less keen to relocate, witch means less easy reorganization of the society following some ruling class will. Then the rest. If the home will be the center of so many people lives, homeservers will be the norm, personal desktops as well, far less mobile devices and own hw means "hey, but it's cheaper than the cloud" and so a certain mentality shift also in the IT world toward a more decentralized computing, like we had in the past. Then large real estate owners who loose big money and so on, essentially MOST large big capitals will loose points. A middle class can flourish again. So? Well, they likely prefer pushing people in offices, allowing only some, the most skilled and useful, to be outside the smart city. No proof, but IMVHO that's what happening today.
pxue 3y ago
[flagged]
- convolvatron 3y ago
  Yes. However no one ever seems to show up with any counter arguments. Some people here miss going in.
  - cmrdporcupine 3y ago
    I actually miss going in. But do not miss long commute. And do not like the poor selection of local employers. And will not be moving for them at this stage in my life -- I already did that in my 20s -- so have to make do with remote. But, I question any of the (esp local) employers now who are strictly hybrid or in-office only, because it tells me that -- among other reasons -- they're fine restricting their talent pool to what's in their immediate surroundings. That's fine in maybe a handful of locales where strong talent has traditionally congregated (Bay Area, maybe New York, London, a few places in Europe?). And so you have to ask the reason why? It's gotta be one of: work doesn't call for special talent (so likely not interesting, and I likely don't want to work there). Or work doesn't pay competitive (so I don't want to work there). Or they feel they need to be looking over the shoulder of their staff (I likely don't want to work there.) So a bit of an acid test, really.
  - pxue 3y ago
    At least here in Toronto (linked article is Bloomberg Canada), banks (minus tech department) are back to office 5 days a week. I just feel like outside of tech, wfh isn't much of a debate.
WirelessGigabit 3y ago
I refuse to be miserable in an office just for someone else's building value.
- CyberDildonics 3y ago
  No one is asking you to come into an office just to boost their landlord's property values. That would be a money losing proposition for the company.
  - jacknews 3y ago
    Indeed they're not asking ...
    - CyberDildonics 3y ago
      If a company wants someone to come back to the office, it isn't for their landlord's property value. If they have lots of free space they can sublease it out, it doesn't make any sense to force people in to an office just to burn money and miss out on revenue.
      - PartiallyTyped 3y ago
        That’s not true. Companies get tax breaks when opening offices and warehouses / factories from local authorities and landlords have quite the sway with the latter.
      - lotsofpulp 3y ago
        What if the leaders of the company, or company itself, is invested in similar properties?
        voisin 3y ago
        Do you have any data to show how prevalent this is? I suspect worker retirement plans have more exposure than leaders of companies, and it seems only the largest, most stable and slower growing companies own their own real estate.
HPsquared 3y ago
One man's value is another man's cost.
- brvsft 3y ago
  Yeah, why isn't the headline Remote Work to Save $800B on Office Rent?
  - BigJono 3y ago
    Target audience. 3 cafes have popped up within walking distance of my house in the past 5 years and they all seem to be going strong. I doubt any of the owners give a flying fuck what Bloomberg has to say about office rents lol.
CBarkleyU 3y ago
Alternative title by me: Remote work frees up $800b to be spent more effectively.
- mastax 3y ago
  When the paper value of an asset disappears you don't get the money back to spend elsewhere. Nobody does. Just like lending creates money, destruction of assets destroys money. Which happens to be what we want right now, as long as it can be done in an orderly fashion.
  - stjohnswarts 3y ago
    That capital that would have been spent by real estate owners can now be spent by the company for pay raises, putting it into other investments, etc. Capitalism is a rough business and lots of winners and losers. Why am I supposed to feel sorry for these real estate guys? They never came to my aid when I got laid off in the past.
  - SeanLuke 3y ago
    > Just like lending creates money, destruction of assets destroys money. Lending creates money? Banks can just, poof, will it into existence? Correpondingly, asset destruction destroys money? Like someone literally is setting fire to it? This is nonsense.
    - zeroonetwothree 3y ago
      Fractional reserve lending does create money.
      - xw4002 3y ago
        I suppose when we say these things we should say, fractional reserve lending creates some money. Otherwise one can get the impression that banks can create as much money as they want, which they can’t.
    - 3y ago
jacknews 3y ago
"Remote work risks wiping $800 billion" No guesses which angle this is coming from. "Attendance still is 30% lower than what it was before the pandemic and only 37% of people are back at the office every day." And yet the world has not stopped. In fact everything seems to be going faster than ever.
- traceroute66 3y ago
  > And yet the world has not stopped. In fact everything seems to be going faster than ever. Indeed. I know many people who used to religiously go to the office 5-days a week. The only time they were not in the office was when they were on holiday or they were sick. It's what they did for their entire working lives. And in some cases it's what "custom and practice" historically dictated in their industry, e.g. those working in the financial sector. The pandemic forced their hand. And now my unscientific sample would suggest 80-90% of them now only go to the office for client meetings. Most weeks they don't go at all, or maybe they pop-in for a couple of hours on their way somewhere else. There is the occasional week where they do a full-day in the office for one or two days. But nobody I know is anywhere near the old 5-days a week regime. Employers attempting to force (or, if we're being polite "strongly encourage") people to return 5-days a week are playing a loosing game. The future is now and the future is hybrid or fully-remote for 99% of jobs. There are very few jobs out there that genuinely need you to be in a different building 5-days a week to do your job.
  - chmod600 3y ago
    "The future is now and the future is hybrid or fully-remote for 99% of jobs." I assume you mean for 99% of office jobs.
    - devilbunny 3y ago
      Yeah, you can't be anything blue-collar remotely. As well as jobs like healthcare. Lots of jobs still require you to physically interact with people or things.
brightball 3y ago
I believe it. It's also going to lead to much more developed suburbs IMO. When you don't have to travel into a city, it's a much less compelling argument to live in one. I think we're all going to find out that the inflated costs of living that are regularly discussed on here are more a result of people being forced to move to these cities than NIMBYism that's it has often been attributed too. Some people like the idea of moving for work, but I have to imagine that many would prefer to stay closer to their families. This only gets more pronounced when you have kids, especially young kids. Every mainstream issue that is talked about from parental leave to child care cost is amplified because so many people have moved away from their own parents for work. My in-laws moved near us when our oldest was 7 years old and the before and after was life changing in how much easier it made everything. I greatly prefer space and trees to the alternatives.
- carlosjobim 3y ago
  Property "values" are extremely inflated in the countryside as well, that's why people move to the cities to work in the first place, because they can get better paid there. The average person born in a rural area has a really hard time affording a place to live there, unless they get help from the landed gentry (usually their parents) - no matter how hard he or she works. Meanwhile, somebody born into rural property will never have to work in their entire life, unless they prefer to. They can rent out productive land, or sell it in small pieces to people who work. And this they can do for generations.
Kapura 3y ago
The building i currently live in is a 20+ storey apartment block that was made out of a converted office building built in the 60s. Given the housing prices in [checks notes] cities, it feels like a wave of residentializing is on the horizon.
- lacrimacida 3y ago
  Whats the layout like? Many office spaces are hard to partition into housing due to not having enough natural lighting, plumbing and other building infra that is built with offices in mind…
- jayski 3y ago
  Not an expert but I've read it's not easy to add all the necessary plumbing to provide showers and toilets if you redistribute office space into apartments. A lot of times office buildings will have one large bathroom per floor.
  - HWR_14 3y ago
    There was a time when many of us on this board lived in buildings without personal bathrooms and only shared facilities. Dorm style housing could work.
    - op00to 3y ago
      For who?
      - navane 3y ago
        For the Millennials with proper jobs that never could buy a house, still live at their parents, and are inclined to communal ideas that lower the impact of individuals on their environments.
    - zeroonetwothree 3y ago
      Once you are 30+ and have a family it becomes much less acceptable
ksec 3y ago
How many of those in SF, London, and NY were due to other issues such as company moving out of the city rather than WFH.
ss1996 3y ago
Good. Remote work leads to better distribution of wealth (w. r. t. geography). That's almost always a good thing.
bravetraveler 3y ago
It only took about two decades, I remember first hearing about WFH around the turn of the century Good riddance IMO
- xg15 3y ago
  Two decades and a pandemic and even then companies are fighting tooth and nail against keeping the (new) status quo. So much for progress...
londons_explore 3y ago
What amazes me is that we didn't see a faster cratering in value in office space. On any given day in any capital city, perhaps 50% of office desks sit empty. Yet I can't buy an office building for cents on the dollar. Normally when supply far exceeds demand like this, companies owning those assets can't pay their bills, the building is sold, there are no buyers, auction prices crash, the crashing prices cause more companies to go underwater, those buildings are sold too, and there is a big wipeout of all leveraged property owners. Rent and purchase prices prices for office buildings fall 70%, encouraging other uses of the buildings (retail, residential, industrial), and they end up full again. But for some reason that isn't happening. 3 years later, and still more office desks are empty than full in most capital cities.
- mpalmer 3y ago
  It's like the lead up to the mortgage crisis, except the reluctance to price the asset at its true value is plain for everyone to see.
- dsr_ 3y ago
  Typical business leases were 5-10 years. If you weren't willing to commit to 5 years in 2018, nobody owning a building in a major CBD wanted to see you. You could get sublets from businesses that wanted to recoup costs while moving to a bigger space, or space at the fringes or outside of the CBD. The leases are just starting to run out.
  - cma 3y ago
    But they didn't all or even near a majority start the lease in 2018.
  - londons_explore 3y ago
    Plenty of leases have already expired. Yet it seems landlords would prefer to leave a building empty than to lease it for a low rent. Somehow the usual rules of supply and demand don't seem to be applying.
    - 3y ago
otachack 3y ago
Costs will be appended to the workers. I hope we all realize someday how working from home applies further wear & tear to our amenities and homes compared to the office's. Think toilets, sinks, fridges, chairs, doors, floors, etc. I fully advocate for WFH regardless and to even supplement with an option like DeskPass for those that want to take a break from home. But a portion of those former office costs should go to the workers.
- threetonesun 3y ago
  Assuming the alternative involves driving the costs associated with being at home are still heavily in your and society's favor.
- sottol 3y ago
  Yes, but so do the costs of the commute. How much wear and tear is that 55min/41 mile commute on the worker's car - or more rarely how much does that train/bus ticket cost monthly? Some of the cost is always borne by the workers. And most people don't realize just how expensive wear and tear on a car is (or just owning one to get to work independent of wear and tear). Personally, I'd take the wear and tear on the house over time lost commuting.
- lacrimacida 3y ago
  Id say that it’s insignificant. Moreover one can write off office equipment. The stress and wear on daily transportation to and from offices is far more significant at that: wasted time, energy, pollution.
- arrrg 3y ago
  Time and flexibility is worth much, much more to me. I agree that employers should pay for adequate equipment (desk, chair, additional monitors, a great camera and headset, not just the laptop). A reasonable sum of money for mortage/rent and utilities should also be considered. Though be careful what you wish for. One of the advantages of home office is that commuting time is not paid (with the somewhat reasonable justification that people can freely pick where they live and it’s not the employer’s job to subsidize those living far away). I think if those at home get something for the additional rent/mortage and utility use then those commuting should also get something for their commute time and lost flexibility. So in the end that comes to me out in a wash and I’m generally fine with no one getting anything.
RcouF1uZ4gsC 3y ago
Aren’t we for reducing inequality and spreading the wealth? The concentration of these massive amounts of wealth in Silicon Valley and NYC is the driver of a whole lot of pathologies from the high cost of housing to homelessness to gentrification of historical neighborhoods to the hollowing out of large portions of the United States. Remote work has a chance to spread some of the wealth throughout the country and across different neighborhoods. This wiping out of $800B from already wealth-concentrated areas is a good thing.
a13o 3y ago
Everyone keeps calling them offices, but I used to work in them and they felt a lot more like code factories to me. Good riddance.
- colechristensen 3y ago
  Yeah, if I actually had an office I would probably be significantly more into the idea. Instead I was paid in the top whatever small percentile of workers and had, at best, a few feet in a couple of directions in a big open room where I spent a third of my life. Which is just... stupid capitalism. Degrading conditions until they are just above intolerable.
- spudlyo 3y ago
  When I started my career in the late 80s programmers had their own offices, which was great. Then in the 90s I largely worked in shared offices, which was still OK. By the late 90s everyone was working in cubicles, which was a step down, and I longed for the days of offices. Then, for me, in the teens it had seemed that everyone had converted to the open-plan hellscape we're all now familiar with, and I longed for the days of cubicles. Now since the pandemic, I work from my personal office at home, which is the absolute best, and I'm never going back.
deleted 3y ago
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dagaci 3y ago
Many city centers used to be a lot more varied and interesting (and depraved at nights) a few decades back. I guess its possible with falling rents they could become more interesting again.
- colechristensen 3y ago
  Yup, a whole lot of our "housing crises" are caused by stupid/greedy cities zoning for more commercial usage than residential and continuing to grow the disparity. If you actually kept them at a fixed ratio you wouldn't generate housing problems. Your commercial space would fill up and then be full, additional jobs wouldn't be added to your city until residential units were and companies would just have to go somewhere else when there wasn't space.
JoshTko 3y ago
"Remote work increases productivity by nearly a trillion dollars for businesses by reducing costly office space overhead costs" Should have been the title.
- voisin 3y ago
  It isn’t saving $800B in rent expense. That’s the property value which is around 14-20x the actual rental income.
Qwertious 3y ago
"Value" in this context meaning "prospective source of money". "Value" in normal context means something like "source of things that people actually want". If people choose not to use something the moment they have that option, then perhaps they never wanted it in the first place.
23B1 3y ago
I wonder who at McKinsey is studying both the tangible and intangible benefits of WFH.
cpdean 3y ago
Can you call it value when it's fundamentally rent-seeking? This wasn't value created, it was value extracted.
- charles_f 3y ago
  It was valuable for the person who extracted that rent, it will be less valuable. Therefore that value has disappeared from the market. At a societal level, rent payers will pay less, and shareholders will probably be delighted.
bipop5000 3y ago
This is what happens when urban planning goes wrong. In asian cities where most office buildings are zoned along with residential buildings and other types of buildings (shops, service providers etc) the office commercial property would just get converted to another type of commercial and possibly residential property and life moves on. An extreme example of this would be to have residential building type be almost identical to a commercial type which I have seen plenty of in south Asia. The problem in US is that when offices close down the entire city dies. The economic activity halves, it feels empty, creepy and unsafe. A lot of cities in the US exist to cater to the 9-5 office workers that relapse back to suburbs far from the city for anything other than work and some entertainment.
- jdjdjdhhd 3y ago
  > An extreme example of this would be to have residential building type be almost identical to a commercial type which I have seen plenty of in south Asia. I have seen this a lot too in the US... Usually a home gets converted to a business
- somsak2 3y ago
  it would be great if it were as simple as re zoning. unfortunately it's not so easy. https://www.nytimes.com/interactive/2023/03/11/upshot/office-conversions.html https://www.nytimes.com/interactive/2023/03/11/upshot/office...
cs702 3y ago
Keep in mind, this is coming from the same firm who told AT&T in the 1980's that mobile phones would be a niche market with only 0.9 million subscribers.[a] Truth is, no one knows with certainty whether office real-estate losses will be in the hundreds of billions or in the trillions of dollars. And then, there's the question of indirect, non-real-estate financial losses -- for example, by downtown shops, restaurants, and other establishments that cannot survive if offices remain half-empty for much longer. The indirect, non-real-estate losses may well dwarf the direct ones! All predictions about losses caused by remote work are little more than educated guesses at this point. --- [a] Sources: http://www.economist.com/node/246152 http://www.economist.com/node/246152 https://dealbook.nytimes.com/2013/09/02/in-a-new-book-mckinsey-co-isnt-all-roses/ https://dealbook.nytimes.com/2013/09/02/in-a-new-book-mckins... http://www.dtic.upf.edu/%7Ealozano/innovation/ http://www.dtic.upf.edu/%7Ealozano/innovation/
ClumsyPilot 3y ago
We've become more efficient as a society. We stopped wasting fuel, our time and wear and tear on cars. All that time and material can be spent on something productive. Instead headlines tell about value of offices. Maybe that value was not real. It only existed because someone with power over employees could force them to waste resources. It's a market failure.
- mycall 3y ago
  What are some examples of something more productive? Hobbies and family time?
  - loco5niner 3y ago
    Why is the question about being more productive? Yes, family time especially is important to me. I only get to spend 18 years or so with each kid; enjoying them, giving them love, and guiding them through/preparing them for life. I want to prioritize that. Some day, I'll give anything for the chance to have more time with them. Trying to keep that in mind while they are young.
  - commandar 3y ago
    Literally anything that isn't sitting in a car burning fuel if the same work can be accomplished without that use of time and resources. Commuting is an externalized cost that gets absorbed by workers, city infrastructure, and the environment.
  - doctorwho42 3y ago
    This is a failure of our understanding of value in our current culture, which we almost always equate to productivity. In a human society, agnostic of economics or politics, productivity would be the measure of ones ability to support their family unit , extended family, and community both in terms of physical support (food, clothing, shelter, child rearing, education, etc.) And emotionally support (cultural interactions, familiar interactions, social interactions). This is the fundamental nature of our social order, but with the advent and rise of modern American capitalism, everything must equate to a dollar amount. And that in a simple sense works for helping drive an economy, but in the complex sense of actual society - it devalues the foundational structures that make up human society.
bilekas 3y ago
And therein lies the push from big companies to force back-to-office working. I know from my previous company who are huge in the US who were very candid and honest about it saying they had signed several years worth of leasing and couldn't pull out of those contracts and basically the middle management didn't want to appear to have these expensive contracts on them when nobody was using the offices and the infrastructure that was also involved.
- thrill 3y ago
  Anyone who signs a contract without an exit process for which they've budgeted deserves the financial hit they're going to take.
osigurdson 3y ago
When something isn't needed, it tends to atrophy. It took us a long time to realize that offices are not needed when working only with information but it is undeniably the case. You can argue that it is somehow better when everyone is typing on keyboards and exchanging air pressure fluctuations in close physical proximity but you cannot argue it is necessary. Furthermore you cannot make any conclusive claims regarding the relative effectiveness of WFH vs WFO. You can, on the other hand, conclusively make claims that commuting is time/energy consuming while largely being an externality for most companies (as they do not have to pay for roads, cars, time, ambulances, carbon emissions, etc.). You can also make conclusive claims regarding lease costs, building maintenance, etc. Offices are plainly irrational from a first principles perspective.
revlolz 3y ago
I hate the framing of this. It's so click bait and sensational. Remote work isn't wiping it out. Decreased demand for office space, with a ton of supply on market, and owners wanting to make antiquated leasing agreements are ignoring the market/reality. They are refusing to adapt to modern needs are seeing easily anticipatable economic outcomes as the consequence. It's not simply "remote did this" when the problem is greedy investors can't cope and refactor. Their target market's core consumer (employees of their renters) have unequivocally made it clear they do not want to go into offices or be bound to failing cities just to please a company that will lay them off or not take care of them (use any of the dozens of reasons employees don't want to rto or be forcibly relocated anywhere). I don't feel a shred of pity for impacted businesses or investors if these offices just as I wouldn't feel sorry for an investment group pouring millions into horse infrastructure in the early days of the automobile.
kstrauser 3y ago
“Remote work saves businesses $800B.” There, fixed it.
dboreham 3y ago
This has taken such a long time to play out. It's been obvious to me since it became possible to physically move my computer out the office and take it home (c. 1990) that software development doesn't need to be done in a central building. Then when I worked in Silicon Valley in the late 90s, I did go into an office, but realized that 80% of the colleagues I interacted with were not in that office. They were either elsewhere on campus in other buildings, or in other countries. This, of course, facilitated by the internet that we were building at the time. So I moved to a location where I wanted to live, a long way from the office building. My employers' would ask that I travel to be "on site" from time to time. Fair enough, but after a few years of this I noticed that I was traveling to an empty office to have meetings where all the other participants were on the Polycom. So subsequently I only worked for clients who were mostly/fully remote. Next a pandemic, where everyone else adopts my work model. Everything's fine -- nobody is commuting and they can continue to do productive work while attending useless meetings remotely. Collaboration (aka "pair programming") is much easier thanks to remote screen sharing. Business relationships widen because nobody cares where anyone is located any more. Heck, supposedly the personal computer was invented in a garage (not an expensive office).
postalrat 3y ago
Chump change compared to the lost productivity.
benrapscallion 3y ago
Given the scale of their claim, do they have anything to lose if this is completely wrong? Or if it turns out to add $800B in value to the economy? /rhetorical question
Maro 3y ago
I've been working at an organization for 3 years that contracts McKinsey (and others, like BCG) frequently. Based on that experience, I automatically ignore everything coming out of these consultant companies.
glimshe 3y ago
"Office value" has zero benefit for society. Offices take living space away and high valuation leads to overcrowding, high rents for startups. The only people who want high office valuations are large real estate investors and hedge funds.
bvoq 3y ago
Let’s fucking gooo
dbg31415 3y ago
Pretty hard to feel sorry for these guys. They found a cheat code in capitalism and they're exploiting it. * Landlord: "I didn't have to increase the rent but I did it anyway. " : iamatotalpieceofshit || https://www.reddit.com/r/iamatotalpieceofshit/comments/14xope6/landlord_i_didnt_have_to_increase_the_rent_but_i/ https://www.reddit.com/r/iamatotalpieceofshit/comments/14xop...
ChrisArchitect 3y ago
More discussion from when this was news only 2 weeks ago: https://news.ycombinator.com/item?id=36704528 https://news.ycombinator.com/item?id=36704528
jabofh 3y ago
Good bloody riddance, in my opinion... Letting the workers escape their jails has not caused the collapse of western civilisation. At least not yet...
lost_tourist 3y ago
but how much more value does it bring to other places! It's a zero sum game, that money will go to boost other people's fortunes. It has helped the piece of mind of millions not to sit in traffic!

111 points by eatonphil 3y ago

Since the value was never created by the real estate investors themselves, honestly, who cares. Housing as a speculative asset is bad enough, let alone rewarding somebody trying to get rich off being a cubicle landlord.

kkfx 3y ago

I suggest a large reasoning: why big&powerful seems to want people back in offices? IMO the primary reason is their own economic model. Office means city. City means services. Services means profit for those who run them. If inflation keep going and there is not much space for the New Deal in cities, too dense to change, people get poorer, so try cheaper solution, meaning owning less, witch indirectly means using more services. Let's say some try to go to smaller apartments, then they have not much space for keep foods and cook at home, not much space to washing clothes at home, and that means services. No cars? Well, collective transportation service (improperly named public, since they are private companies in most of the cases) are there. They start to be toll free? Oh, someone pay, it does not matter if it's the transported human or the State. The point is that the SOLE way to realistically reach the famous "in 2030 you'll own nothing" is pushing people to total poverty and doing so without massive revolt means substituting what people loose with something else, services. In cities people can be impoverished while kept calm giving "aids" and services. Once their are trapped is just a matter of time to pushing services economical entry barrier a bit higher and de-facto imposing jobs people's can't refuse to earn enough to pay for all the services they need. If WFH became the norm, in the western countries where tertiary sector is largely dominating other jobs many people would go out of the city, looking for large homes in nice places, homes large enough to have a personal office per adult, at least, so they have also space for cars, for fridge, kitchen etc and since perhaps they are in an area not so well serving they would prefer some redundancy and they learn how to repair stuff and so on => they would value their properties and they do want to posses, not to lease, not to externalize, less services. Owning means also have valuable assets, witch means an economic reserve that allow for life changes without being so tied to a 24/7/365 jobs and services, they be less blackmailable than someone who own nothing and spend anything in services. Such ownership also means people less keen to relocate, witch means less easy reorganization of the society following some ruling class will. Then the rest. If the home will be the center of so many people lives, homeservers will be the norm, personal desktops as well, far less mobile devices and own hw means "hey, but it's cheaper than the cloud" and so a certain mentality shift also in the IT world toward a more decentralized computing, like we had in the past. Then large real estate owners who loose big money and so on, essentially MOST large big capitals will loose points. A middle class can flourish again. So? Well, they likely prefer pushing people in offices, allowing only some, the most skilled and useful, to be outside the smart city. No proof, but IMVHO that's what happening today.

pxue 3y ago

[flagged]

convolvatron 3y ago
Yes. However no one ever seems to show up with any counter arguments. Some people here miss going in.
- cmrdporcupine 3y ago
  I actually miss going in. But do not miss long commute. And do not like the poor selection of local employers. And will not be moving for them at this stage in my life -- I already did that in my 20s -- so have to make do with remote. But, I question any of the (esp local) employers now who are strictly hybrid or in-office only, because it tells me that -- among other reasons -- they're fine restricting their talent pool to what's in their immediate surroundings. That's fine in maybe a handful of locales where strong talent has traditionally congregated (Bay Area, maybe New York, London, a few places in Europe?). And so you have to ask the reason why? It's gotta be one of: work doesn't call for special talent (so likely not interesting, and I likely don't want to work there). Or work doesn't pay competitive (so I don't want to work there). Or they feel they need to be looking over the shoulder of their staff (I likely don't want to work there.) So a bit of an acid test, really.
- pxue 3y ago
  At least here in Toronto (linked article is Bloomberg Canada), banks (minus tech department) are back to office 5 days a week. I just feel like outside of tech, wfh isn't much of a debate.

WirelessGigabit 3y ago

I refuse to be miserable in an office just for someone else's building value.

CyberDildonics 3y ago
No one is asking you to come into an office just to boost their landlord's property values. That would be a money losing proposition for the company.
- jacknews 3y ago
  Indeed they're not asking ...
  - CyberDildonics 3y ago
    If a company wants someone to come back to the office, it isn't for their landlord's property value. If they have lots of free space they can sublease it out, it doesn't make any sense to force people in to an office just to burn money and miss out on revenue.
    - PartiallyTyped 3y ago
      That’s not true. Companies get tax breaks when opening offices and warehouses / factories from local authorities and landlords have quite the sway with the latter.
    - lotsofpulp 3y ago
      What if the leaders of the company, or company itself, is invested in similar properties?
      - voisin 3y ago
        Do you have any data to show how prevalent this is? I suspect worker retirement plans have more exposure than leaders of companies, and it seems only the largest, most stable and slower growing companies own their own real estate.

HPsquared 3y ago

One man's value is another man's cost.

brvsft 3y ago
Yeah, why isn't the headline Remote Work to Save $800B on Office Rent?
- BigJono 3y ago
  Target audience. 3 cafes have popped up within walking distance of my house in the past 5 years and they all seem to be going strong. I doubt any of the owners give a flying fuck what Bloomberg has to say about office rents lol.

CBarkleyU 3y ago

Alternative title by me: Remote work frees up $800b to be spent more effectively.

mastax 3y ago
When the paper value of an asset disappears you don't get the money back to spend elsewhere. Nobody does. Just like lending creates money, destruction of assets destroys money. Which happens to be what we want right now, as long as it can be done in an orderly fashion.
- stjohnswarts 3y ago
  That capital that would have been spent by real estate owners can now be spent by the company for pay raises, putting it into other investments, etc. Capitalism is a rough business and lots of winners and losers. Why am I supposed to feel sorry for these real estate guys? They never came to my aid when I got laid off in the past.
- SeanLuke 3y ago
  > Just like lending creates money, destruction of assets destroys money. Lending creates money? Banks can just, poof, will it into existence? Correpondingly, asset destruction destroys money? Like someone literally is setting fire to it? This is nonsense.
  - zeroonetwothree 3y ago
    Fractional reserve lending does create money.
    - xw4002 3y ago
      I suppose when we say these things we should say, fractional reserve lending creates some money. Otherwise one can get the impression that banks can create as much money as they want, which they can’t.
  - 3y ago

jacknews 3y ago

"Remote work risks wiping $800 billion" No guesses which angle this is coming from. "Attendance still is 30% lower than what it was before the pandemic and only 37% of people are back at the office every day." And yet the world has not stopped. In fact everything seems to be going faster than ever.

traceroute66 3y ago
> And yet the world has not stopped. In fact everything seems to be going faster than ever. Indeed. I know many people who used to religiously go to the office 5-days a week. The only time they were not in the office was when they were on holiday or they were sick. It's what they did for their entire working lives. And in some cases it's what "custom and practice" historically dictated in their industry, e.g. those working in the financial sector. The pandemic forced their hand. And now my unscientific sample would suggest 80-90% of them now only go to the office for client meetings. Most weeks they don't go at all, or maybe they pop-in for a couple of hours on their way somewhere else. There is the occasional week where they do a full-day in the office for one or two days. But nobody I know is anywhere near the old 5-days a week regime. Employers attempting to force (or, if we're being polite "strongly encourage") people to return 5-days a week are playing a loosing game. The future is now and the future is hybrid or fully-remote for 99% of jobs. There are very few jobs out there that genuinely need you to be in a different building 5-days a week to do your job.
- chmod600 3y ago
  "The future is now and the future is hybrid or fully-remote for 99% of jobs." I assume you mean for 99% of office jobs.
  - devilbunny 3y ago
    Yeah, you can't be anything blue-collar remotely. As well as jobs like healthcare. Lots of jobs still require you to physically interact with people or things.

brightball 3y ago

I believe it. It's also going to lead to much more developed suburbs IMO. When you don't have to travel into a city, it's a much less compelling argument to live in one. I think we're all going to find out that the inflated costs of living that are regularly discussed on here are more a result of people being forced to move to these cities than NIMBYism that's it has often been attributed too. Some people like the idea of moving for work, but I have to imagine that many would prefer to stay closer to their families. This only gets more pronounced when you have kids, especially young kids. Every mainstream issue that is talked about from parental leave to child care cost is amplified because so many people have moved away from their own parents for work. My in-laws moved near us when our oldest was 7 years old and the before and after was life changing in how much easier it made everything. I greatly prefer space and trees to the alternatives.

carlosjobim 3y ago
Property "values" are extremely inflated in the countryside as well, that's why people move to the cities to work in the first place, because they can get better paid there. The average person born in a rural area has a really hard time affording a place to live there, unless they get help from the landed gentry (usually their parents) - no matter how hard he or she works. Meanwhile, somebody born into rural property will never have to work in their entire life, unless they prefer to. They can rent out productive land, or sell it in small pieces to people who work. And this they can do for generations.

Kapura 3y ago

The building i currently live in is a 20+ storey apartment block that was made out of a converted office building built in the 60s. Given the housing prices in [checks notes] cities, it feels like a wave of residentializing is on the horizon.

lacrimacida 3y ago
Whats the layout like? Many office spaces are hard to partition into housing due to not having enough natural lighting, plumbing and other building infra that is built with offices in mind…
jayski 3y ago
Not an expert but I've read it's not easy to add all the necessary plumbing to provide showers and toilets if you redistribute office space into apartments. A lot of times office buildings will have one large bathroom per floor.
- HWR_14 3y ago
  There was a time when many of us on this board lived in buildings without personal bathrooms and only shared facilities. Dorm style housing could work.
  - op00to 3y ago
    For who?
    - navane 3y ago
      For the Millennials with proper jobs that never could buy a house, still live at their parents, and are inclined to communal ideas that lower the impact of individuals on their environments.
  - zeroonetwothree 3y ago
    Once you are 30+ and have a family it becomes much less acceptable

ksec 3y ago

How many of those in SF, London, and NY were due to other issues such as company moving out of the city rather than WFH.

ss1996 3y ago

Good. Remote work leads to better distribution of wealth (w. r. t. geography). That's almost always a good thing.

bravetraveler 3y ago

It only took about two decades, I remember first hearing about WFH around the turn of the century Good riddance IMO

xg15 3y ago
Two decades and a pandemic and even then companies are fighting tooth and nail against keeping the (new) status quo. So much for progress...

londons_explore 3y ago

What amazes me is that we didn't see a faster cratering in value in office space. On any given day in any capital city, perhaps 50% of office desks sit empty. Yet I can't buy an office building for cents on the dollar. Normally when supply far exceeds demand like this, companies owning those assets can't pay their bills, the building is sold, there are no buyers, auction prices crash, the crashing prices cause more companies to go underwater, those buildings are sold too, and there is a big wipeout of all leveraged property owners. Rent and purchase prices prices for office buildings fall 70%, encouraging other uses of the buildings (retail, residential, industrial), and they end up full again. But for some reason that isn't happening. 3 years later, and still more office desks are empty than full in most capital cities.

mpalmer 3y ago
It's like the lead up to the mortgage crisis, except the reluctance to price the asset at its true value is plain for everyone to see.
dsr_ 3y ago
Typical business leases were 5-10 years. If you weren't willing to commit to 5 years in 2018, nobody owning a building in a major CBD wanted to see you. You could get sublets from businesses that wanted to recoup costs while moving to a bigger space, or space at the fringes or outside of the CBD. The leases are just starting to run out.
- cma 3y ago
  But they didn't all or even near a majority start the lease in 2018.
- londons_explore 3y ago
  Plenty of leases have already expired. Yet it seems landlords would prefer to leave a building empty than to lease it for a low rent. Somehow the usual rules of supply and demand don't seem to be applying.
  - 3y ago

otachack 3y ago

Costs will be appended to the workers. I hope we all realize someday how working from home applies further wear & tear to our amenities and homes compared to the office's. Think toilets, sinks, fridges, chairs, doors, floors, etc. I fully advocate for WFH regardless and to even supplement with an option like DeskPass for those that want to take a break from home. But a portion of those former office costs should go to the workers.

threetonesun 3y ago
Assuming the alternative involves driving the costs associated with being at home are still heavily in your and society's favor.
sottol 3y ago
Yes, but so do the costs of the commute. How much wear and tear is that 55min/41 mile commute on the worker's car - or more rarely how much does that train/bus ticket cost monthly? Some of the cost is always borne by the workers. And most people don't realize just how expensive wear and tear on a car is (or just owning one to get to work independent of wear and tear). Personally, I'd take the wear and tear on the house over time lost commuting.
lacrimacida 3y ago
Id say that it’s insignificant. Moreover one can write off office equipment. The stress and wear on daily transportation to and from offices is far more significant at that: wasted time, energy, pollution.
arrrg 3y ago
Time and flexibility is worth much, much more to me. I agree that employers should pay for adequate equipment (desk, chair, additional monitors, a great camera and headset, not just the laptop). A reasonable sum of money for mortage/rent and utilities should also be considered. Though be careful what you wish for. One of the advantages of home office is that commuting time is not paid (with the somewhat reasonable justification that people can freely pick where they live and it’s not the employer’s job to subsidize those living far away). I think if those at home get something for the additional rent/mortage and utility use then those commuting should also get something for their commute time and lost flexibility. So in the end that comes to me out in a wash and I’m generally fine with no one getting anything.

RcouF1uZ4gsC 3y ago

Aren’t we for reducing inequality and spreading the wealth? The concentration of these massive amounts of wealth in Silicon Valley and NYC is the driver of a whole lot of pathologies from the high cost of housing to homelessness to gentrification of historical neighborhoods to the hollowing out of large portions of the United States. Remote work has a chance to spread some of the wealth throughout the country and across different neighborhoods. This wiping out of $800B from already wealth-concentrated areas is a good thing.

a13o 3y ago

Everyone keeps calling them offices, but I used to work in them and they felt a lot more like code factories to me. Good riddance.

colechristensen 3y ago
Yeah, if I actually had an office I would probably be significantly more into the idea. Instead I was paid in the top whatever small percentile of workers and had, at best, a few feet in a couple of directions in a big open room where I spent a third of my life. Which is just... stupid capitalism. Degrading conditions until they are just above intolerable.
spudlyo 3y ago
When I started my career in the late 80s programmers had their own offices, which was great. Then in the 90s I largely worked in shared offices, which was still OK. By the late 90s everyone was working in cubicles, which was a step down, and I longed for the days of offices. Then, for me, in the teens it had seemed that everyone had converted to the open-plan hellscape we're all now familiar with, and I longed for the days of cubicles. Now since the pandemic, I work from my personal office at home, which is the absolute best, and I'm never going back.

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dagaci 3y ago

Many city centers used to be a lot more varied and interesting (and depraved at nights) a few decades back. I guess its possible with falling rents they could become more interesting again.

colechristensen 3y ago
Yup, a whole lot of our "housing crises" are caused by stupid/greedy cities zoning for more commercial usage than residential and continuing to grow the disparity. If you actually kept them at a fixed ratio you wouldn't generate housing problems. Your commercial space would fill up and then be full, additional jobs wouldn't be added to your city until residential units were and companies would just have to go somewhere else when there wasn't space.

JoshTko 3y ago

"Remote work increases productivity by nearly a trillion dollars for businesses by reducing costly office space overhead costs" Should have been the title.

voisin 3y ago
It isn’t saving $800B in rent expense. That’s the property value which is around 14-20x the actual rental income.

Qwertious 3y ago

"Value" in this context meaning "prospective source of money". "Value" in normal context means something like "source of things that people actually want". If people choose not to use something the moment they have that option, then perhaps they never wanted it in the first place.

23B1 3y ago

I wonder who at McKinsey is studying both the tangible and intangible benefits of WFH.

cpdean 3y ago

Can you call it value when it's fundamentally rent-seeking? This wasn't value created, it was value extracted.

charles_f 3y ago
It was valuable for the person who extracted that rent, it will be less valuable. Therefore that value has disappeared from the market. At a societal level, rent payers will pay less, and shareholders will probably be delighted.

bipop5000 3y ago

This is what happens when urban planning goes wrong. In asian cities where most office buildings are zoned along with residential buildings and other types of buildings (shops, service providers etc) the office commercial property would just get converted to another type of commercial and possibly residential property and life moves on. An extreme example of this would be to have residential building type be almost identical to a commercial type which I have seen plenty of in south Asia. The problem in US is that when offices close down the entire city dies. The economic activity halves, it feels empty, creepy and unsafe. A lot of cities in the US exist to cater to the 9-5 office workers that relapse back to suburbs far from the city for anything other than work and some entertainment.

jdjdjdhhd 3y ago
> An extreme example of this would be to have residential building type be almost identical to a commercial type which I have seen plenty of in south Asia. I have seen this a lot too in the US... Usually a home gets converted to a business
somsak2 3y ago
it would be great if it were as simple as re zoning. unfortunately it's not so easy. https://www.nytimes.com/interactive/2023/03/11/upshot/office-conversions.html https://www.nytimes.com/interactive/2023/03/11/upshot/office...

cs702 3y ago

Keep in mind, this is coming from the same firm who told AT&T in the 1980's that mobile phones would be a niche market with only 0.9 million subscribers.[a] Truth is, no one knows with certainty whether office real-estate losses will be in the hundreds of billions or in the trillions of dollars. And then, there's the question of indirect, non-real-estate financial losses -- for example, by downtown shops, restaurants, and other establishments that cannot survive if offices remain half-empty for much longer. The indirect, non-real-estate losses may well dwarf the direct ones! All predictions about losses caused by remote work are little more than educated guesses at this point. --- [a] Sources: http://www.economist.com/node/246152 http://www.economist.com/node/246152 https://dealbook.nytimes.com/2013/09/02/in-a-new-book-mckinsey-co-isnt-all-roses/ https://dealbook.nytimes.com/2013/09/02/in-a-new-book-mckins... http://www.dtic.upf.edu/%7Ealozano/innovation/ http://www.dtic.upf.edu/%7Ealozano/innovation/

ClumsyPilot 3y ago

We've become more efficient as a society. We stopped wasting fuel, our time and wear and tear on cars. All that time and material can be spent on something productive. Instead headlines tell about value of offices. Maybe that value was not real. It only existed because someone with power over employees could force them to waste resources. It's a market failure.

mycall 3y ago
What are some examples of something more productive? Hobbies and family time?
- loco5niner 3y ago
  Why is the question about being more productive? Yes, family time especially is important to me. I only get to spend 18 years or so with each kid; enjoying them, giving them love, and guiding them through/preparing them for life. I want to prioritize that. Some day, I'll give anything for the chance to have more time with them. Trying to keep that in mind while they are young.
- commandar 3y ago
  Literally anything that isn't sitting in a car burning fuel if the same work can be accomplished without that use of time and resources. Commuting is an externalized cost that gets absorbed by workers, city infrastructure, and the environment.
- doctorwho42 3y ago
  This is a failure of our understanding of value in our current culture, which we almost always equate to productivity. In a human society, agnostic of economics or politics, productivity would be the measure of ones ability to support their family unit , extended family, and community both in terms of physical support (food, clothing, shelter, child rearing, education, etc.) And emotionally support (cultural interactions, familiar interactions, social interactions). This is the fundamental nature of our social order, but with the advent and rise of modern American capitalism, everything must equate to a dollar amount. And that in a simple sense works for helping drive an economy, but in the complex sense of actual society - it devalues the foundational structures that make up human society.

bilekas 3y ago

And therein lies the push from big companies to force back-to-office working. I know from my previous company who are huge in the US who were very candid and honest about it saying they had signed several years worth of leasing and couldn't pull out of those contracts and basically the middle management didn't want to appear to have these expensive contracts on them when nobody was using the offices and the infrastructure that was also involved.

thrill 3y ago
Anyone who signs a contract without an exit process for which they've budgeted deserves the financial hit they're going to take.

osigurdson 3y ago

When something isn't needed, it tends to atrophy. It took us a long time to realize that offices are not needed when working only with information but it is undeniably the case. You can argue that it is somehow better when everyone is typing on keyboards and exchanging air pressure fluctuations in close physical proximity but you cannot argue it is necessary. Furthermore you cannot make any conclusive claims regarding the relative effectiveness of WFH vs WFO. You can, on the other hand, conclusively make claims that commuting is time/energy consuming while largely being an externality for most companies (as they do not have to pay for roads, cars, time, ambulances, carbon emissions, etc.). You can also make conclusive claims regarding lease costs, building maintenance, etc. Offices are plainly irrational from a first principles perspective.

revlolz 3y ago

I hate the framing of this. It's so click bait and sensational. Remote work isn't wiping it out. Decreased demand for office space, with a ton of supply on market, and owners wanting to make antiquated leasing agreements are ignoring the market/reality. They are refusing to adapt to modern needs are seeing easily anticipatable economic outcomes as the consequence. It's not simply "remote did this" when the problem is greedy investors can't cope and refactor. Their target market's core consumer (employees of their renters) have unequivocally made it clear they do not want to go into offices or be bound to failing cities just to please a company that will lay them off or not take care of them (use any of the dozens of reasons employees don't want to rto or be forcibly relocated anywhere). I don't feel a shred of pity for impacted businesses or investors if these offices just as I wouldn't feel sorry for an investment group pouring millions into horse infrastructure in the early days of the automobile.

kstrauser 3y ago

“Remote work saves businesses $800B.” There, fixed it.

dboreham 3y ago

This has taken such a long time to play out. It's been obvious to me since it became possible to physically move my computer out the office and take it home (c. 1990) that software development doesn't need to be done in a central building. Then when I worked in Silicon Valley in the late 90s, I did go into an office, but realized that 80% of the colleagues I interacted with were not in that office. They were either elsewhere on campus in other buildings, or in other countries. This, of course, facilitated by the internet that we were building at the time. So I moved to a location where I wanted to live, a long way from the office building. My employers' would ask that I travel to be "on site" from time to time. Fair enough, but after a few years of this I noticed that I was traveling to an empty office to have meetings where all the other participants were on the Polycom. So subsequently I only worked for clients who were mostly/fully remote. Next a pandemic, where everyone else adopts my work model. Everything's fine -- nobody is commuting and they can continue to do productive work while attending useless meetings remotely. Collaboration (aka "pair programming") is much easier thanks to remote screen sharing. Business relationships widen because nobody cares where anyone is located any more. Heck, supposedly the personal computer was invented in a garage (not an expensive office).

postalrat 3y ago

Chump change compared to the lost productivity.

benrapscallion 3y ago

Given the scale of their claim, do they have anything to lose if this is completely wrong? Or if it turns out to add $800B in value to the economy? /rhetorical question

Maro 3y ago

I've been working at an organization for 3 years that contracts McKinsey (and others, like BCG) frequently. Based on that experience, I automatically ignore everything coming out of these consultant companies.

glimshe 3y ago

"Office value" has zero benefit for society. Offices take living space away and high valuation leads to overcrowding, high rents for startups. The only people who want high office valuations are large real estate investors and hedge funds.

bvoq 3y ago

Let’s fucking gooo

dbg31415 3y ago

Pretty hard to feel sorry for these guys. They found a cheat code in capitalism and they're exploiting it. * Landlord: "I didn't have to increase the rent but I did it anyway. " : iamatotalpieceofshit || https://www.reddit.com/r/iamatotalpieceofshit/comments/14xope6/landlord_i_didnt_have_to_increase_the_rent_but_i/ https://www.reddit.com/r/iamatotalpieceofshit/comments/14xop...

ChrisArchitect 3y ago

More discussion from when this was news only 2 weeks ago: https://news.ycombinator.com/item?id=36704528 https://news.ycombinator.com/item?id=36704528

jabofh 3y ago

Good bloody riddance, in my opinion... Letting the workers escape their jails has not caused the collapse of western civilisation. At least not yet...

lost_tourist 3y ago

but how much more value does it bring to other places! It's a zero sum game, that money will go to boost other people's fortunes. It has helped the piece of mind of millions not to sit in traffic!