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A business is stuck paying for that lease regardless of how many butts are in seats in it. That is a fixed sunk cost they can't do anything about. However, eve

A business is stuck paying for that lease regardless of how many butts are in seats in it. That is a fixed sunk cost they can't do anything about. However, every employee not in the office isn't using office pens, putting wear on office furniture that will need replacement, filling office trash cans that need to be emptied by someone, burning out office light fixtures that need to be replaced, and using office toilet paper that will need replenishment. Bringing them back to the office doesn't make the lease any cheaper, but it does make operating the space more expensive.

Clubber 3y ago
>A business is stuck paying for that lease regardless of how many butts are in seats in it. That is a fixed sunk cost they can't do anything about. There's usually a break lease clause in most contracts, no? I would imagine breaking leases is pretty common in business real estate.
- Libcat99 3y ago
  In many cases, yes, and in that case it would make more sense to break the lease than to bring employees back to the office.
- tzs 3y ago
  From what I've read the majority of commercial leases do not have anything covering breaking the lease, so it defaults to whatever state law says happens when there is no prior agreement. That commonly says that (1) the landlord must try to find another tenant, and (2) the leaving tenant has to continue paying until that happens or they reach the end of the lease. Trying to find another tenant does not mean that the landlord has to take any extraordinary actions to do so. They just have to list the property as available and show it to people who show interest, just like they would with any other empty property they have. Thus, it comes down to what the market is like. E.g., when I moved from Seattle I broke a lease, but my apartment was next to the University of Washington. There are always people looking for apartments next to UW so the landlord easily found another tenant. A lot of cities right now have a glut of commercial office space available, with listings staying open for months or years. Someone breaking a lease on office space in such a city would likely finding themselves having to pay to the end of lease.
RA_Fisher 3y ago
Exactly. Continuing with the lease would be a classic case of sunk cost fallacy.
leoedin 3y ago
Also I've heard many stories of people leveraging return to office policies for raises. If an important and productive team-member says "cover my increased costs or I'm leaving" then most managers who have the discretion to pay that person more will. Managers don't want their good employees to quit. Maybe large corporations aren't taking that cost into account, but they probably should. Ultimately though, I suspect return-to-office policies are not driven by current financials at all. They're driven by the emotions of senior management. Probably a combination of feelings - concern that they can't see their employees, fear (whether founded or not) that remote work is less productive, fear that some employees are doing no work and getting away with it, desire to impress someone higher up the tree who cares about presenteeism - just the usual stuff that drives big corporate decision making.

Clubber 3y ago

>A business is stuck paying for that lease regardless of how many butts are in seats in it. That is a fixed sunk cost they can't do anything about. There's usually a break lease clause in most contracts, no? I would imagine breaking leases is pretty common in business real estate.

Libcat99 3y ago
In many cases, yes, and in that case it would make more sense to break the lease than to bring employees back to the office.
tzs 3y ago
From what I've read the majority of commercial leases do not have anything covering breaking the lease, so it defaults to whatever state law says happens when there is no prior agreement. That commonly says that (1) the landlord must try to find another tenant, and (2) the leaving tenant has to continue paying until that happens or they reach the end of the lease. Trying to find another tenant does not mean that the landlord has to take any extraordinary actions to do so. They just have to list the property as available and show it to people who show interest, just like they would with any other empty property they have. Thus, it comes down to what the market is like. E.g., when I moved from Seattle I broke a lease, but my apartment was next to the University of Washington. There are always people looking for apartments next to UW so the landlord easily found another tenant. A lot of cities right now have a glut of commercial office space available, with listings staying open for months or years. Someone breaking a lease on office space in such a city would likely finding themselves having to pay to the end of lease.

RA_Fisher 3y ago

Exactly. Continuing with the lease would be a classic case of sunk cost fallacy.

leoedin 3y ago

Also I've heard many stories of people leveraging return to office policies for raises. If an important and productive team-member says "cover my increased costs or I'm leaving" then most managers who have the discretion to pay that person more will. Managers don't want their good employees to quit. Maybe large corporations aren't taking that cost into account, but they probably should. Ultimately though, I suspect return-to-office policies are not driven by current financials at all. They're driven by the emotions of senior management. Probably a combination of feelings - concern that they can't see their employees, fear (whether founded or not) that remote work is less productive, fear that some employees are doing no work and getting away with it, desire to impress someone higher up the tree who cares about presenteeism - just the usual stuff that drives big corporate decision making.