5 ms·

Not just worldview... there's a lot of money at stake. Providing office space is effectively an entire industry, so an entire industry is at stake here. And the

by jerf 3y ago

Not just worldview... there's a lot of money at stake. Providing office space is effectively an entire industry, so an entire industry is at stake here. And then that industry has financial derivatives on top of it, so the financial industry has a lot of incentive to get people back in offices so supply goes down and prices can go back up. There's a lot of money available to PR-submarine articles about the virtues of back-to-office. I'm surprised we don't see much, much more.

Workaccount2 3y ago
This take is so common and so bizarre to me. Executives at companies do not give a fuck about the landlords of their buildings. It's an annoying expense that they complain about. They idea that they are working together to make sure the real estate firm has a tenant is so hilariously detached. It's akin to saying that apartment renters care immensely about their landlords to the point of going out of their way to keep paying them rent. Its a total and complete fiction.
- dataduck 3y ago
  No, it's akin to saying landlords care about the occupancy of their buildings and their tenants paying rent. Of course they do, and of course they're prepared to use media influence to try and make that happen.
  - Workaccount2 3y ago
    Of course they care. But no tenant really cares that they care. Execs will look at the numbers. Renting is very expensive and eats up a large chunk revenue. So if you are going to keep paying rent and maintaining an office, you better have a good explanation for investors other than "Our landlord will be upset". I'm sure plenty of CEOs are falling over themselves to mislead the board on rental costs so that they can protect their 2% portfolio stake in some random commercial REIT. Totally logical here.... /s
- chownie 3y ago
  ‎
  - Workaccount2 3y ago
    We are just increasing to detachment to think that executives carry large (if any at all) stakes in their landlord's company (or even commercial reit in general.) So much so that spending $100,000/mo from their own company (which they likely have a lot of equity) makes more sense than not renewing the lease. Guys. Please. There are many reasons why a company would want to RTO. Being in cahoots with the real estate industry is not it.
- surajrmal 3y ago
  Some companies own the buildings they operate out of rather than lease them, but I think that's less common. So your point largely stands.
- david927 3y ago
  No, but they care about their company and their stock price. And the collapse of commercial real estate, especially in large cities, is an economic tsunami so big that it's terrifying. Go to downtown SF and walk around. It's a ghost town. When is it coming back? What if the answer is not for a very long time. And it's not just the big cities, even in smaller towns, law offices, etc. are still sitting empty since the pandemic. It's a huge, huge problem. And when that impact hits, it will affect every business. Those executives and many others know that. They're standing on the beach with the water out, knowing what's coming but helpless to stop it. But they're trying. Of course they're trying.
  - Workaccount2 3y ago
    If execs cared about the macro economy they would simply pay their workers more. But they don't, they care about their company. They are hired, paid, and legally obligated to act in the best interest of the company. Not the country.
- tessierashpool 3y ago
  Executives at companies do not give a fuck about the landlords of their buildings. It's an annoying expense that they complain about. you spend $2B on a brand new office campus. you work directly with the architects and talk about how this new campus will create a great place for your employees to work. and then you have the humility and wisdom to throw all that away? even though everybody at the company knows that this is the big project you spent billions of dollars on? the money that companies spend on their offices is a commitment that an executive makes. keeping their commitments and persuading other people to buy in to those commitments is one of the biggest parts of the job if you're an executive. another very big piece is making sure that the assets on your balance sheet don't turn into liabilities. This take is so common and so bizarre to me. so take the time to think it through and understand it. commercial leases are 10-year leases. when an executive makes a 10-year commitment, they have spent energy to convince others to make the same commitment, and they are committed to spending more energy on it as well.
  - ghaff 3y ago
    That is not your typical company though. The typical company is leasing pretty cookie cutter office space in an office park or downtown. And many of those companies are not renewing many of their leases as they come up.
- BowBun 3y ago
  I think you missed the point. It isn't the CEO who cares about the specific building they're in. It's people like the Blackrock CEO on who massive amounts of investors (and by extension your retirement portfolio) depend on. Or the people who own the newspapers depending on a healthy economy, of which a huge percentage is commercial real estate. Or, as GP said, these basically-oligarchs that sit on a few boards and can steer CEOs to make nonsensical return-to-office plans to advance their investment strategies and view of how the world should work. It's a lot bigger than a single tenant in a single office.
- naasking 3y ago
  > This take is so common and so bizarre to me. Executives at companies do not give a fuck about the landlords of their buildings. I don't think you have the right framing. Investors diversify, and so the set of investors and board members in your company that are invested in commercial real estate is non-zero, and arguably non-negligible. The set of investors and board members that have some stake in work from home is considerably smaller, possibly zero. This is a clear bias that acts as a non-negligible incentive on CEOs to push a return to office. Everyone in this scenario is working in their own self-interest.
- jerf 3y ago
  Well, if you run on the assumption that consumers are the ones with lots of ad spend for things, you would be confused, yes. Why would consumers run ads for things indeed? Obviously it is the producers of the good who have the ad spend money for submarine PR, just as it is everywhere else.
NoMoreNicksLeft 3y ago
> Providing office space is effectively an entire industry, so a But using office space costs companies money, and they're not the ones leasing it. It is totally against their own interests to pay extra facilities costs, when they could just shirk that burden onto their employees who have to pay for a home office themselves. We're not seeing big real estate companies push this while big tech companies try to distance themselves from it and disavow it. And as for the theory that mutual funds and whatnot are pushing it... it just seems like an opportunity for them to short this crap and make money sabotaging real estate. The more I think about this, the more it seems like something really bizarre is going on.
- asdajksah2123 3y ago
  > The more I think about this, the more it seems like something really bizarre is going on. That's only because people refuse to accept the obvious. Executives, whether correctly or wrongly, genuinely believe having employees colocated in the same geographical space is beneficial for their companies. It's not even such a stretch to imagine this because we absolutely know they believed this before the pandemic. In fact, most SV companies were willing to pay employees located elsewhere huge sums of money to move to the Bay Area.
  - vidarh 3y ago
    Or executives believe it is beneficial for themselves. I've seen plenty of managers over the year manage by "perceived busy-ness", and managers who liked walking the floor and to get a feel for whether people are busy have to actually do real work to check when people work from home. Or execs are more likely to be extroverts who like their job because it provides an opportunity for them to be at the centre of a group of people. Or enough board members are also on the boards of companies that make a living from commercial real estate. There are many options, and many of them can be true to various degrees at the same time. When you fundamentally change a balance of anything you're likely to run into all kinds of odd entrenched interests you may never have thought about, in part because many of them may never have needed to assert themselves before.
vitaflo 3y ago
Don’t forget the local economies that provide services for workers in those offices. My local city has given big tax breaks to companies to get people back to work because the business around those companies are having a hard time with everyone sitting at home. Entire economies were built on top of office spaces and that upends a lot of things when they go away.
- ge0ffclapp 3y ago
  The world needs less gas stations, fast food, and sprawl in general. Lots of businesses are doing fine where I live and there are a ton of empty office parks.
- no_wizard 3y ago
  I say let it upend. Shifts aren't easy, but they are needed. It would do the world long term good to let this play out on its own rather than having government intervention (or corporate intervention, for that matter, let employees win for once)
  - Spivak 3y ago
    Let it upend and then build housing atop the rubble. People who live there will be spending money too.

by jerf 3y ago

Workaccount2 3y ago

This take is so common and so bizarre to me. Executives at companies do not give a fuck about the landlords of their buildings. It's an annoying expense that they complain about. They idea that they are working together to make sure the real estate firm has a tenant is so hilariously detached. It's akin to saying that apartment renters care immensely about their landlords to the point of going out of their way to keep paying them rent. Its a total and complete fiction.

dataduck 3y ago
No, it's akin to saying landlords care about the occupancy of their buildings and their tenants paying rent. Of course they do, and of course they're prepared to use media influence to try and make that happen.
- Workaccount2 3y ago
  Of course they care. But no tenant really cares that they care. Execs will look at the numbers. Renting is very expensive and eats up a large chunk revenue. So if you are going to keep paying rent and maintaining an office, you better have a good explanation for investors other than "Our landlord will be upset". I'm sure plenty of CEOs are falling over themselves to mislead the board on rental costs so that they can protect their 2% portfolio stake in some random commercial REIT. Totally logical here.... /s
chownie 3y ago
‎
- Workaccount2 3y ago
  We are just increasing to detachment to think that executives carry large (if any at all) stakes in their landlord's company (or even commercial reit in general.) So much so that spending $100,000/mo from their own company (which they likely have a lot of equity) makes more sense than not renewing the lease. Guys. Please. There are many reasons why a company would want to RTO. Being in cahoots with the real estate industry is not it.
surajrmal 3y ago
Some companies own the buildings they operate out of rather than lease them, but I think that's less common. So your point largely stands.
david927 3y ago
No, but they care about their company and their stock price. And the collapse of commercial real estate, especially in large cities, is an economic tsunami so big that it's terrifying. Go to downtown SF and walk around. It's a ghost town. When is it coming back? What if the answer is not for a very long time. And it's not just the big cities, even in smaller towns, law offices, etc. are still sitting empty since the pandemic. It's a huge, huge problem. And when that impact hits, it will affect every business. Those executives and many others know that. They're standing on the beach with the water out, knowing what's coming but helpless to stop it. But they're trying. Of course they're trying.
- Workaccount2 3y ago
  If execs cared about the macro economy they would simply pay their workers more. But they don't, they care about their company. They are hired, paid, and legally obligated to act in the best interest of the company. Not the country.
tessierashpool 3y ago
Executives at companies do not give a fuck about the landlords of their buildings. It's an annoying expense that they complain about. you spend $2B on a brand new office campus. you work directly with the architects and talk about how this new campus will create a great place for your employees to work. and then you have the humility and wisdom to throw all that away? even though everybody at the company knows that this is the big project you spent billions of dollars on? the money that companies spend on their offices is a commitment that an executive makes. keeping their commitments and persuading other people to buy in to those commitments is one of the biggest parts of the job if you're an executive. another very big piece is making sure that the assets on your balance sheet don't turn into liabilities. This take is so common and so bizarre to me. so take the time to think it through and understand it. commercial leases are 10-year leases. when an executive makes a 10-year commitment, they have spent energy to convince others to make the same commitment, and they are committed to spending more energy on it as well.
- ghaff 3y ago
  That is not your typical company though. The typical company is leasing pretty cookie cutter office space in an office park or downtown. And many of those companies are not renewing many of their leases as they come up.
BowBun 3y ago
I think you missed the point. It isn't the CEO who cares about the specific building they're in. It's people like the Blackrock CEO on who massive amounts of investors (and by extension your retirement portfolio) depend on. Or the people who own the newspapers depending on a healthy economy, of which a huge percentage is commercial real estate. Or, as GP said, these basically-oligarchs that sit on a few boards and can steer CEOs to make nonsensical return-to-office plans to advance their investment strategies and view of how the world should work. It's a lot bigger than a single tenant in a single office.
naasking 3y ago
> This take is so common and so bizarre to me. Executives at companies do not give a fuck about the landlords of their buildings. I don't think you have the right framing. Investors diversify, and so the set of investors and board members in your company that are invested in commercial real estate is non-zero, and arguably non-negligible. The set of investors and board members that have some stake in work from home is considerably smaller, possibly zero. This is a clear bias that acts as a non-negligible incentive on CEOs to push a return to office. Everyone in this scenario is working in their own self-interest.
jerf 3y ago
Well, if you run on the assumption that consumers are the ones with lots of ad spend for things, you would be confused, yes. Why would consumers run ads for things indeed? Obviously it is the producers of the good who have the ad spend money for submarine PR, just as it is everywhere else.

NoMoreNicksLeft 3y ago

> Providing office space is effectively an entire industry, so a But using office space costs companies money, and they're not the ones leasing it. It is totally against their own interests to pay extra facilities costs, when they could just shirk that burden onto their employees who have to pay for a home office themselves. We're not seeing big real estate companies push this while big tech companies try to distance themselves from it and disavow it. And as for the theory that mutual funds and whatnot are pushing it... it just seems like an opportunity for them to short this crap and make money sabotaging real estate. The more I think about this, the more it seems like something really bizarre is going on.

asdajksah2123 3y ago
> The more I think about this, the more it seems like something really bizarre is going on. That's only because people refuse to accept the obvious. Executives, whether correctly or wrongly, genuinely believe having employees colocated in the same geographical space is beneficial for their companies. It's not even such a stretch to imagine this because we absolutely know they believed this before the pandemic. In fact, most SV companies were willing to pay employees located elsewhere huge sums of money to move to the Bay Area.
- vidarh 3y ago
  Or executives believe it is beneficial for themselves. I've seen plenty of managers over the year manage by "perceived busy-ness", and managers who liked walking the floor and to get a feel for whether people are busy have to actually do real work to check when people work from home. Or execs are more likely to be extroverts who like their job because it provides an opportunity for them to be at the centre of a group of people. Or enough board members are also on the boards of companies that make a living from commercial real estate. There are many options, and many of them can be true to various degrees at the same time. When you fundamentally change a balance of anything you're likely to run into all kinds of odd entrenched interests you may never have thought about, in part because many of them may never have needed to assert themselves before.

vitaflo 3y ago

Don’t forget the local economies that provide services for workers in those offices. My local city has given big tax breaks to companies to get people back to work because the business around those companies are having a hard time with everyone sitting at home. Entire economies were built on top of office spaces and that upends a lot of things when they go away.

ge0ffclapp 3y ago
The world needs less gas stations, fast food, and sprawl in general. Lots of businesses are doing fine where I live and there are a ton of empty office parks.
no_wizard 3y ago
I say let it upend. Shifts aren't easy, but they are needed. It would do the world long term good to let this play out on its own rather than having government intervention (or corporate intervention, for that matter, let employees win for once)
- Spivak 3y ago
  Let it upend and then build housing atop the rubble. People who live there will be spending money too.