4 ms·

"Offices across the U.S. are at an all-time occupancy low, and commercial real estate is starting to see an all-time high of almost 20% of unleased space, accor

by dpflan 3y ago

"Offices across the U.S. are at an all-time occupancy low, and commercial real estate is starting to see an all-time high of almost 20% of unleased space, according to the Wall Street Journal. The reduction in real estate spend has enabled companies to reduce their operating expenses, thereby positively impacting their financial health. This poses the question: Are return-to-work mandates better for the workforce or for business bottom lines?" Don't some real estate contracts require specific occupancy rates (measured at monthly levels?)? At level of detail that is affected by people not in office? How long are commercial real estate contracts usually for?

deleted 3y ago
[deleted]
lysecret 3y ago
Contracts are usually on the order of 10 years.
- dpflan 3y ago
  Right, there we go. Breaking these contracts is expensive I imagine.
bluedino 3y ago
>> How long are commercial real estate contracts usually for? It depends. Amazone has a 17 year lease on space in Manhattan. 3-10 years is pretty common. https://www.geekwire.com/2014/amazon-inks-17-year-lease-470000-square-foot-space-manhattan/ https://www.geekwire.com/2014/amazon-inks-17-year-lease-4700...
tonystubblebine 3y ago
I think there is something to this. We have a long term lease for what is now an empty floor at 799 Market in SF and our landlord will not let us buy our way out of the lease, even at 100% of remaining rent. There are about 120 seats on our floor and about 1000 in the building. I’ve heard only sixty people use the building in a given day. So the usage rate is much much lower than the occupancy rate, i.e. we count as occupants even with zero usage.
- eschneider 3y ago
  Sunk cost. Making people come into the office doesn't somehow make that cost go away, although it might make MGMT feel better about the bad decision.
  - dpflan 3y ago
    I'm sure it is a topic in many managerial meetings and hence a pressure point.
  - tonystubblebine 3y ago
    This impulse isn't true for us (I'm the CEO) and so I've wondered why this accusation toward management is so common. I suspect, but obviously don't know for sure, that merely making use of the real estate doesn't factor at all. It's more "come into the office because that's how I know how to manage people" and "somethings actually are hard to do remote." We are productive remote for some things, but then get stuck on tricky issues that seem to get solved instantly when we are together. So we solved that by gathering twice a year at company retreats and having budget for more mini-gatherings. But our feeling is that going back to the office will never happen.
- pauldix 3y ago
  OMG we had half of the 4th floor of that building on sublease when the pandemic hit (and for 2 years prior). The week of the first lockdown in 2020 we were all set to sign a new long term lease for an entire upper floor and half of the one below. Lockdown happened and we told them "let's just hold off on this for a bit". They were, of course, disappointed and desperate to get us to sign. We held off, and it quickly became obvious the pandemic was going to be a long term thing. So when our sublease expired in September 2020 we moved out and have been fully remote and distributed ever since. We lucked out and dodged a bullet by not signing a long term lease for more space than we needed at the absolute top of the market. Granted, we were already 60% remote at the time so it wasn't a completely massive shift. But that's it, we're remote and distributed and we're never looking back. Good bye central office!!!
  - 3y ago

by dpflan 3y ago

deleted 3y ago

[deleted]

lysecret 3y ago

Contracts are usually on the order of 10 years.

dpflan 3y ago
Right, there we go. Breaking these contracts is expensive I imagine.

bluedino 3y ago

>> How long are commercial real estate contracts usually for? It depends. Amazone has a 17 year lease on space in Manhattan. 3-10 years is pretty common. https://www.geekwire.com/2014/amazon-inks-17-year-lease-470000-square-foot-space-manhattan/ https://www.geekwire.com/2014/amazon-inks-17-year-lease-4700...

tonystubblebine 3y ago

I think there is something to this. We have a long term lease for what is now an empty floor at 799 Market in SF and our landlord will not let us buy our way out of the lease, even at 100% of remaining rent. There are about 120 seats on our floor and about 1000 in the building. I’ve heard only sixty people use the building in a given day. So the usage rate is much much lower than the occupancy rate, i.e. we count as occupants even with zero usage.

eschneider 3y ago
Sunk cost. Making people come into the office doesn't somehow make that cost go away, although it might make MGMT feel better about the bad decision.
- dpflan 3y ago
  I'm sure it is a topic in many managerial meetings and hence a pressure point.
- tonystubblebine 3y ago
  This impulse isn't true for us (I'm the CEO) and so I've wondered why this accusation toward management is so common. I suspect, but obviously don't know for sure, that merely making use of the real estate doesn't factor at all. It's more "come into the office because that's how I know how to manage people" and "somethings actually are hard to do remote." We are productive remote for some things, but then get stuck on tricky issues that seem to get solved instantly when we are together. So we solved that by gathering twice a year at company retreats and having budget for more mini-gatherings. But our feeling is that going back to the office will never happen.
pauldix 3y ago
OMG we had half of the 4th floor of that building on sublease when the pandemic hit (and for 2 years prior). The week of the first lockdown in 2020 we were all set to sign a new long term lease for an entire upper floor and half of the one below. Lockdown happened and we told them "let's just hold off on this for a bit". They were, of course, disappointed and desperate to get us to sign. We held off, and it quickly became obvious the pandemic was going to be a long term thing. So when our sublease expired in September 2020 we moved out and have been fully remote and distributed ever since. We lucked out and dodged a bullet by not signing a long term lease for more space than we needed at the absolute top of the market. Granted, we were already 60% remote at the time so it wasn't a completely massive shift. But that's it, we're remote and distributed and we're never looking back. Good bye central office!!!
- 3y ago