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Yep, that's why there are so many Bloomberg articles jacking off RTO. It's a better investment to shout about how everyone else should RTO than to do it yoursel
by BigJono 3y ago
Yep, that's why there are so many Bloomberg articles jacking off RTO. It's a better investment to shout about how everyone else should RTO than to do it yourself.
Shareholders and board members don't want their company to RTO, they want the entire industry to RTO. If their own company RTOs and CBD real estate crashes anyway, they're the ones that are left holding the bag, whether it's because of big fixed term leases, real estate investment or whatever other skin they have in the game.
- richiebful1 3y agoCan someone explain how a tenant company suffers when commercial real estate value collapses? It's another thing entirely if the company owns its own offices, of course
- BigJono 3y agoCommercial leases for large offices are pretty long. I think 8-10 years or longer is fairly normal? If you're stuck with 5 more years of 2019 rates and all your competitors have downsized, your cost per employee is going to be much higher. Some percentage of the larger companies are going to own their office space too. I'd guess as we get further from the start of covid (bit over 4 years now?) the pressure to RTO will dwindle as more companies downsize.
- fnordpiglet 3y agoYeah it’s mostly sunk cost fallacy driving the regret. Elderly leadership who harken for the way they developed their career are the ones pushing the narrative. “Think of the children,” “how can we organize in any other way than the emergent reality my career was shaped by,” etc are the real drivers and the sunk cost is used to buttress. Eventually cold hard cash will win out over fallacious thinking.