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I suggest you dispel of this notion that the players in this game have any sense of rationality or logic about this topic. There are massive (many trillion) com

I suggest you dispel of this notion that the players in this game have any sense of rationality or logic about this topic. There are massive (many trillion) commercial real estate interests at play here that totally trump all productivity, health, and even the holiest of holy climate change benefits. I don’t think people quite understand the real order of priorities and issues related to remote working. The big corporations are under both pulling and pushing pressures from the government and interests that control it to “put butts in seats” in big commercial real estate. They don’t care about anything else and they are throwing around money and fear to whip everyone into shape. Yes, there will be some pressure pushing back and dread by corporations stuck between the ol’ rock of competition and the government-favor hard place, but it is unlikely to win out at the corporate level unless some real independent competition rises that is putting on massive pressure by not having commercial real estate capital expenditures. A small office in a city can easily cost $1M per year, sure there are tax benefits, but they’re not benefits if you are competing with someone that does not have those expenses at all or far fewer, even after paying for team meetups that also fund a family vacation.

tehnub 2y ago
Would you mind explaining what these commercial real estate interests are? How does a company or the government benefit from having "butts in seats", all else e.g. productivity, equal?
- Rastonbury 2y ago
  One is near retail and footfall, coffeeshops, restaurants etc. But it's the government that cares about that and I don't think there are many place where gov has meaningfully intervened in private company policy I don't see how real estate companies can influence companies/tenants, they don't hold much power here since everyone is shrinking or cancelling their leases Where I work, RTO is partially Finance driven, bean counters just don't like seeing seats they paid for go empty
  - devsda 2y ago
    > Where I work, RTO is partially Finance driven, bean counters just don't like seeing seats they paid for go empty Same here. Leaders up the chain get a "use it or leave it" mail for office space and suddenly everyone is asked to keep those seats warm by coming in x days a week.
    - whstl 2y ago
      Hmm, that could explain what's happening, but this doesn't sound "Finance driven" to me. What those "bean counters" are doing is actually quite rational. If leadership wants people to RTO instead of just giving up seats, then it's 100% on them.
      - Rastonbury 2y ago
        If you buy 2 machines but only use them at 50% capacity, the only you might as well just buy one machine. Problem is office space doesn't work like that when the entire team is in on 'office' days to collaborate, you need the all seats. If you right size down to 60% seats (3 days office, 2 home) and have people rotate, you lose the 3 in-office collaborative days because everyday it's likely 30% of people are dialling in from home. You save 40% rent but it's closer to full remote in terms of collaboration.
        whstl 2y ago
        Aha, good point. That makes sense, thanks!
  - internet101010 2y ago
    I work in Finance and we recently decided to sell our building and just rent office space catered toward meeting rooms since hybrid has worked so well for us. I think it just depends on the company's culture and the pragmatism of its leadership.
  - tomatocracy 2y ago
    Even if it's set up with the "right" incentives, internal cost allocation can cause bad unintended side effects at the firm level. I worked at at large bank during the financial crisis. Individual teams got charged an implied rent for the space they occupied to their P&L - sensible because it means you can get a better idea of how profitable they really are. However, they went further and the rent was also higher for "nicer" parts of the building (which the firm owned and did not sublet to anyone). So when lots of space became available as large numbers of people were let go, teams moved themselves to empty space which was "less desirable" so had a lower internal rent. The space they left was left unoccupied, so this didn't save the firm any money. Worse, an external contractor was used to move the stuff between desks so it actually cost the firm money while "saving" the team money.
- godelski 2y ago
  You buy land, buildings, out have a contract for these types of things. When there nobody at these locations it makes it appear that these were bad decisions rather than the fact that there was a black swan event that caused a paradigm shift. Some walnut will try to say that the writing was on the walls about covid or about the benefits of remote work but that's mostly contingent on post hoc analysis rather than is situ. And as they say: hindsight is 20/20... Tldr: fear of looking bad because metrics are more important than actual results
- worik 2y ago
  Lots of property tax
- PeterStuer 2y ago
  Because the real estates as well as all of the other business services that manage, maintain and cater to the office spaces and the commuters are owned by the same mega corporations that own a large stake in your business.
- carlosjobim 2y ago
  To keep property prices high across the board. If one part breaks, the whole front collapses. Meaning that the banks who own the government and own the population will loose their grip on power.
- highcountess 2y ago
  Some responses approached the reason, but they are essentially the behemoth financial interests of the various pension funds of essentially all the state governments and corporations, high net worth family funds, institutional money like university endowments and REITs/IRA/401ks, even many foreign sovereign and pension funds like the Scandinavians, Dutch, Germans, etc. As you may be surmising, this not only carries rather major domestic risks if pension and other domestic funds start crumbling, but it also has massive implications for foreign countries’ domestic financiers and social stability, but it also has geopolitical implications from it. During the post housing fraud period, a rather understated change was implemented to encourage accounting to not mark real estate to market value, i.e., record what the market is willing to pay, but rather keep real estate on the books for whatever value one would like to keep it at by various methods and practices. What that essentially affected was a cooking of the books to prevent on book from showing losses. It is essentially still going on, but especially in commercial real estate since the COVID happenings. You now still have massive buildings essentially still totally empty, all still valued at full occupation valuation even though they are, e.g., only taking in barely enough to cover operating costs in a freeze state, i.e., minimal services. This is where things like property taxes come in, as the properties are still assessed at fabricated values, and property taxes are used to fund the local governments, everyone with financial interests in commercial real estate (many, because it was considered very safe) are now crying for mom. It gets a bit off topic here, but I think you get the gist.
NoMoreNicksLeft 2y ago
> There are massive (many trillion) commercial real estate interests at play here that t That theory is bullshit though. Yes, there are companies that stand to lose if office buildings clear out. But they're not the same companies that make the RTO decisions. The companies making those decisions could actually gain if they ditched the office buildings... facility cost is some absurdly large line item on the ledger for most businesses. Without a clear connection between the two, I have to chalk this up to irrationality. Companies are still run by humans, and humans are irrational more often than rational. Especially with something like this, where there's no clear precedent to steer by.
- salmo 2y ago
  The one thing I’ve seen are where companies have tax incentives tied to butts in seats. Usually like 0 property tax, with the government assumption that they’ll make it up in sales tax (lunch, gas, etc.) and taxes from employees that move to the town. But honestly, I think a lot of companies are just doing this instead of layoffs or in addition to small “don’t raise eyebrows” layoffs. Raise the pain to get attrition.
- blackeyeblitzar 2y ago
  Companies like Amazon literally own billions in office space. Making that space valuable again with RTO policies, especially if you create an RTO trend, a way of enabling them to sell at their previous values.
  - hellweaver666 2y ago
    Do they actually "own" it? I work for a large company who spent millions building a new office and then immediately sold it to a different company so they could lease it instead of owning it (apparently this looks better on the books!)
    - blackeyeblitzar 2y ago
      Amazon used to lease several buildings from Paul Allen for years but ended up buying them outright, and then going on a construction binge beyond that.
komali2 2y ago
I suppose I can imagine that there's C level pressure from their relationship with a mayor of, idk, Palo Alto for a headquarters, or a new build in Austin, but couldn't that also be offset by pressure from smaller governments in areas that are looking to do "digital nomad" revitalization? Various aspects of the Taiwan government, including the national level, are engaging in big digital nomad pushes. Small counties like Taidong in particular have been actively exploring revitalization through incentive programs, exploratory "hacker house" type events, and engaging with NGOs in the field to advise on how they can get more digital nomads into their county.
Log_out_ 2y ago
The pension funds owning the org also own the office it rents. Could pay rent in shares or scrib.. You dont want to explain to a retiring generation of "scream it into relity"-babyboomers that there retirement plan is wonky, especially after investing fiscally conversative.
- JSDevOps 2y ago
  Exactly this all those pension funds are coming due

tehnub 2y ago

Would you mind explaining what these commercial real estate interests are? How does a company or the government benefit from having "butts in seats", all else e.g. productivity, equal?

Rastonbury 2y ago
One is near retail and footfall, coffeeshops, restaurants etc. But it's the government that cares about that and I don't think there are many place where gov has meaningfully intervened in private company policy I don't see how real estate companies can influence companies/tenants, they don't hold much power here since everyone is shrinking or cancelling their leases Where I work, RTO is partially Finance driven, bean counters just don't like seeing seats they paid for go empty
- devsda 2y ago
  > Where I work, RTO is partially Finance driven, bean counters just don't like seeing seats they paid for go empty Same here. Leaders up the chain get a "use it or leave it" mail for office space and suddenly everyone is asked to keep those seats warm by coming in x days a week.
  - whstl 2y ago
    Hmm, that could explain what's happening, but this doesn't sound "Finance driven" to me. What those "bean counters" are doing is actually quite rational. If leadership wants people to RTO instead of just giving up seats, then it's 100% on them.
    - Rastonbury 2y ago
      If you buy 2 machines but only use them at 50% capacity, the only you might as well just buy one machine. Problem is office space doesn't work like that when the entire team is in on 'office' days to collaborate, you need the all seats. If you right size down to 60% seats (3 days office, 2 home) and have people rotate, you lose the 3 in-office collaborative days because everyday it's likely 30% of people are dialling in from home. You save 40% rent but it's closer to full remote in terms of collaboration.
      - whstl 2y ago
        Aha, good point. That makes sense, thanks!
- internet101010 2y ago
  I work in Finance and we recently decided to sell our building and just rent office space catered toward meeting rooms since hybrid has worked so well for us. I think it just depends on the company's culture and the pragmatism of its leadership.
- tomatocracy 2y ago
  Even if it's set up with the "right" incentives, internal cost allocation can cause bad unintended side effects at the firm level. I worked at at large bank during the financial crisis. Individual teams got charged an implied rent for the space they occupied to their P&L - sensible because it means you can get a better idea of how profitable they really are. However, they went further and the rent was also higher for "nicer" parts of the building (which the firm owned and did not sublet to anyone). So when lots of space became available as large numbers of people were let go, teams moved themselves to empty space which was "less desirable" so had a lower internal rent. The space they left was left unoccupied, so this didn't save the firm any money. Worse, an external contractor was used to move the stuff between desks so it actually cost the firm money while "saving" the team money.
godelski 2y ago
You buy land, buildings, out have a contract for these types of things. When there nobody at these locations it makes it appear that these were bad decisions rather than the fact that there was a black swan event that caused a paradigm shift. Some walnut will try to say that the writing was on the walls about covid or about the benefits of remote work but that's mostly contingent on post hoc analysis rather than is situ. And as they say: hindsight is 20/20... Tldr: fear of looking bad because metrics are more important than actual results
worik 2y ago
Lots of property tax
PeterStuer 2y ago
Because the real estates as well as all of the other business services that manage, maintain and cater to the office spaces and the commuters are owned by the same mega corporations that own a large stake in your business.
carlosjobim 2y ago
To keep property prices high across the board. If one part breaks, the whole front collapses. Meaning that the banks who own the government and own the population will loose their grip on power.
highcountess 2y ago
Some responses approached the reason, but they are essentially the behemoth financial interests of the various pension funds of essentially all the state governments and corporations, high net worth family funds, institutional money like university endowments and REITs/IRA/401ks, even many foreign sovereign and pension funds like the Scandinavians, Dutch, Germans, etc. As you may be surmising, this not only carries rather major domestic risks if pension and other domestic funds start crumbling, but it also has massive implications for foreign countries’ domestic financiers and social stability, but it also has geopolitical implications from it. During the post housing fraud period, a rather understated change was implemented to encourage accounting to not mark real estate to market value, i.e., record what the market is willing to pay, but rather keep real estate on the books for whatever value one would like to keep it at by various methods and practices. What that essentially affected was a cooking of the books to prevent on book from showing losses. It is essentially still going on, but especially in commercial real estate since the COVID happenings. You now still have massive buildings essentially still totally empty, all still valued at full occupation valuation even though they are, e.g., only taking in barely enough to cover operating costs in a freeze state, i.e., minimal services. This is where things like property taxes come in, as the properties are still assessed at fabricated values, and property taxes are used to fund the local governments, everyone with financial interests in commercial real estate (many, because it was considered very safe) are now crying for mom. It gets a bit off topic here, but I think you get the gist.

NoMoreNicksLeft 2y ago

> There are massive (many trillion) commercial real estate interests at play here that t That theory is bullshit though. Yes, there are companies that stand to lose if office buildings clear out. But they're not the same companies that make the RTO decisions. The companies making those decisions could actually gain if they ditched the office buildings... facility cost is some absurdly large line item on the ledger for most businesses. Without a clear connection between the two, I have to chalk this up to irrationality. Companies are still run by humans, and humans are irrational more often than rational. Especially with something like this, where there's no clear precedent to steer by.

salmo 2y ago
The one thing I’ve seen are where companies have tax incentives tied to butts in seats. Usually like 0 property tax, with the government assumption that they’ll make it up in sales tax (lunch, gas, etc.) and taxes from employees that move to the town. But honestly, I think a lot of companies are just doing this instead of layoffs or in addition to small “don’t raise eyebrows” layoffs. Raise the pain to get attrition.
blackeyeblitzar 2y ago
Companies like Amazon literally own billions in office space. Making that space valuable again with RTO policies, especially if you create an RTO trend, a way of enabling them to sell at their previous values.
- hellweaver666 2y ago
  Do they actually "own" it? I work for a large company who spent millions building a new office and then immediately sold it to a different company so they could lease it instead of owning it (apparently this looks better on the books!)
  - blackeyeblitzar 2y ago
    Amazon used to lease several buildings from Paul Allen for years but ended up buying them outright, and then going on a construction binge beyond that.

komali2 2y ago

I suppose I can imagine that there's C level pressure from their relationship with a mayor of, idk, Palo Alto for a headquarters, or a new build in Austin, but couldn't that also be offset by pressure from smaller governments in areas that are looking to do "digital nomad" revitalization? Various aspects of the Taiwan government, including the national level, are engaging in big digital nomad pushes. Small counties like Taidong in particular have been actively exploring revitalization through incentive programs, exploratory "hacker house" type events, and engaging with NGOs in the field to advise on how they can get more digital nomads into their county.

Log_out_ 2y ago

The pension funds owning the org also own the office it rents. Could pay rent in shares or scrib.. You dont want to explain to a retiring generation of "scream it into relity"-babyboomers that there retirement plan is wonky, especially after investing fiscally conversative.

JSDevOps 2y ago
Exactly this all those pension funds are coming due