White-collar workers temporarily enjoyed unprecedented power during the pandemic to decide where and how they worked.
Plus they have a ton invested in commercial real-estate and office buildings. They literally losing money and makes me happy.
They really aren’t losing money because:
a) WFH has been saving them money (i.e. lowered heating, water, electricity, stationary, toilet paper, food, janitorial, window cleaning, etc.).
b) Their WFH staff are more productive than their office staff.
Just let those leases expire when they do, and these companies will really be saving a ton of money from not having to lease large office space.
I don’t get the desire to cling onto some outdated, unproductive, sad way of doing things.
Just let those leases expire when they do
The companies losing money are the huge companies who don’t lease from what I’ve seen.
A company in my city JUST finished a $250-million expansion onto their HQ right as COVID hit. That same land area is in a central location and was even being highly considered for high density housing before the company bought the land. The parking lot for the new building never gets more than half full. Fuck 'em.
Control. They call it office culture because it’s a cult. They control the way you think and make it easy for you to be manipulated and keep you under their thumb. They can’t make you think they give anahit if they can’t bribe you with bullshit like snacks and pizza and a gym. They can’t slowly take away your benefits because “hey look we gave you standing desks”. Office culture needs to die.
a) WFH has been saving them money (i.e. lowered heating, water, electricity, stationary, toilet paper, food, janitorial, window cleaning, etc.).
How? If I own a building and I can’t rent it out, I’m losing money. I still have to pay some bills and probably repay the loan that I took to build or renovate it.
b) Their WFH staff are more productive than their office staff.
Is there undeniable data proving that? I’d like to see a bunch of researches that support each other and have serious samples.
Majority of studies and measurements show that remote working leads to happier, less stressed workers spending more time on task. Previous studies have shown those are key factors in driving productivity.
The notable difference is that manager reported productivity often show worse measures as unchanged or lower productivity, even where less subjective measures show increases.
Some studies have tried to measure productivity directly, these commonly have unaddressed problems with methodology, and show more mixed results ranging from slightly less productive to significantly more productive.
I seem to remember a study measuring rate of completion of task lists as much more productive, including call centers, IT, customer service and sales. Whereas more nebulous tasks in management and group facilitation suffered slightly.
I’m thinking it’s due time for a meta study on the topic though, maybe you could put one together?
How? If I own a building and I can’t rent it out, I’m losing money. I still have to pay some bills and probably repay the loan that I took to build or renovate it.
To clarify, they may still be losing money (i.e. leasing/renting costs), but not nearly as much as if they had to maintain and pay for utilities for a building that’s full of people.
It’s still to their advantage to keep people home.
Is there undeniable data proving that? I’d like to see a bunch of researches that support each other and have serious samples.
Yes and no… depending on the type of work and who wants the study to succeed/fail. 😂 Even having people WFH 1-2 days a week has been shown to be positive for productivity, employee happiness, etc.
I find that one caveat with studies that shows how WFH “fails” is that they tend to use some piss-poor setup that’s not designed with the appropriate tools to allow people to be efficient. For example, no dedicated office space at home, lack of communication tools, etc. These are growing pains for the most part, and an effective WFH setup is distraction-free and made to be efficient.
That’s the difference between you and a company. You need a building to live. A company needs its employee to work in order to live.
The building is an expense that was budgeted. When it’s bought or leased, it’s paid. The money is already lost. What’s left is the money you win. If the employee are already there, you still earn the money.
What the company doesn’t pay is the energy, food, cleaning etc. Actually it’s now the employee who are paying that.
For a company, the building is more comparable to a printer for you. Once you bought the printer, the money is lost. If you stop using it, you don’t lose more money.
A family is not a company. Nor is a government by the way. These comparison are wrong but also usually dangerous, because they hint at extremely bad interpretations and decisions.
Our department of a couple thousands employees has seen an increase in productivity of 14% going from 3 days in office to full WFH, but our work is especially appropriate for it (lot of individual work where we can monitor productivity, team work is required just to answer questions when someone isn’t sure what they need to do)
b) Their WFH staff are more productive than their office staff.
This probably varies place to place, person to person. However, over the course of, say, 10 years, productivity would likely drop in a 100% WFH scenario. People retire and the new hires never really find their groove without the in person experience.
Just let those leases expire when they do
Some of these leases are absurdly long, like decades long. Some own the buildings rather than lease, so they’d need to sell, but who would be buying?
I do see significant reduction in office space and more aggressive ‘hot desking’ to size a lower occupancy rate due to increased WFH. Before pandemic, our office planned to 80% occupancy, based on measuring generally 60% occupancy (between sick days, vacations, meetings, and travel, a lot of people aren’t at their desks). I would not be surprised for them to size for, say, 50% occupancy if opportunities to exit lease for some of the buildings comes up.
Most of the empty office spaces are in the traditional downtown highrise locations. These locations traditionally have had low vacancy rates of 5-10%. Post pandemic the rates have risen sharply with over 30% vacancy in some markets.
When you move away from these downtown locations the vacancy rates are in the 8-15% range. Still higher that pre-pandemic but still sustainable and profitable for landlords.
Personally I predict a rise for smaller office spaces intermixed with residential locations. The traditional demand for the expensive downtown highrise office will permanently be reduced. Most of that space will need to be converted to residential in the future.
No this isn’t right. It’s cheaper to have an empty building than a full one so companies who own their buildings would still make more money letting their employees work from home.
Also, even if it was true, no company is going to try to solve a problem like that. Companies are selfish. They’d rather everyone else go back to work to boost the value of commercial real estate while they continue to work from home to increase their profits everywhere.
The only reason companies are forcing people back is because upper management simply prefers that work environment. They like to sit in their corner office, surrounded by their peons. A sense of power.
Or, they have the kind of personality where they thrive surrounded by people and can’t understand how anyone could be productive at home, data be damned.
It has nothing to do with real estate.
I 100% agree there are people in management who just like to have a sense of power over people, but there are big corporations losing money over real-estate.
For starters, if you’re a firm who owns a lot of rental office space, you’re losing money on the businesses not renewing their license (which I’m not saying this is a bad thing).
Then, you have the huge corporate business who have a huge amount of office space which they own. A company in my city JUST finished a $250-million expansion onto their HQ right as COVID hit. That same land area is in a central location and was even being highly considered for high density housing before the company bought the land. The parking lot for the new building never gets more than half full. Fuck 'em.
And even if they were, it still can’t justify orders of magnitude differences in compensation.
commercial real estate values are one rationale but I don’t really buy that unless you own the property. Lots of companies that don’t own their property are doing it.
One big rationale behind forcing return to office is that it causes soft layoffs from all of the people who do not want to return to in person working. It’s a great way to downsize without announcing layoffs and taking a share price hit.
A part of that real estate equation is that the municipalities give tax breaks to the companies because they anticipate the extra people in the area getting them more money from gas stations, lunches, etc. Those contracts usually state that the building needs to have a certain occupancy for them to maintain the credit… and now municipalities are coming knocking for their back taxes since buildings haven’t been full.
Thats what’s happening around me, at least
Sunk cost. No matter if they buy or lease their building, it seems like a waste to have it empty all the time. But that money isn’t coming back whether employees come in or not.
Hold out a couple more years for leases to expire. Office real estate market hasn’t seen its bottom yet.
Well. Getting more and more obvious that employers want to “own” their employees. Just a number in the grid - pro tip: Don’t mention that at work to a manager, ends terribly. Dead man talking.
It’s really there from the beginning: you don’t get paid to do work, you get paid for your time. What happens when you finish all your allotted tasks in 4 hours instead of 8, you think you can just go home?
Once you have enough money to buy anything, all thats left is power and high scores. That’s why we should eat them.