Working from home could wipe $800 billion from office values globally
Working from home could wipe $800 billion from office values globally
Remote work risks wiping $800 billion from the value of office buildings in major cities worldwide by 2030 as the post-pandemic trend pushes up office vacancy rates and drives down rents, according to a new report.
McKinsey said cities could adapt to the declining demand for office space by “taking a hybrid approach themselves,” developing multi-use office and retail space and constructing buildings that can be easily adapted to serve different purposes.
Ok so for the pros of working from home that's:
- lower demand for prime real estate downtown
- less environmental impact due to daily commutes
- less employee time wasted due to daily commutes
- more comfortable and familiar work environments
- less business overhead associated with running a permanent office
- more reasons to do company events or retreats in interesting environments
- better accesses to a broader pool of talent
- more/cheaper housing options for people to live outside of cities
- less traffic and traffic accidents, with lower demand for cars and parking in city centers
But let's not forget the big cons of work from home too!
- your inferiority complex-having superviser/boss/manager doesn't get to feel powerful and important by performing workplace theater while breathing down your neck constantly or counting your keystrokes.
- you don't have to pretend to like the people you work with every day, but only some days.
Of course it could. I guarantee if you look at all the “return to work or else” CEOs they are all heavily invested in commercial real estate.
I don't understand why corporates are so against the idea of savings millions of dollar in office spaces. More people working remotely mean smaller office required, cut on office supplies and utilities bills. Higher employees moral, motivation, and productivity.
What are so bad about all that? Just because the boss can't spy on their employees and assert their authority ?
And this is exactly why board rooms are demanding a return to office. The wealthy people who run companies are invested in commercial real estate.
"So yeah, if all you peasants could get back in the office, that'd be greeeeeeat."
I see this as an absolute win
If businesses can run without $800 billion tied up in assets, not only should they, the market dictates that they have to. Sorry landlords, sucks to suck.
There is no value lost unless you're an owner being forced to sell. Employment space is not worth anywhere near what the value of housing is. Call this what it is, a market correction.
So you're saying WFH both reduces carbon emissions and frees up real estate for affordable housing?
Sounds like the march of technology continues. When cars became common, did Big Horse whinny about it? When the printing press hit the scene, did we mourn for the loss of monk jobs? Why should we care about people caught holding the bag when we no longer need a building? That's their gamble and they lost.
🎻
Think of how much value was wiped off the horse industry after the horseless carriage.
Working from home is a net cost cutter, if done right. It will take a while for us to adjust though. Workers who game the system from home are the same ones who game the system in offices. Then too, boss suck-ups will have a bit harder time getting ahead while working from home.
Turn them into housing
Permanently Deleted
McKinsey expects landlords to do real people work and innovate?
Have they met landlords?
nice
Well the report is from McKinsey so take it with an office building sized grain of salt.
Converting such buildings to affordable housing would be a great start.
Working from home could create massive value for people that matter while forcing a bunch of people who don't matter to accept lesser status symbol items like smaller yachts and less splendorous vacations that they wont be able to feel as proud as they are bragging to their friends.
Oh nooooo. Anyways.
I don't think the various stakeholders will allow it to happen in any significant way (see the article), but I've been hoping for an office rent crunch for a while.
I've always wanted a dedicated home theater that's just big enough for me and maybe 1 or 2 others. Upsizing my current living situation isn't feasible, but I could make a wee little 150 or 200 sq. ft. office space work!
Nice
Good. Bring back the small town.
NMP.
Maybe they should have built buildings that could be easily converted to residential or maybe they should have not signed 20 year lease or whatever. IDGAF NMP IDC FU.
Won't someone think of the real estate profits!
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Too bad, how sad. Turn it into housing.
What if we turn office buildings into homes and allot some of that space to the homeless?
What did it add to residential?
I am not sure what they are crying about now. We knew paces in automation and AI were going to render jobs obsolete.
They are only worried about that NOW that they realize the people were the ones buying the products?
They don't talk about the increased value of commercial space outside of city centers though, weird right?
Ohhhhh yeah. Sloooowwwwwwwerrrrrr.
Oh no!
Anyway...
This is the best summary I could come up with:
The research adds to a string of recent signs that lasting changes to working habits because of the pandemic are hurting the value of commercial real estate — a market also under strain from rising interest rates.
(HBCYF) announced plans to halve the size of its global headquarters, giving up its imposing tower in London’s Canary Wharf business district for a much smaller building close to the city center.
McKinsey looked most closely at nine “superstar” cities with a disproportionate share of the world’s urban gross domestic product, namely Beijing, Houston, London, New York, Paris, Munich, San Francisco, Shanghai and Tokyo.
Waning demand for office space has driven down landlords’ asking rents, with US cities suffering the sharpest falls, McKinsey found.
Foot traffic near stores in urban areas remains 10-20% lower than it was before the pandemic, partly driven by growth in online shopping.
In an interview at Bloomberg’s Technology Summit last month, San Francisco Mayor London Breed proposed remaking the struggling city’s downtown by tearing down abandoned retail space, including Westfield mall.
The original article contains 534 words, the summary contains 173 words. Saved 68%. I'm a bot and I'm open source!
So what? The market decides what is needed or not. Business need to stop whining, stop with the silly 'return to office' mandates that are killing their productivity and reducing their quality of talent, and adapt.
It's business. Adapt or die.
