The slowly deflating #CommercialRealEstate bubble continues. People are just not that interested to go back to the office.
This building in a suburban #SanJose office park was occupied by Nio, the Chinese carmaker, who did not renew their lease in October 2023. Without a new tenant, the building went into foreclosure with $25M of outstanding debt.
The slow collapse of downtown commercial real estate is continuing. I suspect news like this, and stories about the decline of retail around downtowns that depend on daily commuter traffic will come in at faster and faster rates.
Workers are not returning to the office to work. #RemoteWork and #flexibleWork are showing to be a perfectly viable solution that is more friendly to workers. Even with hybrid work, the volume of people commuting is far lower than it used to be.
#CBRE is slowly declining to a new, lower-value equilibrium.
“Once-hot tech office in SF's SoMa sells for a fourth of its 2019 price”
“Really the only other dinosaurs howling into the wind about the latest fax machine going extinct due to the internet are [commercial real estate] bagholders, who are of course upset they (god forbid) have to reinvest or change strategies, and continue to clutch pearls hoping the world would revert to a previous state. They of course don’t believe Earth can change (something it’s literally defined by). We’re a free capitalist society and so everyone has to go through the ringer of disruption, but ultimately we come out the other side better for the vast majority. They’ll evolve, but for some reason this group are extremely sore losers here.”
“The best data to date shows that the reasons and justifications for RTO mandates are largely misguided. Such mandates do not generally lead to higher productivity, better performance or improved corporate values in the short term.
It also shows that the reasons and justifications for WFH are largely real and serious. Remote work does improve schedule flexibility and work-life balance, and it saves employees a lot of time and money.
In other words: Forcing employees to work in an office doesn’t benefit companies, but does harm the lives of employees — at least in the short term.
More to the point: Most companies cannot show actual monetary benefits from RTO mandates. But most employees can show actual and significant monetary costs from RTO mandates.
In essence, these kinds of mandates represent a transfer of wealth from employees that their employers don’t even benefit from.”
“Some experts, including Stephen Meier, chair of the management division at Columbia Business School in New York, remain genuinely baffled why companies like UPS are putting up a fight over return-to-office. But he believes there's a common thread among many of these firms: hard-line management tactics.
"You can't continue that leadership style that you had before [the pandemic]," he says. "You need to actually empower [employees] … And, I think, some leaders are just used to a certain command-and-control model.””
This a good story about how mass layoffs happened across the Tech industry the past year, and specifically at Microsoft:
tl;dr: Pandemic started, work from home productivity went up, demand for remote work products shot up, projections were revised upwards, mass hiring happened to meet expected demand. Demand suddenly flatlined, but companies were still on the hook for massive payroll and hiring incentives. Major shareholders demanded downward pressure on wages. Mass layoffs happened.
“How we got here. Some inside scoops from Microsoft on handling early days of pandemic to cutting over 20K folks in 2023”
Remember that this is not the first time IBM pulled this trick. They did the same thing in 2017, when they were being hailed as an innovative company for reducing cost by not having physical offices. They forced people to RTO and caused a bunch of people to quit without severance.
“IBM to managers: Move close to an office or quit”
“[100 Fortune 1000 and 100 Fortune 500] CEOs aren’t far behind. Nearly all (99%) of the chief executives Atlassian surveyed said they believe that distributed work is the way of the future, and it’s only going to grow in popularity from here. That’s hardly a new feeling—and hardly a baseless prediction. ”
“Even Fortune execs who mandate a return to office admit that it doesn’t improve productivity, finds Atlassian’s 40-page remote work report”
WebMD’s parent company, Internet Brands, released a cringey and abusive internal video threatening their employees to #returnToOffice. “We aren’t asking or negotiating at this point”, the CEO says. “Don’t mess with us”, the video reads at the end. The video features employees dancing and celebrating RTO (at gunpoint? or at least under threat of firing by HR?).
I know corporate videos are all kinda crappy, but this one is…spouse-beating levels of terrible.
@sqncs I think it’s the other way around. Unionization is a powerful way to make the Bay Area affordable, and also a good way to force Silicon Valley to accommodate #remoteWork and #flexibleWork so people can live wherever they want.
Another regular reminder that #RTO is being incentivized by deals for local employment and paying local builders to construct buildings.
“The deal spells out the minimum number of jobs Apple must create in Wake County to remain eligible for economic incentives. By the end of this year, it has to have added at least 126 local jobs. This obligation rises to 378 total jobs next year, 990 in 2025, and ultimately at least 2,700 new positions overall by the end of 2032.
While its hiring commitments are more immediate, Apple has a longer runway to abide by another part of its incentive agreement: investments. According to the deal, Apple must spend at least around $500 million on a Wake County campus by the end of 2031.”
“Open Source: Apple RTP campus is ‘really slow rolling,’ Wake official says”
Just your regular reminder that the real money behind #RTO is commercial real estate. Downtown areas — especially those like #SanFrancisco that steadfastly refused to build high-density housing and mixed-use areas for decades — are now suffering because the commuters they depend on for income are no longer showing up.
What a shame that $800B of “value” will be lost, but hey, that’s business, right? Surely we’re not going to nationalize the losses by forcing people to commute against their will, right? What’s that? Oh, we are?
“Remote work could cut the value of office buildings by $800 billion by 2030 — with San Francisco facing a 'dire outlook,' McKinsey predicts”
“Going to the office is no longer a necessity. It's a choice. And we wanted to know what, if anything, would cause people to voluntarily choose to go back to the office when the entire rest of the world (including the comfort of their bed) beckoned. And we're happy to report that the results are in:
Mostly no.
Recall that we went absolutely all out – we did everything possible to make the office as attractive as we possibly could. Drinks delivered straight to your desk. Gigabit wifi. Call rooms. We took this concept further than any company reasonably could at scale, to leave no stone unturned.
…
You heard it here folks:
Yep. #ReturnToOffice was never about productivity. #RemoteWork#FlexibleWork has obvious benefits that don’t affect work productivity; there never was a cogent argument about which arrangement is better for workers’ well-being while preserving or even increasing work output.
#RTO is about #CommercialRealEstate and the preservation of capital, and it is about satisfying the bosses’ lust for CONTROL. Not just control over workers’ productivity our output, but control over where they are, how they behave, where they can live, and what opportunities they can seek outside of their office. https://tech.lgbt/@deilann/110884985364053944
My first meeting isn't until 10:00 AM and it's a pleasantly cool, cloudy morning, so I'm taking an hour to work by a fountain in park before heading into the office.
I will never, ever again work for a company that doesn't at least embrace hybrid work, with office hours 100% at the staff's discretion. I will only work for adults, who treat their employees like adults. A beautiful, productive morning like this costs nothing.
Was in the office building for a while today, and got into an elevator with another person with a mask (a rare sight), and they casually mentioned that they were masking because they were recently in close contact with someone who later tested positive for #COVID.
I mean, thanks for being considerate, but boy howdy was that a good reminder that I’m one careless person away from being in contact with the virus.
“Fully remote workers could produce less than half the climate-warming emissions of people who spend their days in offices, according to a new study published Monday in the journal Proceedings of the National Academy of Sciences.”
“Working from home now has another powerful benefit”