https://www.marketwatch.com/story/labor-day-is-just-a-milestone-in-the-marathon-to-get-workers-back-to-the-office-dcb3be34?mod=mw_quote_news
Highlights:
- It has been a different story for landlords facing a roughly 19% vacancy rate nationally and piles of debt coming due, especially for owners of older Class B and C office buildings with a bleak outlook or properties in cities with wobbling business centers. (Meaning, RTO has NOTHING to do with collaboration and everything to do with fattening up CRE portfolios. Think of how backwards all this is.)
- As with shopping malls, LaSalvia said it’s largely a problem of oversupply, with many office properties at risk of becoming obsolete as tenants flock to better buildings and locations staging a rebirth. (These are small suburban office complexes with restaurants in walking distance and bright and airy offices...not horrible AT&T brutalistic architecture in the middle of shitehole areas of a city with pay for parking.)
- “Little by little, we are finding the office isn’t dead,” LaSalvia said, but he also sees more promise in neighborhoods with a new purpose, those catering to hybrid work and communities that bring people together. (This! Want me to come to the office? Make the office a place I want to be....)
- The push for a return to the office also doesn’t mean a repeat of prepandemic ways. Goldman Sachs analysts estimate that part-time remote work in the U.S. has stabilized around 20%-25%, in a late August report, but that’s still up from 2.6% before the 2020 lockdowns. (Yeah, that genie isn't going back in the bottle.)
- Furthermore, the persistence of remote work will likely add another 171 million square feet of vacant U.S. office space through 2029, a period that also will see tenants’ long-term leases expire and many companies opting for less space. (No one wants to work in a downtown skyscraper, pay extravagant prices for parking, pay for food at overpriced stores and restaurants, and the $3.50 + per gallon gas. Top that with inflation and no COLA increase, and it becomes a noticeable pay cut.)