Workers bailed for home during the pandemic. And many have not coming back. We had an appointment in a big office building this week ... lots of empty offices. It's NYT, so everyone won't be able to read the rest of it, but you get the gist Office Building Losses Start to Pile Up, and More Pain Is Expected
I've already argued that universities are a real estate scam with incidental learning on the side. Might make the leap to say that work in general is a real estate scam.
As shopping centers, from strips to malls, started seeing lots of vacancies, you began seeing other uses. Churches moved in. Doctors and dentists, even hospitals. But they tended to be in high-traffic, high-visibility spots. The fifth floor of an office building is a very different challenge.
I think we're going to see more commercial office buildings repurposed as residential apartments. One example is my old office building in Alexandria, Virginia which has been completely renovated. See photos below: When it was an office building; After renovation as an apartment building.
We returned to the office in 2022 after two years out (far too long in my opinion). There are three buildings in this complex and from what I hear they are about half full.
PPD (pharmaceuticals) Built their national headquarters here about 15 years ago. A modern glass structure. 12 stories. Downtown on the riverfront. Prime spot on what USA today has rated Americas Best Riverfront. Yet they are gone. Bought out and mostly remote now. The City just bought the building and are moving all City opps into it.
I have a friend who is a professor at a small private college. He has told me several times that the descendants of the college's namesake only keep it running because it is a massive tax shelter that preserves their generational wealth.
Just so you’re aware, doing it right, as it appears they’re doing in the rendering, is quite capital intensive. For instance, the building enclosure is about 10% the cost of a new building and they’re reskinning the building you’ve shown. Office buildings are not set up for residential tenants so there will be a lot of required buildout. Done poorly they do very little of anything (same office entry doors which may be glass, partition walls that do not run all the way to underside of next floor, insane layouts that are jumbled, limited bathroom/kitchen options, etc.).
This is America, surely they wont do it poorly in order to quickly repurpose it in a sellers market in order to avoid incurring more costs in order to start collecting rents quicker
Gerald Celente predicted the coming disaster in commercial real estate. He knew the COVID lockdowns would cause great harm. Once again MAGA vindicated
A lot of companies have figured out that work from home helps their bottom line too much and once they weed out the non-productive staff, the remaining staff are often more productive than they were previously. When you think about the cost of owning or leasing commercial real estate, plus the insurance costs having employees work from said office space, utilities, upkeep, etc etc many companies are saving money by allowing work at home. I suspect things will keep trending this direction as internet accessibility continues to improve, technology continues to improve. The main concern is worker productivity. Companies just have to separate the sheep from the goats and then they're clearing more money than they were before.
Anecdotally, seeing the non-married or no-kids want to be in the office for socialization. The cost savings evaporates with workforce replacement.
How is it a massive tax shelter? Was he insinuating that the college loses money? I feel like I'm pretty well versed in RE, but I don't understand how losing money in a fully stabilized investment is a good strategy. Lets say they have 500M into it and it's losing revenue. They could sell the college and take the loss and invest in a better deal. I'm not saying it isn't a great tax scheme, I just need someone to explain this to me one day because I see scenarios like this claimed often. Maybe they just want the keep their names on buildings for their neighbors to see? Plus, if they shut it down, they failed. Seems more reasonable.
nice. every building has it's challenges. biggest challenges is not enough window space but the occupants of some are going to have to accept less window space for better locations or reduced rent. other challenges are meeting egrees requirements commercial in Collier county is still up around 95% occupancy last time I saw numbers for down here but we are an outlier
another taxpayer funded Taj Mahal. that property is now off of the tax rolls forever. really bad governing imo unless they got it for 50 cents on the dollar. who owned it? what was their connection to local gubmnt?
Are companies really missing out on elite, hard-working talent because they refuse to pay for a building to socialize in? And who says you can't still socialize with co-workers when working from home? The cream rises to the top and finds other ways to socialize.
