Those markets are already getting hit.
By Wolf Richter for WOLF STREET:
Alphabet, the parent company of Google, which has about 200,000 employees and contract workers, keeps pushing out the date when its staff need to return to the office. CEO Sundar Pichai has now decided, after a debate with his leadership team, that work-from-home option will be in effect at least until July 2021, a source told the Wall Street Journal.
The goal post keeps getting moved. The previous back-to-the-office date had been set for January. In May, Pichai said in a message that post-pandemic there may be “more flexibility and choice for employees as they consider how to work in the future.” But he was still expecting that “most Googlers will be largely working from home for the rest of this year.” This goal post has now been moved to at least July 2021.
Unlike other tech companies, Google has never really got on the permanent work-from-home bandwagon and has so far not announced it as a permanent option.
Other companies, including Twitter and Facebook, have announced a permanent shift to work-from-home for at least some of their employees at least some of the time. Facebook said that as many as half of its employees might be working remotely in five to 10 years.
After the WSJ reported the news this morning, Pichai sent a note to employees:
“To give employees the ability to plan ahead, we’ll be extending our global voluntary work from home option through June 30, 2021, for roles that don’t need to be in the office,” Pichai wrote.
“I hope this will offer the flexibility you need to balance work with taking care of yourselves and your loved ones over the next 12 months.”
In the US, Alphabet has a large office presence in the San Francisco Bay area, not only at its headquarters in Mountain View, but also in numerous office buildings spread around the Bay Area.
In addition, Google is planning to build a huge project in San Jose’s Diridon Station Area, of 7.2 million square feet of office space and 5,900 residential units. The plan is still being hammered out with city of San Jose.
And it has built up a massive and expensive presence in Manhattan, where it operates out of several buildings, including the eight-story Chelsea Market, spanning an entire city block, that it acquired in 2018 for $2.4 billion, the second largest deal ever to close in Manhattan.
In December 2018, Google announced that it would invest over $1 billion in capital improvements “to establish a new campus, Google Hudson Square” in Manhattan. The campus spreads over three leased buildings with over 1.7 million square feet of space. At the time, Google had over 7,000 employees in Manhattan. Construction officially kicked off in October 2019.
In addition to its huge and costly and – formerly – ballooning presence in the Bay Area and in Manhattan, Google has offices around the country:
Other companies with large numbers of office workers who are now working remotely are likely to follow Google’s lead to keep “most” of their staff working from home for another year at least. It will give companies and employees more time to fine-tune the whole process of working remotely in order to improve its efficiency, which will make it more entrenched.
This extension of working remotely has big impacts on housing – both owned homes and rental apartments – as well as the office sector of commercial real estate.
In Silicon Valley and San Francisco, where working remotely has become a very big thing, it is already showing up in the housing and office sectors.
Condo prices in the San Francisco Bay Area in June dropped by 6.5% year-over-year, according to the California Association of Realtors, with the largest price drops in Silicon Valley (Santa Clara County -10.9%; San Mateo County -7.8%) and San Francisco (-6.6%). And the median rent of one-bedroom apartments in San Jose dropped by 8.0% in June compared to a year ago, and in San Francisco by 11.8%.
There is now a large amount of office space coming on the market, particularly sublease space, where companies decided in the past that they needed to lock in scarce office space even if they didn’t need it at the moment. This “warehousing” of office space was designed to provide space in the future when these companies would expand into it. Much of this space has remained vacant and is now coming back on the market.
Overall office availability in Silicon Valley in the second quarter has risen to 14.4%, according to Savills: 22% in Palo Alto, 19.7% in Santa Clara, 19.3% in Milpitas, and 16.4% in Downtown San Jose.
In San Francisco, where the office market had been softening before the pandemic, office availability surged 2.4 percentage points in the second quarter to 13.5%, the highest since 2012, according to Savills. Sublease space surged by 40% and now accounts for about half of total availability.
“Most companies are downsizing, as layoffs and furloughs continue to creep into the labor force, in addition to WFH measures being lengthened,” the report by Savills said.
But these were the dynamics in the second quarter. Google’s decision to extend its working-from-home policy until at least July 2021 – with other companies likely to follow in its footsteps – are now piling on top of it.
The initial moves in the condo, apartment, and office markets may have been caused by the first knee-jerk reactions to working-from-home. What is now setting in is a deeper shift as companies realize that this won’t blow over in a few months and that there will be long-term changes in where work will be done.
For Brick & Mortar Retailers, Malls, Mall-REITs, and their Debts, there’s Just No Good Way Out. They have been spiraling down for years. The only thing that’s surprising is how long they were able to hold on. Read… Brick & Mortar Retailers, Malls, Mall-REITs, and their Debts: The Whole Schmear is Coming Apart
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What does all this do the national internet footprint. A few years ago the future was going to be wireless internet, which could service very rural areas with at least phone service. The notion was most of traffic is incoming, browsing, would be done on the satellite, while outgoing broadband requirements were done on the phone, or equivalent. You could spool your days work and upload at night. Or maybe data centers, like the old day trading T1 connection businesses, or maybe government will pass an internet infrastructure bill. There are probably a lot of ways to get your work in on time no matter where you live.
Google StarLink, yeah I know it is Musk… But having satellites at 300 miles vs 23000 miles away is huge on network latency, the big problem with satellite internet. And the idea of the satellites communicating via lasers is pretty cool.
These people aren’t likely to be working in places where satellite internet is needed, they are more likely moving to second tier less expensive cities, not the sticks.
Part of that over the air stuff was hype. There’s only so much bandwidth you can stuff through the air without some *major* regulatory overhauls from the FCC… but this is less of an issue in other contries, who have allocated more of the spectrum to internet.
5G is deader than it was before, as its only really viable in dense cities.
An infrastrucure stimulus type thing will depend on the election. But I know *nothing* is going to get done with Ajit Pai in office.
Forget national, international. When you can work from anywhere, why not?
I’m seriously considering it, if it actually works. I could be on the beach somewhere in Asia or Eastern Europe working part-time remotely and live well off.
:)
A headline from an article on cbc.ca today: “Sick of working from home during COVID? Do it from Barbados, island nation tells pandemic-weary Canadians?”. If it’s good enough for Drake, it’s good enough for you too.
Yeah but the Drake statue on Sir Francis Drake ave. here in Marin county has been splattered with red paint and a spray painted message informs me he was a slave trader. So there’s that.
One reason is the tax consequence to the Company. Employees can’t work just anywhere without the right tax and legal standing set up by the company beforehand. At our company we support employees working from 24 of the 50 US States, and 2 international countries. Everywhere else is not an option.
Ambrose Bierce,
There are too many limitations on how many signals can be in the air for wireless internet to ever take over, it’s simply impossible to replace the amount of data currently being used to be replaced with wireless. Unless, they are going to put short range antennas (which still need wires running to them) EVERYWHERE, and I mean alot of them, even then some people will have trouble getting a signal. Even then, all data centers, universities, large businesses and more will require wired connections. Wifi works, because, it only has a range of hundreds of feet and the antennas are limited to a single watt of power, so that wifi routers don’t interfere with each other too much.
For rural communities there are possibilities like power-line internet (Also called “Broadband over power lines”). Basically the wires used for electricity are just wires and it’s entirely possible to send internet signals through them. The big issue is that transformers and other electrical equipment scrambles the signal. It’s not possible to send huge amounts of data this way, but, it may be possible in rural cities to run data wires along the the roads and next to each small group of houses or at the end of long driveways have a device, which puts the internet signal into the electrical wire. A corresponding device would have to be put into each house (or in worst case, possibly, before the wire connects to homes normal electrical components). Power-line internet is used in some places.
For more remote houses, the only options are Medium and Long-Range cellular Internet and satellite. All of these options have low monthly bandwidth limits though.
In terms of the overall national internet infrastructure though, as far as i’m aware, the wires running to most houses are good enough for internet faster than people would actually need. The bigger issue is the internet companies ripping people off and then not investing in their network components/(mainly backend)infrastructure or limiting you to charge more over time. These companies can also overcharge you if you have a long driveway and they have to put in the wire, which only they are allowed to do. Over time, they manage to send more data over the same wires and I don’t think the long distance wires between cities are any concern.
When you consider the infrastructure needed for houses whether it be roads, electrical wires, gas lines, water lines, sewer lines, or more. It doesn’t make sense to cheap out on the communications wire, a single coaxial cable running that last part is all that is needed for internet faster than you ever need (I think the local 1 gigabit connections go over coaxial, I know for sure the 400 megabits connection do). That wire can also handle cable and phone at the same time.
Also, like I’ve said before, the work from home trend is probably a prelude to massive layoffs, so the whole internet situation might not be that effected. It’s important to note, people elsewhere have said, that It’s almost definitely the case that certain companies like Apple will have to keep most employees at the headquarters to protect against corporate espionage, some google employees and other industries would have to do the same.
My home has fibre….delivers digital TV/Internet. That is the future.
Good comments on wire infrastructure, folks.
Here is an interesting take.
About 6 km from my house is a small village of 350 people. Fibre optic cable was strung everywhere in Canada to link all communities and The F cable runs down the road past my driveway to this village; yet, we cannot hook up. My son’s buddy is a tech for Telus and says our rural population will never be hooked up due to cost. So, I continue to use the coax cable link, (which is fine, but…..).
The cruncher is our valley has 3X the population of the village, and has 10X the value in property, etc. Furthermore, we pay 90% of all costs for the fire dept, local hall etc. But, we cannot tie into the internet link.
The great thing is the Village also has cell service. We don’t, which we prefer, but…..
I went to one too many family dinners where the millenials pulled out their phones and checked messages before the desert was served. Screw it.
Some small towns have tried to do community owned infrastructure. Co-Op type stuff. But usually the politicians sell out to the local incumbent telcos and block the momentum. So the citizens and businesses are stuck with legacy network infrastructure.
Really, the PROPER way to do it is just drop fiber everywhere.
As others have mentioned it currently is no good to be along backbone routes which tend to use high density, crazy high speed high power DWDM long haul fiber. The neighborhoods are serviced by systems like the FiOS passive optical networks the operate differently. You could have nodes along the long haul stuff that feed the PON setups though. The flyover towns in the USA need PON service *yesterday*. This would be a huge benefit to them.
I work for one of the internet via satellite services that is in competition with the Tesla one. Apparently it was originally in cahoots with the Tesla guy but then he bailed and decided to do the same thing, and is way better at marketing. It’s been a ride. Should be decent latency but not sure it’s going to match a fiber to the home service. Still a lot of satellites to go before service starts.
How much data can the fixed telecom links can handle. Again you do your work, store and upload from a local office once a day? How interactive is this work? Like just how wired up is Google headquarters? End game, they must invest in infrastructure companies, and retail customers will enjoy the benefits. It all comes down to electricity, and that leads to the bitcoin mining solution. Find sources of cheap electricity and set up farms. (Columbia river for instance). The internet developed in counter productive fashion, with the idea that everybody (planet) had to be connected at the same time, and have the same access. You and I can download websites from anywhere in the world, but people in rural America can’t download anything. Now they need to upload as well, and that is a bandwidth deal breaker. The asymmetry inherent in computer information media is unique. Far more stays inside, than gets out. Like going to a library and they hold the book up to the window and turn the pages. Intellectual property? Chinese are trying to steal info on Covid vaccine? Gee why would they want that?
@Paolo
You start family dinners with desert?
ps. I would consider those kids well raise if they can wait to desert
@Ambrose Bierce
Network effect. The more use it the valuable it is. Even so much that users of competing networks are sabotaged. Competing network in this case would be none standard internet
I have a one man machine shop with 3phase machines and deliveries from 40 foot trucks so I won’t be working from home. But I may never see traffic again on my commute to work if this trend continues.
Sounds good for having real estate in the exurbs. If you only have to go into the office a day or two, in non-rush hour traffic it starts to make sense with the price of real estate. Quality of life is not that bad if you are near college towns. Disclaimer, I have not worked in the office for 15 years.
Can you elaborate on why quality of life isn’t bad near college towns? San Diego, among other things, is one big college town. SDSU, UCSD, USD and a few others. In non Covid times there’s always a bunch of students around, except summertime.
Things are on fire here and this is probably partly why.
“why quality of life isn’t bad near college towns?”
In the context of rural America it’s because they have people around that have particular tastes with money to spend, where towns/villages/small cities in rural America without colleges often do not.
Anecdotal experience, I grew up in a rural area in the Northeast with a lot of colleges, some small state colleges, some competitive Liberal Arts colleges. The villages with the ‘good’ colleges always had more stuff i.e. good restaurants, movie theaters, cool stores, than the villages without. Also the colleges in these towns would in some cases would pay for things like new facades for old buildings, to impress the student’s monied parents.
Case in point: My first time to SoCal, I was driving through San Bernardino on the way from Las Vegas to LA. My very hungry wife wanted to stop at the first chain restaurant we could find after going down Cajon pass but I said “we should wait until we get to Claremont”, knowing nothing but that there are a few colleges there and therefore probably good food. She was incredulous until we found a nice little Mediterranean restaurant on a leafy street.
I’d think the dynamic is different here in San Diego than what I’d consider in a typical ‘college town’ in this context in that it doesn’t seem like the colleges/universities dominate the economy. They’re definitely a huge contribution, but not hegemonic. I would think Chico or Davis, CA a great examples, pretty high quality of life for the respective areas and are a disproportionate size of the cities’ economies.
Bit long winded on my part :)
Nope. Insightful comment. I graduated from CSU Chico and loved the ambiance, even considered moving back there after retirement.
Lots of universities/colleges will probably lock their doors and go out of business in the next few years which will kill all those smaller cities and towns they are located in.
The USA has too many universities/colleges and too many idiots, I mean students, studying there. They don’t belong there and they don’t have the intelligence or basic education needed to be there.
And once those schools close up shop it will alter the politics of the city/town – gone will be a lot of the liberal bs injected into those places by the students.
Case in point, Fargo, North Dakota/Moorehead, Minnesota – home of North Dakota State University (Fargo). Moorehead State, and Concordia (Moorehead).
NDSU surpassed 10,000 students in the fall of 2000 for the first time, and by Fall Semester of 2009, NDSU increased enrollment by another 10% to 14,189 students. Enrollment in 2018 stood at 13,650.
Moorehead State had 9960 students in 2019. Concordia had 2500 or so.
Population of Fargo was 90,000 or so 2010 so the student population made up 11% of the city’s population. In 2010 the population increased to 105,000 (There must be a bunch of idiots that want to experience -40 C in winter!!) and the student population increased as well to roughly maintain that same percentage.
Moorhead had 44,000 or so people in 2019 and the students Moorhead State made up 22% or so of the population. Add in the students at Concordia and university/college students made up a whopping 28% of the total population of the city.
Combined the population of the two cities was about 150,000 or so people and students enrolled at the three schools totalled 26,000 or about 17% of the entire population.
Fargo is more ‘liberal’ than the rest of the state with a larger percentage of the poulation voting for democrats than in other places. Grand Forks with the other big university also had a similar voting result compared to the rest of the state.
Moorehead has always been a left leaning city with a much lower level of income so I doubt that any reduction in student numbers will have that much effect there though.
In 2010 the population increased to 105,000
Should be:
In 2019
Plenty of loud and drunk fraternity dudes… HARD PASS!
Those are in the college town. Near it so you can go to the restaurants, pubs, movie theaters, music venues, malls, hotels, hospital etc. of the college town but far enough that no frat boy is in sight. But the problem is with covid those colleges are closed
Why? I rather have 10 acres close to a real city, Ryan Holiday’s way.
They’re sort of closed. I have three kids in college. One is all hands on in class at a JC. The other two are “mostly” online. If you’ve got 4 classes and they’re mostly online but have one stinking lab, guess what, you’re going to have to live on or near campus. I think they’re doing this to justify their (the campus’ existence). Either way that means students are returning. I’m keeping an eye on the rental situation here and will know really well in the next 5 to 7 days how things are going to pan out. Typically, right about now, the masses move in. The forward thinkers get their places (the best ones) in June and July.
One SD school is Med, the other Law, and the other Business (party). Been around here all my life and never thought of SD as a college town? A military town, yeah.
Earlier I mentioned that “San Diego, among other things, is one big college town.” We’re definitely military as well, but not just military. Back in the early 90’s we were very reliant on military and defense and when the budget cuts happened we got nailed. The most obvious thing we’re also is a tourist town. Bio-med and technology is huge here, too (look at Sorrento Mesa and much of Carlsbad). Cross border traffic is a tremendous source of our economy as is international trade. Our port is very busy with international cargo, cars, etc. The list goes on and that’s why I said “among other things.” The other things are huge, but that doesn’t take away the fact that we are a big college town as well. UCSD isn’t just medical; they have numerous colleges and are also very well known for engineering. I think the many nursing, biology, chemistry, engineering and other students at SDSU wouldn’t think of SDSU as a business school. They are a party school, though, and do bring a lot of that atmosphere to the College Area. The College Area is essentially a small college town of its own within the larger economic region. Look at the Gaslamp area and PB any given night during the school year and you’ll see professionals and military mixed with gobs of students. Point Loma Nazarene is also a business school and well known university. USD is best known as a law school, but does offer more than just that. There are numerous junior colleges through the county as well as smaller private lesser know colleges all over. San Marcos State University up the road is within the county. We’re loaded with schools and folks from across the country know it and what to come here. Just adding up the enrollment from the universities and the main junior colleges comes to 250,000. Active duty military is at 110,000 and only comes close to 250,000 when dependents are added in.
San Diego is only a college town, no; San Diego is a college town as part of a greater economy, yes.
Our diversification here is what I believe will save San Diego from the current economic, political, and pandemic storm we’re all living in now.
The demographics have changed, SD used to be much older. People came here to retire (and die as the story goes). Wyatt Earp retired to SD after OK Corral. Now we have younger people, (hispanics), and less affluent, and less conservative. Fewer military. We are probably going to have a gay latino mayor after the next election. I would describe the SD universities as integrated into the community. What seldom is considered is how Tijuana and SD represent one extended city, with mutual interests, separated by only a border.
That’s a point often forgotten by most and something I always remind folks of. San Diego and TJ are essentially one giant metropolis and for the most part the same city/region. Demographics have certainly changed here. Orange and San Diego counties used to be reliably red but aren’t anymore. The folks moving in and are bringing their blueness with them and it’s only a matter of time before we’re lumped in with the rest of the failed left coast cities; I give it 20 years. Gloria was mayor briefly but I’m not so sure he’s getting it this time. Gloria has one of the most interesting race mixes out there and you’re absolutely correct as he will likely appeal to hispanics, but Bry is likely going to get most all the Sherman votes which should push her over the top.
I think the next big one to jump on the work is Tesla. Since they already build their battery cars in tents, it is not a big stretch to supply each employee with a backyard, “build” tent. Then on a weekly basis the fleet of Tesla battery trucks can bring kits of parts and take away finished assemblies ( or whole cars in the case of ambitious employees). It will cut way down on workers comp claims I think.
ROFL.
You have to be thankful for the little things in life. Traffic in the SF bay area is down considerably from what is was in early February. Every dark cloud has some kind of lining, the only question is whether the glass is 99% empty or 1% full.
What you’re describing is a lot like the Great Leap Forward, where factory workers can work from home. If only there can be some form of telepresence robot linked with VR/AR interface so that the factory worker can be at home interacting with their colleagues on a real life assembly line. It would sure cut down on comp claims.
That’s exactly what I’ve been envisioning for sometime on the engineering side of things, even for field engineering which is my specialization area. It still needs work but not nearly as far fetched as in the past where it was only found in science-fiction.
Seneca’s cliff, you have it now. It is a cousin to Chairman Mao’s Great Leap Forward with the backyard iron smelters.
That only lasted about a year, until Mao was visiting a real steel mill. They explained to him that the backyard smelters were not making real steel. Work From Home might suffer a similar fate.
This is a great example, the backyard smelters were not making real steel and the backyard Tesla build tents will not be making real cars either. but in todays fed levitated stock market economy that makes no difference.
They’ll probably talk the government into changing them into residential apartments or condos.
Just the way governments tend to flip flop for the money.
It will be quite difficult to manufacture anything from home on a computer. My industry (Aerospace) has taken an absolute beating.
The US will at some point have to produce something besides services no?
With BA wasting 43 BILLIONS in buy-back shares (2013-2019) without a spending a DIME on the festering problems of 737 MAX, i shed no tears!
What kind of business model is that, under kind of capitalism?
A poster boy for Corporation GREED!
BA is not alone in selling out its future. INTC completed $90B in buybacks over the last 15 years, and discovered on Friday that it had sold its future for (very short term) capital gains. As with IBM as well: difficult to invest in the cloud when you’ve spent all your money ($200B) buying shares at a higher price than they are today.
You are right that they are not alone but stood out b/c of their incompetence with 737 Max, by NOT spending a dime!
BUY-BACK shares was ILLEGAL until 1986!
50% of of gain in S&P is mainly due to buy-back shares in Billions, if NOT trillions since ’09! NONE went into productive Economy but fattening their options! There has been ‘financialization of the Economy at a cost to the main street!
All thanks to Fed’s policies of favoring DEBTORS and punishing the savers!
A great RESET is badly needed and the Covid 19 is accelerating!
Don’t insult the Fed. They’ve been producing dollars like mad.
On a more serious note, there’s always agriculture work. The US is at least self sufficient in that regards.
Most of the farms are highly automated and have fewer manual labor type jobs anymore.
People who made jet engines can now do stoop labor. Jobs for all!
Like Mao’s great leap forward! Forge pig iron in the backyard…
“It will give companies and employees more time to fine-tune the whole process of working remotely..
which will make it more entrenched.”
This is how society shifts. Let’s see if it sticks. I think much of it will.
That 200k work force is fixing to get gnawed on like Old Lou the Bluetick gnawing on a ham bone. Google Domestic Surveillance Systems won’t be far behind. If you are a young Turk that’s eager to climb you will have to install that extra camera in your bathroom.” Wake up Bob you’re drooling all over our tablet” will be coming to dinner.
I LOVE working remotely, was able to leave Denver thanks to it, and save an enormity on rent.
What’s not to like?
Reassigning your work to Hyderabad or Bangalore.
The quality of most outsourced work is dogshit, which is why large tech companies still pay exceedingly high American wages, by and large. This won’t always be the case, but the dioloma mills in China and India are flooding the market with CS grads that are functionally illiterate when it comes to CS.
About 20 years ago I used to post on a website that was similar to Farkdotcom today. The webmaster was a systems analyst. He was constantly complaining about coding jobs being outsourced to India. His website stopped updating for a long time. Eventually he notified everybody that he was shutting it down, He was working in India recruiting programmers and setting them up with jobs with American companies. Twenty years ago. Remote work is not a new thing.
Data security will keep most essential workers still going into the office.
Data security isn’t that much better when you’re at work anyway. Social engineering is effective anywhere because its target is the human, wherever he/she is.
Wrong. Home networks are enormously less secure.
Among other things: the home network is almost certainly using a cheap, crappy wifi router which the script kiddies/youtuber trained can crack in under an hour.
I agree with you from a technical perspective. My point was more along the lines of social engineering. There’s a reason IT departments hammer employees with reminders about vigilance with respect to phishing emails. and these emails show up in your corporate email all the time. If you click on these and follow the heartfelt pleas for help from long-lost relatives you didn’t know existed and who happen to be located in Nigeria for some reason, the end result is the same. Home or office won’t matter in this case.
DeerInHeadlights,
Humans are the weakest link in any security setting.
IT is no different.
NSA’s biggest success stories were from the HUMINT side and not the technical side and I know that for a fact.
The USSR also had ‘good results’ from the Walker spy ring.
You don’t even have to crack the password. Just get into the house under some pretense and look at the password on the bottom of the router.
@roddy6667 – works great in the office too. Just check the pencil drawer for a small post-it with username and password. Or worse, the bottom of the display. Early on I spent many Sundays checking work areas, then chastising folks on Monday.
Social engineering does work, but they only succeed when companies have poor information security to start with.
Just a few examples: how many companies have active data classification and retention policies?
How many companies segregate their internal networks?
There are many examples of huge companies which haven’t and been burned: the NotPetya victims for example.
Now add in home (in)security: the book-keeping intern who has the same resource and company network access as the head of R&D, who lives in a commune of 5 other youths.
been working from home since 1999, its great for a while, then you want some interaction on ideas that is not drenched in Arial Font….
but the cities are in big trouble, my wife loves the city…..I pray that she will begin to like it less…..
the real bummer is the really good places to eat getting chewed up by Gruesome and his corrupt cronies….
Two points that I predict:
1) Alphabet employees will return only to Alphabet owned real estate (And they will use legal muscle to stiff the landlords they abandon)
2) it is far more difficult for employees working remotely to organize against policies to which they object . The passion of the motivated gets lost in a video conference plus they might suddenly and mysteriously get disconnected ?
Working from home is great when you live alone, or if you have a large home. But for the rest of us, if you have a family it becomes a burden on the family. No noise during working hours, means no tv, no music, no vacuuming, no long conversations. And with covid, it’s not like they can just go outside, hangout with friends, or explore other interests.
Very true! Works great for me because I only live with my son. With a male adult in the house all day long it would get crowded pretty soon.
My ideal is having enough land to build a separate building where I work. We’ll see. I can already afford it but land prices will keep on going down imho.
Air conditioned tool shed.
One option is work spaces… in other words, the burden of your office is transferred to the worker.
So, economically speaking, the workforce in the US should become 1099 LLCs and rent workspaces if they can’t afford a home that affords that luxury.
Right, because shared workspaces are just so much safer than a single workforce in a single work place.
And if one workspace sharer gets COVID-19 and transmits it to others, who gets sued?
Your idea is correct RH, but ya really don’t even need the LLC.
”Sole Proprietor” is an IRS accepted category of business, and comes with appropriate tax deductions similar to any corporation.
Been working remote/contracting professional services that way, paid on 1099, since 1968, and was told by CPA to stop taking so many deductions or it would seriously deplete my SS, so I did so in 1975 at her suggestion, and have enough SS to live fairly well.
I do caution folks to make sure to be very careful about delineating liability responsibility, either avoiding it completely, or designating limits and purchasing (tax deductible ) insurance for at least the limits designated in your contracts with your clients.
IOW, do not assume anything, but specify exactly re liability.
Petunia,
For not a lot of money, you can soundproof a room in your house. Then your kids watch TV in the room next door and you don’t hear it. I’ve done it in two houses and it’s great.
“And with covid, it’s not like they can just go outside, hangout with friends, or explore other interests.”
Sure they can. That’s what my kids do every day. Every day at around 10 or 11 my kids go outside and ride their bikes with neighborhood kids and/or go to one of their houses. Some days they even remember to put on sunscreen. :) Luckily my house is “boring”. We don’t have a pool or trampoline or basketball court. So nobody ever comes here (YES!!). In March and April that stopped as kids for the most part stayed inside and away from each other. But once May hit and summer weather showed up, it was back to normal on that aspect. I’m honestly awestruck that some parents have kept their kids locked up for the past 5 months and presumably for months or even years to come. That is going to do some serious phycological damage long term.
I think this WFH trend will not change until at least next summer at the earliest because no one wants to commute in the winter anyway and the virus spread might just explode come cold weather.
No employer wants to be in the unenviable position of asking their employees to come back and face:
1. Refusal by employees to come back
2. Lawsuits should anything happen
The primary driver for RE increase in the suburbs seems to be:
1. First and foremost the need to have a bigger place to live in since you’re now having to spend 24 hours in it as opposed to just sleeping overnight and the weekends
2. Wanting to park your capital in “safer” and physical assets than measly bonds and the very volatile stock market
3. FOMO on part of those merely wanting to profit from the trend and not specifically having the need for RE in the suburbs
4. Not wanting to deal with nightly riots outside your window.
Actually that should be 1.
Are you from the United States? If this wasn’t sanctioned in some way or another those companies would just fire the people who are too scared to return. Where in our entire history have the PTB ever bent over backwards for workers unless they were working towards something just out of eye sight?
So, if everyone goes home WHyTF do we need corporations. Why not coorporations. Dump the stockolders into bonds or buyouts and place stock in the name of all employees. Make home improvements for work part of the business costs. Let the employees turn the spy cameras in themselves to make sure they work enough to benefit from their stock pool. They can get excercise at home in a giant squirrel wheel hooked up to a generator to cut company costs.
Because corporations, even LLCs have many advantages.
Wolf, there was a comment about the coming downturn cleaning out bloated local government. Having been around and working for the S_itty, as I call it in friendly company, I seriously doubt much good will come of it and it will probably hit the innocents hardest. especially with the other unions eyeing police funding and prop thirteen leading a lot of people to not care as much about governance (marginal impacts) and others who think gov’t should provide jobs of last resort (and thus often have low expectations) . This voter fragmentation, due to the above and other issues, hurts accountability and lets incompetent middle managers, office politics and cronies flourish. actual functional employees need a few more wins through the FBI and the courts for a chance of change. Otherwise, the poorer side and the reformer types get pushed out, as usual, while the problem folks stick around hoping for a buyout.
And taxpayers get some short term savings with shoddy services and higher longterm costs.
Regardless, paying for operations with a bond, unless I misunderstand the ballot, seems moronic. We should have already been providing optional furlough and mandatory in some cases. Instead the old incompetent guard will run until they have to layoff and give management buyouts.
If schools are remote and the teachers are as well, property taxpayers should expect a SUBSTANTIAL reduction of our school taxes and the right to use school facilities for non school events, that are paid for by bonds on property taxes.
I’ve been thinking about issues which could arise from WFH such as injuries such as carpal tunnel or injuries from not have ergonomically correct office chairs, etc. Also, would companies pay their employees at home a stipend for their internet connection, or other computer equipment if needed? It seems unfair to not have the employer at least contribute something for the employee. What about pay based on the cost of living when the employee was in house? Moving from SF Bay Area to a much cheaper place might cause one’s pay to “adjust.” Just some thoughts.
The money saved in commuting costs would more than offset $50/mo for high speed internet at home (which virtually everyone already has anyway).
If your company reduces your pay because you move to a house with a lower cost of living, will your company increase your pay if you move to a house with a higher cost of living?
Max, I’ve been thinking about the same legal issues lately. Workers comp for injuries while working from home seems to be an issue we haven’t addressed as an industry yet. There is a general liability issue here that needs to be explored.
I had heard June 2021, more than 3 months ago, from a Google insider. Amusingly, it was at one of the last on-site, public Google events in SF – after one of their employees was publicly reported as COVID-19 positive.
I guess its official now.
Pretty soon, as part of the next stimulus package, employers will receive liability immunity if their employees get covid at the workplace. I wonder if that reverse the WFH trend a bit.
Nigh. There will be no liabilities. No stimulus package.
Wolf, you’re looking at one side of the coin. Perhaps real estate is not doing so well in the Bay Area, but those people who can now work from home (for a year, and perhaps forever) are showing up … in Arizona.
I call it “California East”, not just because when you drive through neighborhoods here you might think you’re in California, since the SouthWest housing style is the same, the palm trees are the same, the sunshine… but also because so many Californians come here. CA license plates everywhere. I went out to the park today and a giant SF sign in the back window of a car in front of me. I swear I see at least one a day, and I don’t drive much.
Since January, house prices have gone up about 15% here. It’s beyond ridiculous. I’ve looked at about 100 or so houses on Redfin, and (especially new) house prices are through the roof.
There are now quite a few places in California where you can find a cheaper house than in Gilbert, Chandler, Tempe, Scottsdale or Phoenix, just to name a few popular cities here.
It’s like air in the balloon, it got squeezed in California (largely due to failed socialist policies of the ruling party), and it showed up in Arizona, Texas and other places. No wonder Maricopa county is the fastest growing county (and Phoenix the fastest growing city) in the U.S.
I wished California government got its act together, we need a break here in Arizona. Too many people…
Trust me when I say native Californians are glad to see people go home. I doubt many of them are actually from here. The nation has been filling us up since the last depression.
All the California naysayers should have stopped cheer-leading the exodus. As you illustrated, your neighborhoods, burgs, and villages might get the California experience with none of the benefits.
Lol, nigh. California has the largest producer economy in the US. All your seeing is credit bubble excess. It pops and Arizona says goodbye. A socialist policy???? Where?? All I see is debt and a bunch of it. Florida is even worse.
I will be very happy when California pops. The house I was eyeing for a rental in Maricopa went from 205K in January to 255K today. Goodbye ROI (return on investment)… California license plates everywhere, raising prices for locals…
I think California does have socialist policies, like in entitlements, unions, rent control, tax policies and such. It also has corruption (NIMBY – “not in my back yard”), union pricing in infrastructure, preventing new construction.
But whatever it is, it was like this in 2008 too. Phoenix kept going up for a while, long after other metros popped, and it took longer to recover on the back end.
I expect prices here to continue to rise stronger than elsewhere, and then to dump catastrophically in the latter stage of the economic depression. Although the area now has many more tech jobs and manufacturing, mostly companies relocated from California, Washington State and elsewhere, something we didn’t have in ’08… Still, significant adjustment down is coming as soon as the influx of “housing refugees” from elsewhere stops.
I am wfh from a small lovely village in Eastern Europe right now. The 4G modem (air) gives me a faster connection than when I was wfh from the Peninsula in the Bay Area. I am a dual citizen, and this is an old renovated family home, so this is pretty awesome. I am pretty glad I put $$ into this renovation rather than saving more of a down payment, as we endlessly look to buy in the Bay Area. We will be back by the end of the summer, because weather, and I will get tired of working California hours at some point, but I certainly expect to do this next year if possible. Kids love the freedom.
I’ve said it before and I’ll say it again. The work remote trend is not going away. Now that people have seen the light, the desirable employees will be able to call the shots on this. That’s not to say that office culture will die entirely, and I think a hybrid (2 days a week in office, 3 from home) is more likely, but anyone who thinks that the world is returning to February 2020 ever is deluding himself.
You have to show that working from home is more productive before it goes mainstream. Short of that, corporations will not buy into it. As for “desirable employees”, they’ll want what’s best for the company, because they know what’s best for them in the long run.
Companies are using this WFH time to evaluate employees, among other things under review. My guess is that the “key” employees will be retained as employees with benefits, etc, and the “others” (not Key) will turn into 1099 contractors or just see their work moved overseas.
Now that mass transit, the anchor around which highrises are forced upon communities statewide through the elimination of single family zoning has become a leper, state senator Scott Weiner and his gang of construction company payoff progressives have to come up with another way to benefit their investors.
I bet the Diridon Station and it’s shopping mall is never built.
Long live the suburbs with their built in social isolation, sunny backyards and mini-farms!
Tony 22,
I would never live in a suburb or in a single-family house. I hate yards. I want panoramic views and I want to walk nearly everywhere I go. My wife is the same. There are millions of people like us. There are many reasons why people LOVE living in big beautiful cities. There are reasons why these cities are so crowded. And we’re all ecstatic that some of the people who don’t like big cities are leaving and are making some room.
Thank God, not everyone thinks the same and likes the same. And tolerance is a good thing. So enjoy your backyard and your mini-farm.
And we’ll enjoy our Bay Views and the fact that when I visit my doctor, I get to go on a gorgeous 8-mile walk roundtrip, including up and down Pacific Heights, twice, at full speed. Tourists come from afar to see this, and I just get to see it on the way to the doctor. And I get in some great exercise too, 45-50 minutes each way, with gorgeous views. And the temperature is nearly always perfect for walking. You just cannot beat that.
I lived in big cities most of my life. Grew up in one, went to college in one, lived in a few after college. For me living in one into my 20s and early 30s, no other place I’d want to be. Afterwards, most of the big city things weren’t that important anymore. My wife is from a small town and each time I visited her parents, the more I liked the idea of living somewhere like that. Eventually we made the move. Not quite a small town, more small city, but close enough. Wouldn’t trade it for the world. Perfect for me right now.
I live within 90 mins drive of several ski resorts and within 30 minutes of 4 lakes and countless rivers. Also more golf courses than I can count off the top of my head. That is heaven for me, not hiking 8 miles to my doctor’s office. But as you said, everyone has different needs/wants, likes and dislikes. If SF is your think, all the power to you. You’ve found your happy place and that’s awesome. Lots of people never find it.
And big cities are always a quick flight away if I get the itch for a weekend.
it would be nice if we could get some more warmth during the summer though…..Summer is about sandals and t-shirts not jackets
Yes, there are days when I miss that. But the Central Valley and the Foothills aren’t that far away if I need a good bake.
I used to live in SF (Nob Hill), and loved it. But at some point I started to crave the warmth and I felt my life was going nowhere due to cost of living (and having my own place), even though I was making $130K as a software engineer, which was a substantial sum at the time (I was 37 back then, some 15 years ago).
The apartment I rented for $950 a month now is over $3000. It was rent controlled and allowed me to save money to buy elsewhere. Although I firmly believe rent control is wrong and SF (and much of CA) wouldn’t be in this housing mess if they refrained from it.
I worked remotely ever since (and kept my salary too, however I didn’t get as much raises as the people who stayed there, which is fair I guess). So this virus thing didn’t disrupt much of my life.
I live in Mesa, AZ now in a spacious house and love it too. I was a “city bug”, especially since I grew up in a big European city, but have learned to love the burbs and the space and the suburban decor, even though it took me some years. Especially nice is the lack of homeless and feces (which weren’t a problem when I was there, but a few subsequent visits discouraged me from ever contemplating going back to SF).
Happy for you Wolf, the city will be quieter and more relaxed as you go on your walks. Different strokes for different folks. We too loved the walk from home to the cafe atop the Art Institute, then over the reservoir at Sterling Park, down all the shops on Union and up over Lyon Street to Laurel Village. After a lifetime here, that view loses its lustre.
However, imagine the change of the last six months repeating for a couple more years. If practically every business one passes is closed and you are one of the few people on the street, would that change the ambience?
Might not the same guys that drove around breaking into tourist cars on Lombard Street change gears and rob pedestrians they roll up on?
The police will protect? Don’t make me laugh. People may soon be on their own in a mostly empty city. Renters can leave when they want. That is an advantage. Our daughter convinced us to sell after Thanksgiving. What a great move that was. We are paying rent to a friend while looking for the dream place. Nothing on the market though, darnit.
Yes, let’s bring on more debt and you sound like a RE globalist.
Dead cities walking.
You’d have to be insane to live in SF is Google says you can work from anywhere in the world.
Just Some Random Guy,
See my reply to Tony22 just above ?
It’s funny, a lot of people have being using the WFH acronym, it could be just me, but if the font is a little smaller, I usually have to the a second take to be sure that it isn’t WTH.
“Sublease space surged by 40% and now accounts for about half of total availability.”
This is interesting. I’m curious what companies are doing with employee equipment and possessions when they sublease their space. You’d assume they would use prior, standard processes. But, that’s not what I’m seeing. An example…
In my company we’ve been locked out of our offices for 4.5 months now. No one has been allowed in. Employees have personal items they can’t access. Plants have died and withered. Bananas left on desks are gross. Then there are departures. Former employee’s were not allowed to clean out their desks. We’ve hired new people and re-assigned those desks – even though no one has been there to actually use them. Without allowing employees to access the office, subleasing is going to get very difficult. Or, employees are going to lose their “stuff”. Seems like this should be a trivial problem to solve. For my company we are struggling, and that is surprising.
From what I have seen, most of the sublease space on the market now was planned for future expansion and never occupied by the company that leased it originally. That’s the space that goes first. Then when you need to shrink the footprint further after having shed a bunch of employees, you put the formerly occupied space on the sublease market.