End of the Era of Voracious Corporate Appetite for Office Space

Formerly temporary, now persistent work-from-home turns into slow-motion nightmare for office landlords.

By Wolf Richter for WOLF STREET.

It has been nearly 18 months that many big-company offices became no-go places, and the temporary disruption that was supposed to last only a few months has been dragging on and on. The vaunted and repeatedly delayed “return to the office” – as flexible, partial, and “hybrid” as it was supposed to be – is being pushed out further into next year. February 2022 will close the second year of this shift to working from home.

Apple, which spent a massive fortune on its new campus in Cupertino and wants its people back in it badly, said that it would delay the return to the office until at least January 2022. Amazon, DoorDash, Lyft, Chevron, Wells Fargo, Facebook, and many others have delayed their return to the office until next year as well.

This is on top of the numerous companies that have moved to permanent work-from-home models.

The temporary situation is now becoming ingrained. Routines have formed around it, and people and companies have gotten used to it and found solutions to the problems that arose from it. They discovered the benefits and cost reductions and productivity gains that came with it.

The longer this goes on, the less likely is any return to the old pre-pandemic normal, even as some bosses dread the possibility that the old way of managing people and valuing work may become obsolete.

But all that can be worked out. What can’t be worked out is corporate demand for office space, which has been sagging and pressuring the office sector of commercial real estate.

These companies aren’t going to default on their office leases and mail the keys to the landlord. That’s not the issue. They will continue to make their rent payments.

The issue is that these companies have put vast and historic amounts of office space that they lease but don’t need on the sublease market, trying to find tenants for it, and this sublease space comes on top of the space the landlords are trying to find tenants for. But when lease renewal comes, many of these companies won’t renew, and then it’s the landlord’s job to find new tenants.

Office occupancy, as measured by workers actually showing up at the office has fallen for the fourth week in a row, from already dreadfully low levels. Kastle Systems, which provides electronic access systems for office buildings, said today that across the 10 cities it tracks, office occupancy in the week through August 18 had dropped to 31.3% of the level before the pandemic (early March 2020), meaning that occupancy was down by 68.7%:

Office occupancy fell in all 10 metros, but fell by the most in the metros that had made the most progress with their return to the office earlier this year: Austin, Dallas, and Houston. Those three metros had already bumped into the 50% line, but now amid the resurgence of the virus in those cities, had dropped to the 45% range, which is still far higher than in the remaining seven cities.

Office occupancy in the metros of San Francisco and San Jose, which is most of the Bay Area and Silicon Valley, and in New York City dropped to the 19% to 22% range, meaning office occupancy is down roughly 80%. These metros are among the most expensive office markets in the US, and they have turned into epicenters for working from home:

Survey after survey has shown that working from home has become very popular among workers, and that it has become more popular the longer it dragged on, and that many people are willing to take a pay cut if that’s what it takes to keep working from home.

People have organized their lives around it, have bought houses to accommodate two offices, have eliminated the endless and stressful hours of commuting, and the expense of it, and they no longer get slowed down by office chatter and sundry annoyances, distractions, and worthless meetings, and they can get their job done faster, and sometimes better. And some of them have even used the extra time they’re saving to pursue a side gig.

And the benefits of working in an office, the camaraderie, if any, the possibilities (fraught with risks) of finding a date or a mate at the corporate coffee bar, the free gourmet lunches at some companies – all this is receding into the background.

The longer this goes on, the less likely people are willing to go back to the office five days a week, and the idea of going to the office two or three days a week may already be a stretch.

This is a red-hot job market, with “labor shortages” written all over it, and with recruiters aggressively plying their trade trying to lure employees away from one company and send them to another.

Employers are going to have to bend over backwards to attract and retain their biggest assets – productive employees – and they’re having to make room for what employees have gotten used to and have structured their lives around: Flexibility about working from home.  This isn’t going to get suddenly undone next February.

Some bosses are having a hard time with it, and have little enthusiasm for remote work, and they want their people back at their desks where they can be seen and monitored and “managed.” But in a hot labor market, they don’t have the final say in this. The employee does.

For landlords in the office sector of commercial real estate, this may be the end of the era of voracious appetite by businesses for office space.

Office markets, it now turns out, have been hugely overbuilt. Companies have for years leased office space, or even purchased and built office space, that they thought they might grow into some years down the road, but they never actually grew into it, and they were just warehousing empty office space for future use that now isn’t coming, or may be coming to a much smaller extent.

Sure, some companies will sign new leases to expand their office footprint, and new companies are popping up that rent office space, which is now getting a lot cheaper in places like San Francisco. And there will be many renewals, and some of those renewals, as we have already seen, will be for less space.

But the net effect is that there are vast amounts of unused office space out there. The latest and greatest office buildings will have little trouble filling their space if the rent is low enough, amid a flight to quality, though those lower rents might not have been planned for.

Over time, as long-term commercial leases expire, and as companies are upgrading their digs, the vacancies shift to older buildings.

That is already happening in Houston, the worst office market in the US, where the oil bust that started in late 2014 popped the magnificent office bubble. New fancy buildings have come on the market since then, and landlords are luring tenants away from older buildings, as vacancies have skyrocketed to 31% of total office space.

San Francisco is catching up with Houston, after having been one of the hottest office markets in the US through 2018. It takes years for this to wash out, timed with the expirations of long-term commercial leases, giving cities some time to think about alternatives for the vast amounts of aging and now unneeded office space.


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  128 comments for “End of the Era of Voracious Corporate Appetite for Office Space

  1. 2banana says:

    And many of these cities have wage taxes.

    It’s like getting a raise not being there…

    “People have organized their lives around it, have bought houses to accommodate two offices, have eliminated the endless and stressful hours of commuting, and the expense of it, and they no longer get slowed down by office chatter and sundry annoyances, distractions, and worthless meetings, and they can get their job done faster,”

    • RH says:

      I doubted that it could work before but scanning and electronic documents, combined with Zoom or its equivalents may be ending full time work at offices. Not all jobs can be performed from home but more can be.

      I look forward to more employers being flexible.

    • Djreef says:

      I know my wife gets much more done at home than she does going in. She actually works more hours to boot since she doesn’t have to fight the other commuters on the road for 1.5 hours twice a day.

    • Tony of CA says:

      Agreed. I up to never enter a corporate office again.

    • Anon1970 says:

      If you work from home in NJ and you used to commute to a job in NYC, do you still have to pay NY state and city income taxes because that’s where your employer is located?

      • RightNYer says:

        You only pay NYC income taxes if you live there (the commuter tax was abolished over 20 years ago). As to state income tax, that’ll be for the Supreme Court to decide.

      • candyman says:

        Ma has sued NH over this very subject. All those commuters living in NH dont want to pay. The Supreme court, I believe has ruled in favor of Ma. Biden Admin. wrote a friend of the court brief. this will play out all across the U.S.

    • c1ue says:

      The question is how will the already significant isolation of Americans be affected.
      People already don’t meet new people much – without an office, is this going to get worse? Or better as people “work” on the beach etc.
      And of course, all this really only applies to white collar workers.
      Still waiting to see the next wave – WFI (Work from India)

      • Harrold says:

        Outsourcing to India started back in the 1990’s.

        Costs in India have been rising over the past decades, and without the need for expensive offices, the cost advantage is not nearly as significant.

  2. David Hall says:

    Condo conversions.

    • 2banana says:

      To live close to the job and company you are virtually working for….?

    • Prof. Emeritus says:

      The more specialized a building, the less suitable it is for conversion. Basically any commercial-purpose high-rise constructed after the mid-’70s is unfit to be turned into a living space, the architects eliminated that possibility at the earliest phases of design in exchange for higher profitability numbers.
      I mean you can always lobby at the regulators to change the requirements as to what qualifies as habitable space, but where the article mentions old buildings are getting out of the market I guess Wolf refers to ’80s and early ’90s structures that are past 2 or 3 big renovations. These are too run-down to be feasibly turned into a Grade A office space, but are already too functional for condo conversions.

      • Nik says:

        The Regulations will easily be amended…when the ‘Homeless Storage Units’ come rolling out in a city or state near you…

      • David Hall says:

        Some office buildings may be converted. They may open up the center of a building for use as an atrium and keep the outer walls/windows for the outer views. The steel frame is good. The roof is good.

        Before the 2008/2009 foreclosure crisis, someone tore down a strip shopping center in a DC suburb and put up mid rise multifamily housing units.

      • Old School says:

        Reading Buffet and Peter Lynch makes me view fancy, smancy headquarters in a negative light and a poor use of shareholders money.

        When Apple built it’s futuristic headquarters I assumed it was marking the top for the company, but I was wrong.

        • LeClerc says:

          Apple spent pocket change, around $6 billion, on Apple Park.

          They could convert the space to an indoor root vegetable garden and not miss the money they spent.

          Such is the scale of Apple’s profits.

        • Bill says:

          You’re probably right about Apple. It’s called the “Versailles Effect.” No new product categories are coming out of Apple. Instead we hear about changes in component parts. It took 15 years after they built the Sears Tower for everyone to realize that Sears was heading to the crapper.

        • Anthony A. says:

          Beautiful facility, that Apple park. I wonder what it will be used for when Apple no longer is viable someday.

  3. NoPrep says:

    Vaccine mandates coming all over for in-office work will, I think, work against larger number of folks going back to the office. Or maybe not? How this plays out surely depends so much on mass psychology. There’s a psychic war going on, I can feel it. Infowars has not gone away. But Trump is telling his people “get vaccinated!”

    • Wolf Richter says:

      In San Francisco, about 80% or so of the adults are fully vaccinated. They feel a lot better about going to the office if EVERYONE is vaccinated. My wife, who has been going to the office throughout the pandemic (“essential business”), is in this situation. As soon as vaccines were available, EVERYONE in the office got vaccinated as fast as possible (there was no such requirement at the time).

      Now you have to be vaccinated in order to sit inside a restaurant or bar in San Francisco. This went into effect before the weekend. So Saturday night, when we went out, indoor spaces at restaurants and bars were PACKED. Everyone is vaccinated and feeling safer because of it.

      We still dine outside, however, because we love it and because it adds another layer of protection on top of the vaccine.

      If the vaccination rates are high, vaccine mandates don’t impact businesses negatively. In fact, there are lots of benefits, including higher revenues because everyone, including customers, feels safer and spends more.

      • BatHelix says:

        I’d love to go long/short Northeast / SouthWest office space credit default swaps. Too complicated to really do but something like that would probably pay off, maybe you have a better idea.

        Long term I think a lot of those areas that have been high growth areas like AZ, FL, and TX are going to start reversing because of climate change impacts and how they are ignoring it. Sadly we will all have to bail them out because they won’t do anything about it until it’s too late and costs 10x more. Weather and water shortages will soon have real impacts though.

        • RightNYer says:

          Florida will not be impacted the way the West will because of water problems. We’ve been hearing about rising sea levels for decades now. It’s all nonsense.

        • Wolf Richter says:

          Rising sea levels are not nonsense in Miami. They’re a huge expensive problem having to be dealt with right now, including the installation of pumps. Lots of images on the internet of what happens during big high-tides in low-lying areas of Miami.

        • Harrold says:

          Texas is some how becoming cooler and wetter.

          In Dallas, on August 18th, the high temperature was only 81 degrees and the high for the month has only been 97.

          Last August several days hit 106 degree.

        • Anthony A. says:

          Harrold, I’m in Texas (Houston) and hot is back as usual. A little cold in the winter is normal and a “real cold” spell happens every 15 years or so down this way. Look up the Houston cold snap of 1989 and see what happened then. We have lots of water too!

          Harvey storm in Sept 2017 dropped 53″ of rain on us. We are pretty tropical 200 miles south of Dallas.

      • Brant Lee says:

        I suppose that is the lure to the West coast for companies and employees, hence high cost: The weather, location, and culture. Wolf, you know dining outside in Tulsa would be miserable at the moment with the heat, humidity, and flying pests. A nice deck and pool at a home in Oklahoma on southward is only comfortable for a very few months out of the year. I think those who moved to Texas from California are seeing the harsh reality in the weather from the move (not to forget the great Texas freeze). It’s all about living costs and living conditions. Eventually, most people want to migrate west.

      • Swamp Creature says:

        There is a lot of peer pressure that affects peoples willingness to get vaccinated. Around here most people got vaccinated as soon as the vaccines were available. We have 90% of adults fully vaccinated. 98% of the vulnerable are fully vaccinated. When it became the norm, and no one reported any bad side effects then it became easier to get the holdouts vaccinated. I can’t understand why some states only have 37% of the people vaccinated.

  4. CCTom says:

    Think of the ramifications of this. Here are a few.
    1) Lower property tax collections by cities as buildings are revalued downward
    2) Lower sales/business tax collections by cities as workers aren’t buying food, clothes, etc. near their offices
    3) Lower ridership on mass transit causing (even more) money issues for cities and states
    4) Potential commercial mortgage defaults as owners can’t make payments once long term leases end
    5) Urban blight as stores close that serviced office workers
    6) etc. etc. etc.

    The stock market is papering over it now. However, this story is far from finished. It’s going to take a few years to play out in a slow motion roller coaster ride to defaults and serious money issues by states and municipalities.

    • qt says:

      “The stock market is papering over it now. ”

      I don’t understand why this is a problem with the stock market. I mean tapering or discussion of tapering, or higher interest rate have a bigger negative effect on the stock market. This looks like a tax problem with local governments and municipalities. So they either need to raise taxes or cut spending, or both.

      • Petunia says:

        As rents decrease on office space the value of the building decrease as well. This may cause a “margin call on the mortgage” or an actual default. This means the banks or funds holding the loan or CMBS will take a hit. If their profits decline, so does their share value.

        Retail space also works this way and has a more direct impact on the stock market because many more retailers are listed companies. Remember that many office buildings also have retail space.

      • RightNYer says:

        Because ultimately, big public companies, including bigtech which people think are money machines that are completely non-reliant on the rest of the economy, need customers. Losses in commercial real estate, delis, dry cleaners, and any other businesses that serve these areas mean fewer dollars in customers’ hands.

        You simply can’t have massive systemic job losses, closures of small businesses, and so forth without negatively affecting profits, unless you believe that the government can continue borrowing and printing to ensure that personal “income” never drops.

        We’re already seeing that consumer spending is dropping now that the “stimulus” has worn off.

        An economy that requires constant stimulus to maintain a baseline level of consumption is not a healthy one. It’s very sick.

        • 91B20 1stCav (AUS) says:

          white flag lap in the race to the bottom…

          may we all find a better day.

        • Fred says:

          Your “deli” analysis is silly. Whether people work in an office or at home, they still have to eat. They still want clean clothes and bodies. A market-based economy is dynamic. If people don’t spend money on office-based goods and services they will buy something else.

        • RightNYer says:

          Yeah, and what about the people who previously owned and worked in those delis? Are they suddenly going to be able to get jobs at whatever company the people spend their money at instead? What if the extra money is instead spent on durable goods and sent overseas? All spending is not equal. A $10 lunch bought in a city stays within the economy. $10 spent on Chinese made crap does not.

    • Beardawg says:

      CC Tom

      RE #4 on your list. I have been in residential RE for a long time and admittedly do not understand Commercial Real Estate (CRE) leases very well.

      I have heard about “personal guarantees” being big in CRE, but if a company has 5 years left on a $100K / year lease (for example), is the landlord gonna pursue a $500K lawsuit against that tenant if the tenant drops key ? If it were residential, the landlord licks their wounds and moves on.

      I am just curious to hear from anyone who has knowledge in this area about how many commercial lease defaults are actually pursued to the point of judgment.

      • RightNYer says:

        In my experience, commercial landlords DO file suits against tenants who don’t pay. They don’t necessarily know if they’ll be able to collect anything, but it only costs a few hundred to file a lawsuit (especially if the landlord has in-house counsel to use stock complaints).

        • Wolf Richter says:

          RightNYer & Beardawg,

          In my experience, companies that want to break a lease either file for bankruptcy to break the lease (if a landlord files or threatens to file suit), or negotiate with the landlord — the latter being the most common, such as negotiating a lump-sum payment covering a relatively small portion of the remaining lease.

          No one other than owners of tiny outfits would ever do a personal guarantee on a commercial lease. In my opinion, a personal guarantee for a corporate lease is just nuts.

        • RightNYer says:

          Wolf, yes, that is correct when the corporate entities that are leasing the space truly are insolvent. If they’re just not paying because they’d rather put the money elsewhere, then they can’t file for bankruptcy, and instead usually negotiate. I’ve seen settlements where the tenant agrees to vacate in exchange for a portion of the remaining rent.

          Landlords know they can’t get blood from a stone, but often the only way to find out is to file the suit.

      • candyman says:

        YES, is the short answer. My building 5 retail spaces, were all full before pandemic. Now down to me and a bank. And YES, the landlord went after all three for full lease payment. Thus far, 2 companies have paid, as they had fairly substantial assets. The third, very small, still wants to take court action.

    • Mike says:

      On #3, most mass transit systems run at a deficit and are heavily subsidized by the local government. If lower ridership reduces transit routes, the cost changes may be a wash.

      I’ll add another one – Taxes and fees on parking garages in cities. That has to be going down as people aren’t paying for parking since they aren’t going into the office.

      • Rcohn says:

        Car traffic in SF is almost back to where it was before the pandemic. Bus traffic is still down ~%85. Bridges in the East Bay no longer have live toll collectors . You either pay by Fastrac or are sent your tolls in the mail.
        Bus financing is going to have to cut back on services and beg the government for more money

    • Tony of CA says:

      Not to mentioned bloated municipal salaries and pensions.

  5. Frank says:

    “And some of them have even used the extra time they’re saving to pursue a side gig.” And some have discovered they can work two jobs at the same time:) Then there was the guy who outsourced his work to India, paid that guy and pocketed the (substantial) difference.
    I can’t see younger workers liking working from home full-time. They are typically in a smaller/tighter housing arrangement. Who wants to work in a shared house or studio apartment full-time – like being in a cell 24/7. They want/need to be in the office both for social reasons and for what what one learns both formally and informally in an office environment.
    Depends on the business as well. If just a cubicle farm / call center, then might as well work from home.
    I see a mixed solution, going into the office part-time. But this arrangement does not allow for moving away a great distance.

    • RightNYer says:

      It’s not a matter of “young.” It’s a matter of the person’s relationship status. Single people of any ages aren’t going to want to work from home, especially if their social lives to a large degree revolved around their office.

      Married people and those with families will like working from home just fine.

    • El Katz says:

      Some of the more enterprising could easily serve multiple masters… if they have the time and talent to herd the peeps they hire from emerging economies.

      Think about it…. I work for three companies at $X per year to provide a software product. I have teams in India (or wherever) that I pay peanuts to provide the work (think Accenture). I evaluate the product, test it, send it to my “employer” and reap the profits. The guy in India is dancing on a table, your “employer” gets his product, and you have three times the income.

      What’s not to love?

  6. Paulo says:

    It’s the ‘worthless meetings’ as well as the commute that would convince me to WFH forever if I still worked. How refreshing it would be to simply have an online discussion forum like WS demonstrates almost everyday. Send out an agenda, hold down the number of considered issues, then launch the weekly topics. Let the discussion stand open for up to 6 hours then make some decisions after input. Gets rid of pesky command zoom performances, the commute, and miffed feelings. If people have nothing to add why force them to attend a meeting?

    At a variety of jobs I have had the company always required staff meetings to occur after or before the regular business day so customers would not be impacted. In union jobs the frequency and duration were controlled by contract language. Most of the meetings were a freaking waste of time and people would be just pissed off and want to head home. Manager types or manager wannabes used the meetings to grandstand, and morale suffered, always. If Covid nukes staff meetings then at least one good resulted from this nightmare.

    If I never ever see another power point presentation I will be forever grateful. You know the type….the slide comes up and the presenter reads the slide aloud. Grrrr.

    The world needs more housing rentals, not commercial office space. Build apartments instead.

    • Ron says:

      Had a friend worked at GE had a meeting to figure out how to have less meetings hahaha

      • Bill says:

        IBM had executives flying around the country visiting their sites in order to figure out how to save money on travel expenses.

      • Rob D says:

        Six sigma right there for ya!

        didn’t they call the meetings Kaizan’s?

        • Old School says:

          That is funny about GE. Running six sigma certainly didn’t help them in their finance department and took them to bankruptcy, but they were saved by bailout.

          In some ways what happened to GE is happening again throughout US economy. It basically was more profitable to be in financial engineering than competing making real products because US production cost is uncompetitive in a lot of industries.

    • El Katz says:

      I always said: Stupid people confuse a “meeting” with productive work.

      The ones who cannot do, call meetings. They have their admin (or grunt) develop a PowerPoint and then read it to you because they have no idea what it means.

      I had hours of amusement tearing apart PowerPoints that people presented that you knew that the presenter had exactly zero time invested in the creation thereof.

      Made for plenty of nap time followed by multiple embarrassing questions.

      Regardless, they still got promoted.

  7. Ron says:

    In Canada the big five banks just announced that vaccinations will become mandatory for all staff entering premises. The banks are going to lose good employees if they are mandated back to work. One more reason to push out the return to the office.

    • NoPrep says:

      I don’t know. Wolf made a rebuttal to your viewpoint above to a comment I made. The company I work in the US for doesn’t have mandatory vaccine requirements…yet (I think..). If it turns out more than just a tiny number of vaccinated are falling ill with serious Covid despite the jabs, and mass medias decide to run hard with those stories (fear sells), that obviously will affect how people think and what they do.

      • Don Johnson says:

        The “vaccination” rate at my $largetechcompanynotinSF is allegedly somewhere around 70%, but I suspect it’s lower. Nationwide the fully-jabbed rate is somewhere around 60%. Companies can mandate the jab all they want, but there are plenty of employees who will simply wait to be fired instead of getting on the treadmill of needing a booster every few months just to keep a job.

        • Tony of CA says:


        • Harrold says:

          Delta is taking a more capitalistic approach and making non vaccinated employees pay $200/mnth to cover the increased medical costs.

        • MarkinSF says:

          Okay So they lose the job and the healthcare. Who pays for the hospital stay when they end up on a ventilator?

      • Old School says:

        Going to be some good court cases on the mandates. There will be people getting exemptions for medical, religious and moral (fetal tissue) reasons. Courts will decide the rules as always.

        • Harrold says:

          There is not a single religion that is anti vax. Even the Christian Scientists are not anti-vaxxers

          These people will need to start their very own religions.

          Or, maybe I should? Charge a $1,000/yr to belong?

        • Old School says:

          I think there are people that have a religious belief against using fetal tissue in the vaccine research and development process. I think all three in the USA do, but Astra Z. does not, but that is not available in US.

  8. Bobber says:

    If Apple and others can build new multi-billion dollar headquarters complexes, then not use them, that tells you their profits are excessive and we suffer from lack of competition. Competitive businesses are forced to monitor costs.

  9. DawnsEarlyLight says:

    At first, working remotely was a matter of convenience. But, it always comes down to the bottom line. Get ready to be outsourced, and enjoy those overpriced vehicles and residences!

    • Nik says:

      Once work is moved out of the Office…it can next just as easily be moved out of the Country..Wolf you should look into this massive move in out-sourcing,especially in the Health and Pharma areas….aloha amigos

      • Wolf Richter says:


        Outsourcing has been going on for decades, from coding to lawyering. A whole industry has sprung up around it. But there may be less urge to bring in cheap workers via H1-b visas, and instead have them work at home in India.

        • Nik says:

          I understand it has been going on for decades…however,with our recent massive increase in work from home numbers Covid-wise,seems like many more businesses potentially used it by default…as an ‘Experiment or Dry Run’ for much grander applications in Out-sourcing and Profits…? aloha

        • Wolf Richter says:

          For sure for sure that working from home won’t do anything to slow the trend to outsourcing. I agree with that.

          But dissatisfaction and risks with outsourcing are also issues.

          For example, Americans are extremely dissatisfied with the outsourcing of call centers to India/Pakistan/etc. This is well-known and is part of the decision-making calculus. The only thing Americans hate more is AI chat bots, which are universally despised.

          My bank has a call center in the Southern US somewhere, and when I call, it’s wonderful, the southern accent, the dry humor, I love it, music to my ears. But with other service providers, I have been sent to South Asia, and sometimes I can barely understand these people.

          There are all kinds of quality problems with outsourcing, such as coding, and your managers really have to stay on top of it. All this costs money. So there is a trade-off that goes into this calculus. A lot of companies have gotten burned trying to save a little money.

        • MCH says:

          The outsourcing trend can have one logical conclusion;

          step 1: outsource line workers
          step 2: contract out IT
          step 3: outsource mid level managers
          step 4: outsource sales and marketing
          step 5: outsource accounting
          step 6: outsource finance
          step 7: outsource senior management
          step 8: outsource the board

          there is no need for a step 9…. By the way, the nice thing is that steps 2 through 7 can be completely interchangeable depending on the business and what you feel like.

        • COWG says:

          “My bank has a call center in the Southern US somewhere, and when I call, it’s wonderful, the southern accent, the dry humor, I love it, music to my ears.”

          Well, bless your heart…
          You’re welcome…

      • Old School says:

        I am not sure about that. Outsourcing has limits to the efficiency of an organization. I think everyone working from home stresses an organization to some degree and how much outsourcing you can pile on top of that before everything gets too chaotic is hard to say.

        My friend works with a firm that outsources some things to English speaking developing country. It’s a long turnaround time if something has to go there. She says if people give her a hard time about turn around, she just threatens to send the work overseas and that shuts them up because it is such a disaster.

        There is the cultural relationship and nuance that is tough to replicate to developing country. If there was no nuance a computer would already be doing the work. Nearly all office work has to have some soft skills involved.

      • Swamp Creature says:

        Back in 2004, when JPM/Chase outsourced my mortgage servicing to India, the quality of service improved dramatically. Before, I couldn;t even get a payoff balance on the mortgage, nor an accurate amortization table to gradually pay it off. The female Indian employee at the call center answered the phone right away, was very poilite, and spoke excellent English.

        You should be careful what you wish for. A lot of jobs (Not all) that have shifted to WFH will be shifted to places like India, Bangledesh and other countries with much lower labor costs, and better employees. You can take this prediction and put it in the bank.

  10. Anthony A. says:

    The Woodlands, Texas here: I have a friend who is a mortgage broker with two employees working for a small firm with a few locations around Houston. I saw him last night at a local pub and asked him how business was doing? He said he is still very busy, but sees things slowing a bit. He sees a lot of cash buyers since the area housing is relatively inexpensive in relation to more popular cities. So his new mortgages are not going gangbusters but he has a good “refi” demand (and cash out) as prices are shooting higher for existing area homes.

    He works out of a relatively small multi-story office building that houses small businesses and has a central incoming phone service to answer calls for the businesses and also handle paper type tasks (copying, Fax, FedEx, UPS, etc). He said that the place is practically empty. On his floor, he said that maybe 4 offices are occupied out of a dozen or so available. He said before Covid, the place was a lot more active as. This makes me think that maybe some of those businesses that were renting office space are gone for good (out of business).

  11. Half Bankrupt says:

    I work for a bank with offices in Chicago’s Loop.

    We were planning to return to office in September. Then Delta became a big deal.

    So the bank not only postponed the return indefinitely but if you are not explicitly permissioned then you can’t enter the office even if you want to.

    This is to keep safe those few employees who do have to come into the office.

  12. Seneca’s Cliff says:

    I am planning to move my shop from a dockside industrial area in Portland to an area near Intel in Washington County. There are tons of industrial parks with small industrial spaces but I have not been able to find any vacancies. Over the last 30 years landlords got greedy and overbuilt fancy office space because they could charge more and now we find ourselves short of much needed industrial space. Let’s clear out the cubicles, bring in some three phase power to the one story office space and begin the real work of putting America back on its feet.

  13. MonkeyBusiness says:

    The Fed is preparing a bailout. Those CMBS securities can’t be allowed to lose value.

    • RightNYer says:

      I used to think this idea was insanity, but now I think it will happen, through an SPV or directly.

  14. Ethan in NoVA says:

    Priced out of the local real estate market for the most part, I would love to live in a Pier 1 imports or other commercial space!

    Turn it mixed use.

  15. OutWest says:

    You pretty much summed it up. I work with a large group of professionals and in the last few weeks, plans to slowly return to the office have been put on hold.

    The delta variant is very much in control right now.

  16. Old School says:

    In some ways they are already getting a bailout. A REIT I follow closely just refinanced debt at 2.75%, assuming inflation is 5% then they borrowed at -2.25 real.

    This whole thing has gotten crazy. As Charlie Munger says it’s good to invert the situation and see it what it looks like. I think that is what Druckenmiller did when he broke the pound. I know some of the smartest are shorting the 30 year Treasury, but it’s too risky for me.

    • Swamp Creature says:

      Charlie Munger??? You listening to this clown???

      • Old School says:

        He is a smart hard working old man with some good advice. If I am not mistaken he didn’t go to college, but got accepted to law school and got his degree through hard work.

  17. MonkeyBusiness says:

    I’ve just thought of a brilliant idea. A new type of security called Crypto Mortgage Backed Securities!!!

    Real Estate + Crypto all in one basket case. The sky’s the limit.

  18. Kola says:

    In Dallas they are still building new highrise commercial offices that were in the pipeline. The cranes are still moving and I’m totally baffled why they haven’t changed course. My theory is that these billionaires and developers just don’t care. They’re building to build, writing themselves big fat checks until they can’t.
    But with the uber wealthy getting richer and richer, maybe they’ll just keep doing it, like a child building a sand castle, knowing the waves will soon destroy it. Perhaps they can be converted to Amazon warehouses and distribution centers.

    • RightNYer says:

      Why would they care? The sponsor is probably an SPV entity that has investors. I doubt the actual developers have any skin in the game at all.

    • VintageVNvet says:

      Good comment Kola, and IMHO I think you are correct about at least Some of the motivations; for other motivations/sources of going forward, try at least EGO, Efficiencies of function, etc., etc…
      On the other hand, your comment about the amazing ware/wear ”houses” and all other conversions of any and every building ever to other uses is right on the money…
      And, to be clear, after a 50+ year career changing buildings of all sort, from the most simple residential to the most complex industrial, to ”other” uses, it is really down to the money.
      Certainly, it is very very clear that some buildings every where and every when are not going to be ”cost effective” to change to other uses.
      The vast majority of buildings are going to be very good candidates for changes of use,,,, ESPecially IF the politicians governing the local ”jurisdictions” gets its collective head out from where the sun don’t shine and puts it’s employees to work to come up with helpful ”interpretations” of codes and rules and regulations to actually HELP owners and developers IMPROVE the tax base instead of killing that base…
      Worked for a department head in a small city in FL who was THE very best friend of anyone who wanted to help improve ”his” city,,, and he also had the clear backing of the mayor,,, very very helpful,,, far shore!

    • Old School says:

      Two approximately 20 story projects have been approved recently in Raleigh. They are mixed used. Population is growing at a fast clip and money is cheap and a developer lives to develop using someone else’s money.

  19. AdamSmith says:

    What is happening to office space I see happening in the California Community College setting since I take two classes a semester and have been for about 6 years since retired.
    Class options at 3 SoCal colleges attended are:
    1. Online
    2. Hybrid
    3. In Class
    4. 8 weeks (half a semester) for one class and second 8 weeks if you take another class which is half-time equivalent.
    I see the same issue occurring as COVID has forced me to take online for the last three semesters. Getting good at learning this way and the professors and also getting better at doing it.
    Given traffic in SoCal this is likely going to shrink the need for land/buildings. Even took a kinesiology (p.e. for those older like me) where I had to look at videos, practice what I learned, then record the video to send to professor.

    I think remote everything is going to become more prevalent especially since the big cities, especially L.A. cannot widen freeways much more at all.

  20. AdamSmith says:

    On Apple wanting employees back on “Campus.”
    It does not take a rocket scientist to see how employers get more out of employees on-site.

    WSJ even had an article on how people where able to hold down 2 remote positions with each employer unaware since the employee is off-site!

    If it were me I would have also added a part-time business to the mix to keep things interesting.

    • Petunia says:

      When I worked at a major bank, a male programmer, was allowed to create his own schedule because he was a night person. He usually showed up at about 4 p.m. and never stayed past 9 or 10. I know because I was there late many nights. We all knew he had another day job. You don’t have to WFH to cheat your employer. Right in your face works too.

      The best part is he was trying to get me assigned to work with him on his project. He knew I was the best programmer there. He thought he could get me to do all the work, and he would get all the credit. The situation just pissed me off and I left.

  21. Double Bluff says:

    Bosses may figure out that half the people working from home have – to
    cite David Graeber’s book title, “Bullshit Jobs.” Then they’ll be UFW (Unemployed
    From Home).

    • El Katz says:

      But the “bosses” need someone to boss or they also become UFH. That is a big push at my ex-employer – to get the minions to return because the people who are really the big bosses wonder who all these highly compensated “managers” are managing and the managers are getting nervous, so they want the cubicle gophers to return.

    • Auldyin says:

      DG is the main man on everything to do with ’employment’.
      Huge tragedy he died as young as he did.
      Quote “whenever somebody builds the tallest building in the world there will be a financial crash within 3yrs of its completion”

  22. Ian says:

    This is all simple to fix. Tax the productive more, authorities spend that changing empty office floors into apartments, give the homeless free accommodation. So when you sometimes go into the office on the 10th floor you share the lift with the hobo living in the penthouse.

  23. Kunal says:

    Its amusing how so many people here (mostly old, fussy and negative) reach to conclusions based on pandemic era lifestyle. These folks have been clamoring for economy crash, RE crash, Tesla crash for years and none of them happened. Pls. stop fighting the Govt. and Fed. The entire US and World economy is highly managed now. Mark my word, once we are past pandemic everything will be back to normal: office, commute, immigration, travel, inflation, etc. and WFH will go back to the place it was before pandemic.

    Govt. will not let WFH happen because its terrible for many local economies. Plus WFH productivity is terribly low and it enables slackers and losers. I know some workers are very happy with this mode, most of those workers would also be happy collecting paycheck without doing any work. Companies working in office will best WFH companies any day and WFH fad will disappear like dry ice in dessert after pandemic.

    • RightNYer says:

      Congrats. This is the dumbest post I’ve seen all month.

    • Old School says:

      One thing is sure. There is going to be before covid and after covid and they are not going to look the same.

    • Swamp Creature says:


      Your second paragraph is partially correct.

      I believe after the pandemic is over, a WFH hybrid model will be the norm for most white collar office jobs. Most workers will have to go in at least 3 or 4 times a week. Exclusive WFH for these type of employees will never work. I was in IT security and we tried WFH and it was a disaster even for 1 day a week. You’re dreaming if you think WFH will ever be the norm. Worse yet, if it did work then you will probably find you job outsourced to India or Pakistan. Enjoy

      • Nik says:

        Bingo…a ‘Cupie doll’ for the creature..you inadvertently figured out part of the Multi-National Corporations future workplace ‘Skullduggery’…lolol Oh wait…you didnt know they plan on getting rid of Technologically ‘Sloth-like’ Governments….??? lolol

    • Auldyin says:

      Yeah! It’s definitely different this time.
      Every other time in my life I thought it was different this time, I was wrong, but this time you’re right.

  24. COWG says:

    I dunno…

    Perhaps this “team” culture that corporate execs have espoused for so many years has been exposed for the sham I think it is….

    Are the few people who actually do the work for the “ entire team “ happier now without the slackers on their back?

    Maybe secretly I didn’t want to be on the damn team, but had to eat it so I could eat… now I don’t have to tolerate the counterproductive personalities, backstabbing, office politics and garbage justifications of make work so the next Nero up the line checks his/her so they can eat…

    Perhaps people are discovering a new team…
    their own…

    • COWG says:

      There was supposed to be “boxes” in there somewhere… if any body finds it , send it home please…

    • NoPrep says:

      Many millions of office space people would love to opt out of corporate life entirely and never look back – whether in-office or remote. But their life setup is simply too dependent on the paycheck. Even though they might be grateful for having far more materially than most souls on the planet do.

      They might want to go independent/entrepreneurial, and actually be their own team. Tim Ferriss has made a fortune off selling books pushing that dream. But most people just don’t have the drive or focus that somebody like Wolf or Ferriss has. Most people don’t really look forward to their work day. More like “uhh here we go again – another day another dollar, day to day life bites but this is the world we live in”.

      I am a fan of people who live out of the box and do something different! Even if you take the risk of getting Krakauered (if you know what I mean). Sometimes life can lay you low – making some brave attempt to climb your own Everest, maybe failing, but surviving the test, can leave you with a story to tell.

  25. Agnes says:

    Two silent problems straight out:
    1) Child care places are (were) virtually all tiny Mom-and-Pop businesses which collapsed along with other tiny businesses. They won’t instantly start up again. There is no place to park the kids when parents work.
    2) Many office women appreciate being evaluated for their work, rather than their willingness to spread, which is epidemic in offices and other employment locations.

    • Petunia says:


      You were right to call sexual harassment a silent problem. The silence is the problem.

      It took many years before I experienced it, and I was shocked, embarrassed to speak up, and humiliated when it got so bad I had to complain.

      Here’s my advice now to all women who experience it. Don’t stay silent even for a second, escalate it into a shouting match, a brawl or police incident, if you have to. Once it’s out in the open, it cannot be hidden, by the perpetrator or the company. The public nature of a counter attack will most likely discourage the perpetrator and others. This type of public disclosure will also protect you from it in the future.

      • VintageVNvet says:

        AGREE totally P:
        Make it as public, loud, etc., as possible and RIGHT NOW!!!
        Don’t, for God’s sake,,, YOUR sake,,, and all the sisters and brothers sake be even the least damn bit quiet…
        Been there and done that, screaming at my attacker,,, and he was gone ASAP in spite of being an all star,,,

      • Old School says:

        I admire that you were able to stand up for yourself. Depending on your personality and how bad you need the job it can be very tough.

        Mixing men and women in the workplace was not always common and modern society has to figure it out.

        Sometimes women make trouble for themselves. Bleached blonde hair, rouge, red lipstick, tight fitting clothes and high heels all came from the naughty profession and have that kind of subconscious message to men. That doesn’t excuse men’s behaviour as we all are responsible for our actions.

        My friend always dressed what I would call sexy professional complete with the bleached hair and boob job and I think it helped her advance beyond her peers in the legal profession. She told me she never had one problem with guys at work, but she has an alpha personality. Now that she works from home, she dresses like everybody else now in pj’s or cotton tees.

      • Swamp Creature says:

        In my entire career in the Fed Government I only witnessed one instance of what you would call sexual harassment. It was verbal in nature. In that case the women who was the victim, told the dude off, right to his face, and matter ended. That’s what should happen.

  26. Mira says:

    Based on the stead progress of the COVID-19 epidemic.
    & now the more contagious & vigilant DELTA strain.
    A reliable workforce is a thing of the past.
    Today .. for a company to have a full staff working .. on any given day .. is considered to be down to good luck.
    Working from home is fine for a while .. but it is not viable on a long term basis. Company aims & policies become fragmented as staff lose contact & momentum.
    I think that we are seeing a .. GREAT RESET .. the face of company / corporate is in the process of change .
    I’m sure that folks like Klaus Schwab expect the great reset will spin global corporate control to a select few like them.
    I do not thing so.
    Ownership on mass has not worked .. the bigger the corporation the more lost to reality a corporation becomes .. which leads to waste.
    Small .. focused .. dedicated & liable .. is where we are heading.
    Massive .. distracted .. corporations are not viable in an environmentally conscious world.
    So .. to bad for the short-sighted landlords who put all their eggs in the one basket & have lost out.

    Wednesday afternoon I had a phone app. with ..
    A man who is top of his field ..
    Professor Alistair Royse of the RMH ..
    A man with dialogue.?

    • COWG says:


      It requires a significant attitudinal change in what companies consider employment…

      And the ability to use the workforce you can get, not necessarily the one you want…

      I think this is where the govt could help…

      For example, why not a law that allows employers to flat rate seniors who are retired and want to work a couple of days a week… no taxes from either the employer or employee…

      I could probably work a couple of days a week with no impact to me and greatly assist a local business but at $10-15 per hour, it isn’t worth it after taxes because my tax rate isn’t at the lowest level… plus I already have SS and Medicare…

      For many seniors, that would be a really good thing… For many have skills from a lifetime of working that young businesses could benefit from…

      For employers, I don’t see a down side…

      Plus it would get the under the table crowd back to sitting in the chair…

      I dunno… just trying to be a man with dialogue…

      • VintageVNvet says:

        Good concept cowg:
        Except for the GUV MINT part, at 77 I agree with your thoughts regarding all us ,,, ahem,,, older folks, AKA ”ELDERS” being able to help many many younger folks and their companies with our long time accumulated work wisdom,,,
        That would be exactly as was done FOR me as a teenaged person finally getting paid to work all day in full sun in SFL in the early 1960s, and being ” mentored” by older folks, at first mostly older black guys who had SO much skill and knowledge and helped me SO much,,, probably at times saving my life…
        Thinking there are a lot of folks younger than I am who would be glad to share their long time knowledge if WE the Peons could come up with some ways for US/WE/THEY to do so…

  27. polistra says:

    “Electronic access systems” are one of the pressures that drove me to WFH twenty years ago, and I haven’t looked back.

    In the ’70s, bosses treated me as a responsible adult, gave me the keys to the building, and trusted me to handle money and customers. This turned me into a responsible adult.

    The modern obsession with all sorts of fake “security”, from terrorism to cyber to “virus”, removes adulthood. We are forbidden to enter anywhere or do anything unless our Social Credit Rating at AWS is updated, checked, and approved.

  28. MiTurn says:

    Two of my sons and two of my nephews all WFH, and all had previously worked in their respective company offices. All ended up working from home. But now, none are returning to the office and their employers are not requiring it. It is working out well for all of them.

    At least for these four thirty-something-year-olds, their work-life has undergone a (for now) fundamental shift. Viz. Wolf’s article, there are no landlords involved, as their employers owned the office buildings.

  29. brigitte says:

    What is difficult to understand is the frenzy, massive frenzy of office construction in Manhattan.
    At a time when 20%-25% of them are empty.
    And NYC is getting worse. Covid passports and scifi protocols to enter the class A buildings.
    Who needs that?
    Those who can (individuals and companies) are leaving.

    • Petunia says:

      I know that some of those older buildings date back to the 1960’s and have been retrofitted once or twice already. They are all too outdated to support modern technology. Some are being rebuilt elsewhere and the old sites will be torn down.

    • Old School says:

      The USA is probably getting close to the end of the current game with papering over bad investments. Being able to build something new with 3% money and get the government tax incentives to do it doesn’t take to much for a project to pencil out to a positive return. It employs people. I think the $4 trillion stimulus might signify the last inning of the game.
      We will have to have real hurdle rates on projects and rebalance the US from being the consumer for the world. The cheap stuff was nice while it lasted.

  30. Rcohn says:

    Work from home is the death knell for large cities , for municipal transit ,and for commercial and residential real estate located in large cities.

    And I would suggest that those who have benefitted from this trend not get too comfortable . No reason why more work done on a computer will be increasingly located in lower cost areas overseas or by AI in the future.

  31. Swamp Creature says:

    In 1987 I was in Downtown Denver, Colo on business with Lockeed/Martin. This was in the middle of the oil bust. I went jogging in the downtown area and noticed a lot of brand new high rise buildings but no activity on the street, except for a few homeless people. I asked one of them what was in those buildings. Their reply “NOTHING”. Yep. They were empty. This was not reported by any mainstream news organization. When the only source of accurate info is on the street from a homeless person, then something is wrong with this picture. The same could be said for most commercial offices here in the downtown area of DC Swamp.

  32. Brendan says:

    Pure gold. We’re installing a “corporate coffee bar” next week. Risks be damned!

  33. Don Johnson says:

    For those commenting about off-shoring large amounts of (IT) work, here at my $largetechcompanynotinSF, we’ve sent a bunch of low-level IT work to India (contractors). And every time we (here in the US) have to deal with them, we treat them as if they’re brand new and don’t know diddly about how things are done, and we’re rarely surprised. The companies we hire to do the work have people who can do basic, documented, repeatable tasks, but any advanced work or “engineering” is beyond the ken of the caliber of people hired by these outsourcing firms. Add in the fact that the contractors don’t care and usually bail within 6 months of getting hired and there’s no worry that all of our IT jobs in the US will get outsourced to unreliable hired guns in India or elsewhere.

  34. Auldyin says:

    Fantastic subject, as always, so many issues, much the same here.
    “the benefits of working in an office, the camaraderie, the possibilities of finding a date or a mate at the corporate coffee bar, the free gourmet lunches at some companies – all this is receding into the background.” The parties, the outings.
    Ah, glorious lost youth.
    Billy fancied Mary but she played hard to get has morphed into Billy is harassing Mary who is going for a 5 figure settlement.
    From young folks, I get the impression they love WFH but miss the social aspect of the office, they seem to agree around 2 days in, 3 days out, that could be a 60% reduction in floorspace.
    In 70’s, 80’s transportation planning, some engineers, me included, postulated that digital networking could have a substantial impact on commuter activity and that some road improvements, building demolitions, car park construction projects could end up being marginal investments. Ditto for rail and bus. I confess to wondering why it never happened in a big way, but now I wonder if this societal change is underway about 40yrs on. The politicians took our hesistancy as an excuse not to spend money on roads, so all the queues you sit in every day could be the result of politicians and not engineers.
    Last point, if mallmageddon was scary, officemaggedon doesn’t bear thinking of, so I won’t.

  35. Grave Digr says:

    If I never set foot in an office again,
    If I never meet with my coworkers again,
    It will be too soon.

  36. c smith says:

    “…some bosses dread the possibility that the old way of managing people and valuing work may become obsolete.”

    Not the good ones. Face time, gossip and kissing up to the boss is one of the greatest wastes on earth. Get the work done correctly, on time and on budget and smart leaders will figure it out.

  37. breamrod says:

    the developers in Atlanta must not have gotten the memo. I’ve lived here all of my life and I’ve never seen the number of cranes. Tall skyscrapers going up everywhere. Maybe they’re condos but I’m sure some are office building. Atlanta is a hugh Fortune 500 city and foreigners are moving here in droves. Maybe that explains it.

  38. Tex says:

    My office had a voluntary return to office starting in June for the rest of this year. I went back to the office for a few weeks after getting the vaccine shot only to see about 10% of my coworkers had returned. After about a month of getting up early, getting ready, commuting and sitting in an office for 8 hrs a day, finally said screw it and came back home. When my boss inquired what happened, I said the Delta variant is rampaging and don’t feel comfortable going into office at this time (my guess is that he is jealous that he doesn’t feel he can do the same). Most employees are not going to return until required and most employers don’t want to risk losing staff over it. Have a feeling it’s at a stalemate for a while….

  39. Justsayin says:

    I am retired and work part time. The golf courses where I live are full everyday with younger people. (WFH ?)

    I do believe there is going to be a great “employer” reset too. Allowing people to WFH should be permanent, but longer term effects will lead to outsourcing. So be careful what you ask for. Like, “John is no longer a person to the employer, just a voice on the phone”. Do I need him?

    Some jobs of course cannot be done remotely or outsourced either. These are the important jobs and people.

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