Author Topic: the death of the urban office building  (Read 18144 times)

fareastwarriors

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Re: the death of the urban office building
« Reply #10 on: May 26, 2020, 01:52:53 PM »
If a company can get NYC or SF  with 30-50% cheaper rents, there would huge demand. Everything in big downtown metros are just too expensive.


james22

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Re: the death of the urban office building
« Reply #11 on: May 26, 2020, 02:30:23 PM »
In order to understand the future of commercial real estate we must draw a distinction between companiesí shrinking demand for office space per employee and the marketís demand for office space. Companies take advantage of technological improvements to cut costs and reduce the amount of office space each worker occupies. As they cut costs, they become more productive; that is, the amount of value each worker adds to the enterprise goes up.

More productive firms can increase profits while expanding their market share by lowering the price they charge customers. These lower overall prices expand the market and existing businesses add employees. Because there are profits to be had, new businesses start up and office space remains strongly in demand even though the space per worker at individual firms goes down.


https://economics21.org/coronavirus-upends-nyc-commercial-real-estate
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cherzeca

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Re: the death of the urban office building
« Reply #12 on: May 26, 2020, 02:38:00 PM »
They didnít have Zoom back then though.

A lot of knowledge work (marketing, accounting, finance, law, programming) can be done remotely.

Today's brief can easily be written remotely.  But how does a law firm develop tomorrow's partners, i.e., business generators?

this is a good question and as a long time attorney at big law firms I do have a view.  there is ALOT of learning by watching as a lawyer, whether deal negotiation or litigation...some of this actually can be facilitated by zoom meeting. a young associate lawyer I know says she is getting more face time with partners on zoom than in office...but my point is that for most office-based businesses, I can foresee a reduction of office space requirements of as much as 50%...I think covid showed up that we can do that, a silver lining in a dark cloud 

rb

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Re: the death of the urban office building
« Reply #13 on: May 26, 2020, 02:45:07 PM »
They didnít have Zoom back then though.

A lot of knowledge work (marketing, accounting, finance, law, programming) can be done remotely.
What?

Finance and law are probably some that for practical reasons are very hard to do remotely.

For those that think it's easy, let me paint this scenario for you.

Meet John. John is bight law associate working for Skadden Arps. John works from home under Skadden's new "Fuck the landlord" policy. John jumps on a zoom meeting for a live deal he's working on.

10 ft away in their 600 sqft NYC apartment is his roommate Andrew. Andrew is an ambitious 2nd year M&A associate at Morgan Stanley. He's working from home under MS's new "why should we pay rent policy".

John and Andrew don't want to move to Toledo where they can each afford their own place cause in Toledo the chicks are fat and in NYC the chicks are keeping it tight.

Spekulatius

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Re: the death of the urban office building
« Reply #14 on: May 26, 2020, 03:10:03 PM »
They didnít have Zoom back then though.

A lot of knowledge work (marketing, accounting, finance, law, programming) can be done remotely.
What?

Finance and law are probably some that for practical reasons are very hard to do remotely.

For those that think it's easy, let me paint this scenario for you.

Meet John. John is bight law associate working for Skadden Arps. John works from home under Skadden's new "Fuck the landlord" policy. John jumps on a zoom meeting for a live deal he's working on.

10 ft away in their 600 sqft NYC apartment is his roommate Andrew. Andrew is an ambitious 2nd year M&A associate at Morgan Stanley. He's working from home under MS's new "why should we pay rent policy".

John and Andrew don't want to move to Toledo where they can each afford their own place cause in Toledo the chicks are fat and in NYC the chicks are keeping it tight.
With a NYC salary in Toledo, John and Andrew each buy a new house and have their pick of the top 5% of chicks there. They donít  care that 80% of the chicks in Toledo are fat.

Anyways, jokes aside, I think any shift might be more driven by the companies than the employees. If the companies get the idea they only need some trophy RE to show off and scuttle 60% of their footprint after their digitized and virtualized their company, they might go head and just do that. While they are st it, why not benefit from a much larger labor pool, much of it in low cost areas and get people to work for less, adjusting for the lower cost of living.

And once there, why not hire employees from another country for much cheaper doing the same thing. All this couldíve done before, but once most business process are virtual, and location truly doesnít matter, itís a logical next step. Seems pretty bearish for white collar salaries to me.


Some enterprising remote workers pay it back by having two remote jobs at once and their bosses never find out.
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james22

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Re: the death of the urban office building
« Reply #15 on: May 26, 2020, 03:49:35 PM »
...why not hire employees from another country for much cheaper doing the same thing. All this couldíve done before, but once most business process are virtual, and location truly doesnít matter, itís a logical next step.

As an expat working from home (in-Kingdom) during this, I wonder if my employer might come to believe I can work as well from home in my home country and save themselves the expat (in-Kingdom hardship) premium they pay.
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Broeb22

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Re: the death of the urban office building
« Reply #16 on: May 26, 2020, 05:35:39 PM »
appreciate the comments.

I think face to face business meetings will remain important.  but cubicle to cubicle daily work arrangements will be proven unnecessary by covid.

as to sensationalism, keep in mind that as to mortality rates, Minnesota has had more covid mortalities for people over 100 years old than for people less than 50 years old.  the fourth leading cause of death in US is nosocomial (medical/hospital malpractice).  the human species is imperfect, and sending covid infected people from hospitals to nursing homes is an example, should you need one.  so if we cant have an intelligent conversation about the long term effects of covid, then so be it...

Sorry you thought the responses were so unintelligent to your click-bait thread title.

If Iím going to bet on one thing, Iím going to bet on human beings being social creatures and no pandemic is going to reverse millions of years of evolution in a couple years just because technology enables it.

There are so many reasons people will work in the same offices together again. Want to get a promotion? Good luck trying to do that and being a leader of people remotely. What percentage of your friends that you speak to regularly live within the same metro area as you?
« Last Edit: May 27, 2020, 07:52:00 AM by Broeb22 »

DTEJD1997

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Re: the death of the urban office building
« Reply #17 on: May 26, 2020, 06:30:18 PM »
They didnít have Zoom back then though.

A lot of knowledge work (marketing, accounting, finance, law, programming) can be done remotely.

Today's brief can easily be written remotely.  But how does a law firm develop tomorrow's partners, i.e., business generators?

I've seen this and been involved with it first hand...

Some of the more nimble & "forward thinking" law firms are "in shoring" from Boston, NYC, LA & SF to say Detroit.  Specifically, they are moving low-end, low value work to a Detroit location.  In Detroit, you've got mail, power, interweb, and most other modern amenities.  You've also got VERY cheap office space, and most importantly of all, you've got hordes of desperate attorneys who are willing to work for $20 to $25 an hour reviewing & sorting & doing basic prep work on large cases.  You've got plenty of people fresh out of law skool, desperate to bring in some money, but you've also got seasoned attorneys from firms that disbanded after GFC.  You've also got attorneys downsized from government, all types.

Some of these cases that get farmed out will literally have MILLIONS of documents that need to be sorted & analyzed and have grunt work done.  Perfect for the Detroit attorney!

Detroit is not the only place, Chicago, Charlotte, Houston, Atlanta are other hot spots.

The high end work still gets done in NYC, along with client meetings (most of the time), and the partners and people on partner track.  So shrink down NYC 75%, keep the high end there, but move out most everything that can be done elsewhere.

This has been going on for the better part of a decade though.  I think it will continue to accelerate and why not spread to other sectors of the economy?

cherzeca

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Re: the death of the urban office building
« Reply #18 on: May 26, 2020, 06:46:01 PM »
They didnít have Zoom back then though.

A lot of knowledge work (marketing, accounting, finance, law, programming) can be done remotely.

Today's brief can easily be written remotely.  But how does a law firm develop tomorrow's partners, i.e., business generators?

I've seen this and been involved with it first hand...

Some of the more nimble & "forward thinking" law firms are "in shoring" from Boston, NYC, LA & SF to say Detroit.  Specifically, they are moving low-end, low value work to a Detroit location.  In Detroit, you've got mail, power, interweb, and most other modern amenities.  You've also got VERY cheap office space, and most importantly of all, you've got hordes of desperate attorneys who are willing to work for $20 to $25 an hour reviewing & sorting & doing basic prep work on large cases.  You've got plenty of people fresh out of law skool, desperate to bring in some money, but you've also got seasoned attorneys from firms that disbanded after GFC.  You've also got attorneys downsized from government, all types.

Some of these cases that get farmed out will literally have MILLIONS of documents that need to be sorted & analyzed and have grunt work done.  Perfect for the Detroit attorney!

Detroit is not the only place, Chicago, Charlotte, Houston, Atlanta are other hot spots.

The high end work still gets done in NYC, along with client meetings (most of the time), and the partners and people on partner track.  So shrink down NYC 75%, keep the high end there, but move out most everything that can be done elsewhere.

This has been going on for the better part of a decade though.  I think it will continue to accelerate and why not spread to other sectors of the economy?

what you say is accurate, but this takes it one step forward.  contract work for doc review and discovery searches are being "offshored" at cheap rates to contract attorneys hired on a deal/case basis, but this new twist would have the important work done by all attorneys be done remotely...until there is a need to meet in person over something...this is happening now due to covid and there is no reason that wont continue imo

DTEJD1997

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Re: the death of the urban office building
« Reply #19 on: May 26, 2020, 07:32:46 PM »
They didnít have Zoom back then though.

A lot of knowledge work (marketing, accounting, finance, law, programming) can be done remotely.

Today's brief can easily be written remotely.  But how does a law firm develop tomorrow's partners, i.e., business generators?

I've seen this and been involved with it first hand...

Some of the more nimble & "forward thinking" law firms are "in shoring" from Boston, NYC, LA & SF to say Detroit.  Specifically, they are moving low-end, low value work to a Detroit location.  In Detroit, you've got mail, power, interweb, and most other modern amenities.  You've also got VERY cheap office space, and most importantly of all, you've got hordes of desperate attorneys who are willing to work for $20 to $25 an hour reviewing & sorting & doing basic prep work on large cases.  You've got plenty of people fresh out of law skool, desperate to bring in some money, but you've also got seasoned attorneys from firms that disbanded after GFC.  You've also got attorneys downsized from government, all types.

Some of these cases that get farmed out will literally have MILLIONS of documents that need to be sorted & analyzed and have grunt work done.  Perfect for the Detroit attorney!

Detroit is not the only place, Chicago, Charlotte, Houston, Atlanta are other hot spots.

The high end work still gets done in NYC, along with client meetings (most of the time), and the partners and people on partner track.  So shrink down NYC 75%, keep the high end there, but move out most everything that can be done elsewhere.

This has been going on for the better part of a decade though.  I think it will continue to accelerate and why not spread to other sectors of the economy?

what you say is accurate, but this takes it one step forward.  contract work for doc review and discovery searches are being "offshored" at cheap rates to contract attorneys hired on a deal/case basis, but this new twist would have the important work done by all attorneys be done remotely...until there is a need to meet in person over something...this is happening now due to covid and there is no reason that wont continue imo

yes, I forgot to mention that most work is now being done remotely.

I'm not sure how long that will last?  There are some clients that are NOTORIOUS about security.  Of course, it depends on the client and the firm.

In the past, remote work was rather rare...now it is rather common.

With the remote work, I would imagine you've got all sorts of potential problems, security & confidentiality being near the top of the list....then you've got technical problems....then you've got group dynamics and cohesiveness.  When I was working projects, the first few days were critical, as attorneys would discuss different theories, different things that they were seeing, and would try to act in a synchronized fashion.  Then you would have the group interfacing with the partner on conference calls.  I guess some of this could be done with dispersed work groups, but I would think that quality and efficiency would take a hit to some degree.

Pre-covid, there were some attorneys who were REAL germophobes.  There would always be Lysol wipes & dis-infectant.  Some of the women were really particular about this as we had shared workstations.  If those people were antsy about germs before all this happened, I can't imagine what they are like now.

I think we will know a lot more in a few months, if this is permanent, or if people start going back to offices.