Author Topic: the death of the urban office building  (Read 25160 times)

cherzeca

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Re: the death of the urban office building
« Reply #150 on: September 17, 2020, 02:52:09 PM »
down 51% from February is not nominally 51% of course.  didn't say what February % was


bizaro86

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Re: the death of the urban office building
« Reply #151 on: September 17, 2020, 03:27:24 PM »

trying to think if there a reason that locks/unlocks would overstate occupancy? data seems suspiciously good to me.


It seems possible that it slightly overstates occupancy. My last office job you scanned your pass at a big glass door. If someone else on the floor was on the elevator with you, only one of you scanned.

If you're the only person coming in today, that's one scan just for you, but 3 of you on the same elevator would still be 1 scan.

Its also possible that scans would understate occupancy. Pre covid-19, I might have gone for a coffee and a lunch outside the building. I bet more people are staying in their buildings now (1 scan per day instead of 3-4)

CorpRaider

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Re: the death of the urban office building
« Reply #152 on: September 17, 2020, 06:16:32 PM »
I would be less inclined to go into my office in midtown where I normally ride the path/subway or take an uber versus driving my Tahoe to my suburbia nightmare office park with a view of a retention pond in Atlanta or Houston where there is really no viable public transportation anyway and the traffic is now slightly less hellish.  So I would buy that NYC is lower than RUS. 
« Last Edit: September 17, 2020, 08:14:29 PM by CorpRaider »

fareastwarriors

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Re: the death of the urban office building
« Reply #153 on: September 17, 2020, 06:47:46 PM »
Korean Air eyes sale of LAís tallest tower
Debt-ridden airline lends subsidiary nearly $1B to refinance maturing loan on LAís tallest tower

https://therealdeal.com/2020/09/17/korean-air-eyes-sale-of-wilshire-grand/

fareastwarriors

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Re: the death of the urban office building
« Reply #154 on: September 18, 2020, 10:45:29 AM »
https://therealdeal.com/2020/09/18/700m-seattle-office-tower-buy-would-be-among-largest-covid-era-property-deals/

The sale price is reported to be 800 billion Korean won, or about $688 million,...

The largest tenant at the 701,000-square-foot property is Utah-based experience management company Qualtrics, which leased 275,000 square feet at the building for its co-headquarters last fall. The company also acquired naming rights to the 38-story tower, which was originally known as 2+U.

Other long term tenants at the property include Indeed.com, Dropbox and co-working firm Spaces. Its central location in downtown Seattle and stable rent roll attracted the attention of several other bidders besides Hana, according to Maeil.

fareastwarriors

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Re: the death of the urban office building
« Reply #155 on: September 18, 2020, 11:49:25 AM »
JPMorgan Sends Some Traders Home After Worker Contracts Covid-19
https://www.bloomberg.com/news/articles/2020-09-15/jpmorgan-sends-some-traders-home-after-worker-contracts-covid-19?srnd=premium

while this does not affect the 2,3,5 year outcome of office REITs, I am surprised they didn't trade down on this.

Itís an awful headline / data point.



Wall Street Return-to-Work Push Finds Virus Wonít Cooperate

 New infections crop up at Goldman Sachs, JPMorgan, Barclays

 Executives fear productivity and company culture is suffering


https://www.bloomberg.com/news/articles/2020-09-18/wall-street-s-return-to-office-push-finds-virus-won-t-cooperate?srnd=premium

fareastwarriors

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Re: the death of the urban office building
« Reply #156 on: September 23, 2020, 05:05:32 PM »
Google will try Ďhybridí work-from-home models, as most employees donít want to come in every day


https://www.cnbc.com/2020/09/23/google-ceo-sundar-pichai-considering-hybrid-work-from-home-models.html

more WFH days, not WFH forever...Make sense.



CorpRaider

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Re: the death of the urban office building
« Reply #157 on: September 23, 2020, 05:09:33 PM »
If I had to try and code from one of those shared desks I would never want to come in.

LearningMachine

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Re: the death of the urban office building
« Reply #158 on: September 23, 2020, 09:05:30 PM »
Google will try Ďhybridí work-from-home models, as most employees donít want to come in every day


https://www.cnbc.com/2020/09/23/google-ceo-sundar-pichai-considering-hybrid-work-from-home-models.html

more WFH days, not WFH forever...Make sense.

Looks like a very balanced approach.  For us as investors, I'm thinking two implications from his two statements in his interview with the Time Magazine at https://www.youtube.com/watch?v=hpn1rebBfqY:
  • More employees could spread out into exurbs: Sundar wants to give employees flexibility so that they don't have to commute 2 hours, e.g. on Fridays, as those commutes prevent employees from being able to make plans with friends and families. This would mean more employees could move farther out, increasing the supply of housing they could consider for living, in turn, decreasing the price of housing within 45-min of campus.
  • Company sites could shrink in size: Sundar wants to have concept of "onsites", when employees get together to meet in person.  If employees are going to meet only for "onsites", this could reduce the square footage needed for company, decreasing demand for office space, decreasing office supply.

As other companies do the same, looks like this means the impact will be effective supply available will be higher for both office space and housing options.  In other words, vacancy will be higher.  Incremental supply can cause big swings in price as 20% vacancy did in Detroit.
« Last Edit: September 23, 2020, 09:14:51 PM by LearningMachine »

mattee2264

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Re: the death of the urban office building
« Reply #159 on: September 24, 2020, 01:51:18 AM »
 I think a hybrid model makes a lot of sense. A way of getting the best of both worlds. Also caters for differences in job functions. For example at the momentcompanies tend to like sales teams onsite whereas back office e.g. IT and accounts are being allowed to continue WFH.

 Perhaps another implication will be that companies try to save money by moving their HQ to cheaper locations. There isn't the same need to have a central location that is easy for people to commute to if people are WFH most days. So you might get little business parks cropping up in the suburbs as opposed to the traditional city office blocks.

 Either way I think there will be a reset of office rents as leases roll off and a lot more vacant space which will be difficult to repurpose.