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I agree. And some of the market agrees. But some doesn't.
Most cities have higher office vacancies in their CBDs than in their overall markets based on current CoStar data.
Much of this is a reaction to the WFH trend.
Some reasons: Transit has lost some of its importance to location decisions. Many tenants like to occupy whole buildings rather than sharing. Cities' cores are less orderly than they were before Covid, and have lost some of the retail that serves office workers. Some of the collaborative benefits of being in a tight cluster have been diminished by online tools.
I agree. And some of the market agrees. But some doesn't.
Most cities have higher office vacancies in their CBDs than in their overall markets based on current CoStar data.
Much of this is a reaction to the WFH trend.
Some reasons: Transit has lost some of its importance to location decisions. Many tenants like to occupy whole buildings rather than sharing. Cities' cores are less orderly than they were before Covid, and have lost some of the retail that serves office workers. Some of the collaborative benefits of being in a tight cluster have been diminished by online tools.
The WFH "trend" is highly exaggerated by the media. In reality, less than 20% of the American workforce is even affected by the supposed trend. ~20% of the workforce is part-time, ~15% is self employed. This means only ~65% are in full-time W2 jobs (which almost all of those articles are about). Of those, about 40% are even in jobs where it is *theoretically* possible to WFH. We are down to about 27% of the workforce. Among this subset, ~20% likely do not have secure and reliable broadband at home, and another ~20% does not want to WFH at all. Among the rest, some employers don't encourage it, or they are remote only occasionally. Actual, legitimate, remote and hybrid work positions are thus only utilized by a minority of the workforce, maybe 15% if you average over all workers in the country.
The WFH "trend" is highly exaggerated by the media. In reality, less than 20% of the American workforce is even affected by the supposed trend. ~20% of the workforce is part-time, ~15% is self employed. This means only ~65% are in full-time W2 jobs (which almost all of those articles are about). Of those, about 40% are even in jobs where it is *theoretically* possible to WFH. We are down to about 27% of the workforce. Among this subset, ~20% likely do not have secure and reliable broadband at home, and another ~20% does not want to WFH at all. Among the rest, some employers don't encourage it, or they are remote only occasionally. Actual, legitimate, remote and hybrid work positions are thus only utilized by a minority of the workforce, maybe 15% if you average over all workers in the country.
It may be a minority, but it's enough of one to have an effect on office space occupancy.
About 30 to 40 people worked in the office of the magazine I write for. We have been WFH since the start of the pandemic, and we will be WFH for good now, for we gave up our office space in January of this year. We borrow space for a monthly in-person day.
IDK what percentage of firms that occupy office space have gone totally WFH in this fashion, but since office space occupancy is down anywhere from 20 to 50 percent in city CBDs, depending on the city (I understand San Francisco is the hardest-hit city), I'd say it's a non-trivial trend. (Keep in mind that office space does not constitute a majority of all space used for business, commerce or work. A lot of those workers you're talking about work in warehouses, or institutions, or service businesses where their presence is required.)
Of course, many of those who have scattered, or can scatter, to the four winds work in the media, as I do. So you could say we're reporting on ourselves.
Last edited by MarketStEl; 12-06-2023 at 11:17 AM..
The WFH "trend" is highly exaggerated by the media. In reality, less than 20% of the American workforce is even affected by the supposed trend. ~20% of the workforce is part-time, ~15% is self employed. This means only ~65% are in full-time W2 jobs (which almost all of those articles are about). Of those, about 40% are even in jobs where it is *theoretically* possible to WFH. We are down to about 27% of the workforce. Among this subset, ~20% likely do not have secure and reliable broadband at home, and another ~20% does not want to WFH at all. Among the rest, some employers don't encourage it, or they are remote only occasionally. Actual, legitimate, remote and hybrid work positions are thus only utilized by a minority of the workforce, maybe 15% if you average over all workers in the country.
This thread is about "downtowns." The numbers are much higher for office workers.
I'm in commercial real estate, not the media. The numbers seem plausible to me.
The WFH "trend" is highly exaggerated by the media. In reality, less than 20% of the American workforce is even affected by the supposed trend. ~20% of the workforce is part-time, ~15% is self employed. This means only ~65% are in full-time W2 jobs (which almost all of those articles are about). Of those, about 40% are even in jobs where it is *theoretically* possible to WFH. We are down to about 27% of the workforce. Among this subset, ~20% likely do not have secure and reliable broadband at home, and another ~20% does not want to WFH at all. Among the rest, some employers don't encourage it, or they are remote only occasionally. Actual, legitimate, remote and hybrid work positions are thus only utilized by a minority of the workforce, maybe 15% if you average over all workers in the country.
The tread is very real. I know several people who work from home part time or full time. Basically it does not affect all workers but it affects a large percentage of office workers. Downtowns don't have lots of factory workers or construction workers and only a few healthcare workers(i.e. jobs that pretty much are unable to be done at home) but does have tons of office workers. Basically any job where the person mostly works with a computer all day and does not interact with clients in the office has the potential to be WFH fully or partially.
Anyone who does not have reliable broadband at home is not living in the 21st century. It is almost as important as electricity in this day and age. Even if you live in a rural location you can get broadband via a Starlink and other services. While less than ideal, even a cell phone can give enough internet access speed to a computer for basic office work. The problem isn't the whole country, the problem is cities downtown or places the have offices with large amounts of white Collar employees.
It affects many things such as restaurants and retail downtown that were formaily used by the now WFH office workers. It most directly affects office space because the office no longer needs to be able to house 100% of the people working from it 100% of the time they are working. That is wny the office space is so hard to fill. Many offices don't need as many people in them in person as they once did.
It may be a minority, but it's enough of one to have an effect on office space occupancy.
About 30 to 40 people worked in the office of the magazine I write for. We have been WFH since the start of the pandemic, and we will be WFH for good now, for we gave up our office space in January of this year. We borrow space for a monthly in-person day.
IDK what percentage of firms that occupy office space have gone totally WFH in this fashion, but since office space occupancy is down anywhere from 20 to 50 percent in city CBDs, depending on the city (I understand San Francisco is the hardest-hit city), I'd say it's a non-trivial trend. (Keep in mind that office space does not constitute a majority of all space used for business, commerce or work. A lot of those workers you're talking about work in warehouses, or institutions, or service businesses where their presence is required.)
Of course, many of those who have scattered, or can scatter, to the four winds work in the media, as I do. So you could say we're reporting on ourselves.
Office space is down 20% to 50%? Where are you getting this? I believe 4% is closer to the truth.
The tread is very real. I know several people who work from home part time or full time. Basically it does not affect all workers but it affects a large percentage of office workers. Downtowns don't have lots of factory workers or construction workers and only a few healthcare workers(i.e. jobs that pretty much are unable to be done at home) but does have tons of office workers. Basically any job where the person mostly works with a computer all day and does not interact with clients in the office has the potential to be WFH fully or partially.
Anyone who does not have reliable broadband at home is not living in the 21st century. It is almost as important as electricity in this day and age. Even if you live in a rural location you can get broadband via a Starlink and other services. While less than ideal, even a cell phone can give enough internet access speed to a computer for basic office work. The problem isn't the whole country, the problem is cities downtown or places the have offices with large amounts of white Collar employees.
It affects many things such as restaurants and retail downtown that were formaily used by the now WFH office workers. It most directly affects office space because the office no longer needs to be able to house 100% of the people working from it 100% of the time they are working. That is wny the office space is so hard to fill. Many offices don't need as many people in them in person as they once did.
Even if I re-do my calculation with a mix of 30% of jobs unable to telework and 70% able, the estimate is still that the actual utilization of remote and hybrid work is no more than about 30% of the workforce after accounting for all of the factors I mentioned earlier. It is simply not believable that literally no one can viably occupy those spaces with profitable businesses once rent prices are lowered appropriately relative to supply/demand. The economy is not that fragile (If it were, much bigger problems would have happened with every major historical recession with mass layoffs, which were also unevenly geographically distributed. If the national unemployment rate goes up to 8%, it's going to be concentrated in a few industries that, likewise, will be mostly localized in particular areas. Yet cities almost always bounce back!)
I think it has become popular to catastrophize a lot of economic issues, but the market is mostly self-healing and self-adapting over time, though it may take many years to recover from large disruptions as a near-equilibrium state is re-established.
It is simply not believable that literally no one can viably occupy those spaces with profitable businesses once rent prices are lowered appropriately relative to supply/demand.
What's not believable is the idea that office tenants would massively expand space per worker. Why would they? The typical response would be to simply spend less on offices, or in some cases find better space (still smaller) and still save money. That's even with some expansion to avoid the excessive crowding of the recent past.
There is NO precedent here. The flight of office workers to WFH is like the industrial revolution hitting bespoke manufacturers in the 1800s, or walmart etc. destroying the main streets of small towns everywhere...a whole model has lost some of its viability.
What's not believable is the idea that office tenants would massively expand space per worker. Why would they? The typical response would be to simply spend less on offices, or in some cases find better space (still smaller) and still save money. That's even with some expansion to avoid the excessive crowding of the recent past.
There is NO precedent here. The flight of office workers to WFH is like the industrial revolution hitting bespoke manufacturers in the 1800s, or walmart etc. destroying the main streets of small towns everywhere...a whole model has lost some of its viability.
There IS a precedent - mass layoffs when one company dominates an industry in a particular city. If you are laid off, you aren't going into work. Same effect.
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