Coronavirus Moving To Suburbia

Still building with fewer available tenants?

I had no idea that Facebook and Twitter would tell their employees they could work from home forever.

In one of my early post about the Coronavirus, I mentioned one of the economic impacts of the pandemic would be a hit to commercial real estate. If even 25% of office workers permanently work from home once the pandemic ends, that would be 25% less office space businesses would need to lease.

Ouch.

https://www.usatoday.com/story/tech/2020/05/22/coronavirus-remote-work-post-pandemic/5242420002/

My wife's company still has their office employees except a skeleton crew working from home and there are no plans on calling them back into the office. 

Once companies' leases are up, I imagine a lot of downsizing of office space will be going on.

I had also imagined that some people may move out of the cities if they didn't have to be there. 

CNBC reported that said 13,000 apartments stood empty in Manhattan - twice the number from last year. 

Observer reported that Jennifer Lawrence sold her Upper Eastside Manhattan penthouse apartment. She bought it for $15.6 million in 2016 and just sold it for $9.99 million. Ouch.

https://observer.com/2020/08/jennifer-lawrence-sells-upper-east-side-new-york-penthouse-apartment-at-loss/

I think about Downtown Los Angeles which has been going through a major renovation/gentrification of its old hotels and warehouses and turning them into expensive lofts for young professionals. New restaurants, bars, art galleries and the like were popping up. Does this mean it was all for naught? If you are not working in downtown, why would you move there? Even though it has improved over the last twenty years, it still smells, homeless wander the streets at all times of the day and night, and the only green space is in Grand Park which is far (a mile) from most of the new development.

Mall-anchoring department stores are closing, movie theaters (huge commercial property renters) are in serious financial danger, and concerts and sporting events will undoubtedly be different for years to come.

And while summer whether allows for restaurants to serve diners outside, what is going to happen come fall and winter if there is still no vaccine? Living in LA, the seasons don't matter much (sun, sun, and maybe a sprinkle, then more sun), but I imagine in New York and South Dakota, outdoor dining will probably lose its allure in winter.

Ouch.

To sum up, the things that drew people to the city are changing.

While all of this is scary news, it is a fascinating time to see the world changing before our eyes. 

Can you imagine what the world will be like next summer?

Take care and be safe.

Posts Tuesday and Saturday

Coronavirus The New Office

It's official, companies are allowing workers to work from home permanently. Square and Twitter made the announcement this week. Facebook and Google said most employees will work from home until 2021.

My wife's company as well as my friend's had both planned to have workers return May 15. That date came and went. What happened instead were some employees were laid off, others furloughed, and the return to the physical office for the rest of the employees was moved. June 1st is now the tentative date for one and the other has no date.

This means my kitchen table will continue to be by wife's new workspace for the foreseeable future.

And my wife does not mind. She likes not having to commute an hour a day each way to work. She likes saving money on making lunch at home, I mean me preparing lunch for her. She likes taking our afternoon walks during her daily lunch hour. As she says, it is like we are dating again.

Before the coronavirus hit, we rarely saw each other for more than an hour a day. At one point, I hadn't seen her awake for four days straight as we both worked long hours away from home.

An article from CNBC stated that over 25% of the tech sector wants to permanently work from home. My wife said she is going to advocate to work at least three days a week from home once we return to "normal."

What are parents going to do if their children can't go to school or childcare? That will add even more pressure for employers to allow people to work from home.

Let's think about the ramifications of 5, 10, 25, or even 50% of workers who can work from home begin doing so. We are talking about millions of people. Less commercial space will need to be rented/leased.  Fewer parking spots will be needed. There will be fewer business lunches - catering to the office. Less gas will be used. Longer lasting cars. Workers will have more free time.  VPNs, distance networking software/equipment, and webcam sales will increase. Is this the final nail in the coffin for PC towers? Long live laptops? People can now work from a beach in California or Mallorca. The changes are mind-blowing and endless. Fascinating to watch how this unfolds.

Is your company making the switch?

Take care and be safe.

Posts Tuesday and Saturday