Summary:
Working from home has significant advantages. It may have begun with brute force due to COVID-19, when the government used brute force to create a mass exodus of office workers.Radicalized governance triggered the law of unintended consequences. If the government works to kill businesses, they will leave and seek out more friendly states to operate in. If the government kills offices, commercial corridors, and residential neighborhoods by tolerating violence and criminal behavior, people will move out and seek safer environments.
Occasionally, a dramatic shift comes along, like technology that allows us to work from home, purchase online, and use Uber/Lyft-type transport.
Add the public's response, which created a shifting paradigm, and you get a real mess in some cities. This 'real mess' refers to the sudden exodus of office workers, the subsequent decrease in demand for office space, and the economic challenges faced by property owners and lenders. And there is no turning back. Never to return... next chapter...how to reposition one billion square feet of unused office space.
Article:
A Reflection on the Impact of Remote Work on Urban Office Development: The 'Shifting Paradigm,' a term I use to describe the significant changes in the real estate market due to the rise of remote work. This term refers to the profound shift in work patterns and the subsequent impact on urban office development.
One of the many and most significant unintended consequences of the COVID-19 lockdowns is that employees and organizations have embraced working remotely at home. This shift, which I refer to as a 'seismic shift in work patterns,' a term I use to describe the unprecedented and fundamental change in how we work, has fundamentally changed how we work. This seismic shift is a result of the widespread adoption of remote work, facilitated by technological advancements and changing attitudes toward work-life balance.
The downside is that this new in-home working paradigm returned to haunt many prominent perpetrators who benefited most from the lockdowns. They were the mega-giant investment firms, large corporations, big pharma, and mainstream media- entities considered systemically too essential and exempt from many devastating consequences. These entities are now facing the challenges of a remote work environment.
The workforce has shown remarkable adaptability in the face of economic challenges, transitioning to remote work with innovative solutions such as Zoom meetings. The proliferation of software programs that make it easier to shed marginal employees and create a more efficient and leaner staff is a testament to our resilience and the potential for positive change in the face of adversity. This adaptability should instill a sense of hope and optimism for the future.
This shift, now the norm for tens of millions, has proven that we can be more efficient and productive than in a traditional office setting. Out of a workforce of 154,000,000, 12.2% work remotely full-time and 4.7% one-half time. This model works and offers a promising future for work culture, providing a hopeful and inspiring outlook for the future of work in a post-pandemic world.
https://remote.com/blog/remote-job-roles
https://www.usatoday.com/money/blueprint/business/hr-payroll/remote-work-statistics/
The benefits of remote work are numerous and promising, offering reduced traffic, flexibility to work at the most productive hours, increased productivity, and, most importantly, freedom from company politics and ideologies. This shift has allowed many, including myself, to work in a way that suits our natural rhythms, such as being a morning rather than a night person. We can work or be semi-retired, and it is on our shoulders. This empowerment and liberation are the true essence of remote work.
The economic implications of this shift are profound, particularly in the real estate market. Once bustling with activity, tower office buildings now stand empty and obsolete. The lack of demand for office space and a higher interest rate environment have intensified the strain on owners. At least 1 billion square feet of vacant and unoccupied office space in the U.S. requires repositioning.
The obvious answer is that office space should be converted to residential occupancy when possible, with special financing vehicles for construction and tax credits to help make the transition viable. This shift is a change in work culture and a significant economic transformation that necessitates the urgent adaptation of property owners, lenders, and the government. The government started this mess as a political power grab and needs to step forward to straighten it. The time for action is now.
Office buildings may be considered Class A, B, or C in commercial real estate. The differences are subjective, including pricing, location, quality of construction, and amenities. Thousands of primarily Class B and C buildings need help staying afloat, with some losing 50% or more of their value.
https://www.statista.com/topics/3240/office-real-estate-in-the-us/#topicOverview
Despite the challenges posed by the remote work trend, major owners like Brookfield, Blackstone, and Starwood Capital Group are victims of the shifting paradigm, A term used to describe the significant changes in the real estate market due to the rise of remote work. Many have chosen to adapt by abandoning older towers in downtown areas.
Renovations or repositioning of the building need to be revised. How about a 345,000-square-foot office building in Baltimore selling for 4M dollars or $12 per square foot? There are hundreds of examples of office towers selling for pennies on the dollar, resulting in earthshaking losses for property owners and lenders who foreclose on the defaulted properties. Lenders may be commercial banks, life insurance companies, or vehicles with securitized offerings.
Also, on the commercial property front, the long rope of the COVID-19 fallout is that small businesses are under severe stress due to changing consumer habits. Consumers are stressed financially and do not have money to spend. In particular, companies that rely on office workers are closing up shops. At this point, 40% of all restaurants are considered to be closing up shop for all the reasons, including reduced foot traffic, rising prices, promoted crime on the streets, and the regulatory nightmare. With this will come commercial vacancies that will be released if new, willing tenants understand how tricky the restaurant business is. There are currently more than 1 million restaurants in the U.S., of which 70% are small, single-unit operators.
The second most prominent reason for moving to remote work is that progressive-leaning governments exacerbate the crashing prices by overlooking criminal activities and defunding police departments. Crime-ridden metro cities include Detroit, Memphis, Birmingham, Baltimore, St. Louis, Kansas City, Cleveland, Little Rock, Milwaukee, Stockton, Los Angeles, San Francisco, Oakland, and Seattle. However, considering the complex factors in these cities' economic situations, such as high crime rates, housing affordability, and social inequality, is essential.
There is no end in sight, and nothing will change unless the metro leadership is replaced in primarily progressive-leaning cities and towns, which are based on Marxist governing ideologies. The rule of law (law and order) must be re-established, and this change is necessary and within our reach. It's time for a call to action and a potential solution to the current situation.
Leaving urban blight and moving into suburbs is part of the 'Shifting Landscape.'This shift presents an opportunity for positive urban and suburban development change. We must address the issue of criminal acts going unpunished to ensure a balanced and safe urban environment. This is a matter of economic survival and a fundamental requirement for a thriving society.
Thank you
Dan Harkey
Educator & Private Money Lending Consultant
949 533 8315dan@danharkey.com
Visitwww.danharkey.com