Posted on 01/08/2024 11:35:48 AM PST by george76
The 19.6% of office space that isn’t leased is the highest since at least 1979
...
America’s offices are emptier than at any point in at least four decades, reflecting years of overbuilding and shifting work habits that were accelerated by the pandemic.
A staggering 19.6% of office space in major U.S. cities wasn’t leased as of the fourth quarter, according to Moody’s Analytics, up from 18.8% a year earlier. That is slightly above the previous records of 19.3% set in 1986 and 1991 and the highest number since at least 1979, which is as far back as Moody’s data goes.
The new record shows how remote work has upended the office market. But that is only part of the story. Much of the market’s current malaise traces its roots to the office-market downturn of the ’80s and ’90s.
That surge in office vacancies in the 1980s and early 1990s followed years of overbuilding. Easy lending fueled a construction boom, particularly in the South where land was cheap and red tape sparse. Banks often financed speculative office projects that didn’t have any tenants signed up.
“The building I built was almost a million square feet—100% empty,” said developer Bruce Eichner, who built the Manhattan office tower 1540 Broadway in the 1980s.
The result was a glut of office buildings that couldn’t find tenants when the economy went into recession in 1990 as the country suffered from the savings-and-loan crisis, when many S&Ls failed.
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In 1991, San Francisco had the country’s third-lowest office-vacancy rate ... Today, the city has some of the country’s emptiest offices
(Excerpt) Read more at wsj.com ...
So our taxes dollars still leaseing these empty office spaces/buildings?!?!
We could put all the illegals in these empty offices. The govt. could lease from building owners.
Why?
Why would we house them?
Let them get cold and leave..
They won’t leave. They’ll try to invade people’s homes. Police won”t be any help.
Duh
Before the Covid shutdowns, I think companies would have continued using office space because that’s what they had always done. Call it corporate/social inertia. But when the government caused companies to shut down or work from home, that forced an evolution towards actually using the remote tools that were already there. Before the shutdown, some meetings that had been held in person had an option to attend remotely. Suddenly, that was the only option and people liked not going to the office or commuting to work or traveling on tiny airline seats to listen to some consultants talk about efficiency. Had it not been for the government, things might have continued as they always had. Government forces change and companies make the best of it. It was government that killed the office rental market, in the capital...with a hammer.
This is pretty much what I have seen. I've been remote for about 5 years. The company was really resistant to it for a long time, but finally caved to the reality that I wasn't needed in the office. The plandemic proved that a lot of workers really don't need to be in offices.
Vacancies grab headlines—but one interesting number would be the reduction in total rent/lease revenue due to discounting in order to attract renters.
The other interesting numbers would be the rental occupancy and rate projections that were given to lenders to obtain loans compared to the actual figures.
For many/most commercial office buildings those numbers are probably stunningly horrible.
I’ve been working with a new client who is looking to retain me under a long-term contract for 2-3 years. Their terms included a clear requirement that I work in their office for a minimum of 2-3 days per week.
ME: “That’s not going to happen. I have a bigger/better office than your CEO’s office, anyway.”
CLIENT: “That’s OK. We don’t care if you never show up except for critical in-person meetings every 3-4 weeks. It’s just that if we put this condition in the contract then we have to give you a work station here even if you’re rarely ever here.”
I got the sense that they needed to have a furnished work station with a name plate on it for an employee or contractor — just to demonstrate to the senior management of the company that they are putting the space to good use.
That wouldn't surprise me at all.
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