Comment on Why do people say that "return to office" is about raising commercial real estate prices?
surewhynotlem@lemmy.world 8 months ago
It benefits the owners of commercial real estate. Which is primarily banks and investment firms.
Companies need to stay on the good side of banks and investment firms. Otherwise they don’t get loans.
But also, some of these companies own those buildings. If they’re not in use, their value in the market drops.
Also, there’s external pressure from cities and townships who give tax incentives to companies to bring their employees in to spend money in the city. For example, a company might get a tax break if they create a thousand jobs. That’s only a good deal for the city if those thousand people are in the city and spending their money and generating taxes.
HandwovenConsensus@lemm.ee 8 months ago
I see, so the idea is that they’re responding to external pressure from governments and financial institutions? I guess I could see that, though it shouldn’t be hard to prove by pointing to specific policies and loan conditions.
How does that work? Why would a buyer care if the seller was using the building? If anything, I would think using them would depreciate their value due to wear and tear.
fuckwit_mcbumcrumble@lemmy.world 8 months ago
If nobody is using any buildings then there’s an indefinety supply and no demand.
HandwovenConsensus@lemm.ee 8 months ago
Buying something to create artificial demand usually isn’t a good investment strategy. A “pump-and-dump” can work if you can set off a buying frenzy and sell before it wears off, but it’s not a long-term strategy.
Besides, if that was the plan, leaving the buildings vacant would be just as effective as using them.
chicken@lemmy.dbzer0.com 8 months ago
It’s CEOs doing this, they don’t necessarily have to make things work out long-term as long as it doesn’t look like they messed up.
PaupersSerenade@sh.itjust.works 8 months ago
I’m speaking from experience in CA;
Quite a few of these markets were moved on pre pandemic. Now it’s a question of how to offload. My prior company had a very nice multi story building in SoCal before they tried calling back. That was before covid, even then they had trouble securing a purchaser or renter. The market has only gotten worse.
There’s some sunk-cost fallacy; where you’ve already paid for the space, if you make the whole team drive 1hr+ to meet it’ll have been worth it.
RightHandOfIkaros@lemmy.world 8 months ago
What about modern business makes you think they have a long term strategy? All of them have been making only short term gain decisions for a while now.
Who cares if the company could be successful in the future if I can make a lot now by sending it into bankruptcy today?
trustnoone@lemmy.sdf.org 8 months ago
A big thing in my country, business buildings are expensive because of location and what’s around them. But if employees aren’t in the office, restaurants, cafes public transport corner shops etc lower in demand or even close entirely. This makes the building itself less in demand and harder to rent out at a higher price.
A lot of these buildings are owned by banks, CEO’s and financial institutions who have the money to push for changes like government to make people come into office and can use any reason like “think of all the failing cafes!”.
HandwovenConsensus@lemm.ee 8 months ago
Ah, hm… I guess that makes sense. Bringing people to the office raises the value of surrounding retail, which in turn raises the value of the office. Thanks, that explanation clears it up.
puppy@lemmy.world 8 months ago
Don’t forget if the company outright owns the building, any market price drop negatively affect there books, in asset/net worth section.
Endorkend@kbin.social 8 months ago
WFH makes it so there isn't a buyer or very few interested.
So if you want to shift the property, you're going to have a bad time.
squiblet@kbin.social 8 months ago
A buyer is only interested if they have a use for the building. If work from home becomes the default way, then who would need to buy an office building?