2 months ago • 2 mins
What’s going on here?
Offices in the UK and US are more deserted than they’ve been for a generation, according to news out on Tuesday.
What does this mean?
Companies have been coaxing workers back into offices, yet despite the tempting promise of slightly subsidized vending machines and the occasional free banana, most folk are refusing to give up the good life they discovered during the pandemic. But with the fluorescent lights still on, the cost of keeping an office simply isn’t justifiable for many firms. That’s left offices in prime locations like New York, San Francisco, and London emptier than they’ve been in 20 years, according to research firm CoStar. Commercial property prices are sinking as a result, less than ideal when the sector makes up around 10% of the US economy. So for the country’s sake, that sprinkling of free fruit better start looking a lot more appealing.
Why should I care?
For markets: We’re behind the times.
Builders seem to have missed the memo, mind you. Central London’s expected to complete a record number of new office builds this year, with developers saying there’s enough demand for energy-efficient buildings to keep hoisting up the scaffolding. The most likely explanation, though, is that most projects were funded before the work-from-home movement was born. So unless these new spots are snazzy enough to lure folk in, they could end up empty too.
The bigger picture: Your dime’s on the line.
If businesses don’t move their ThinkPads into these new offices, the firms that financed the developments will be left empty-handed. Often, that’s private firms like British Land, which has already seen its stock pulled back down to pandemic-level depths. But for massive projects like the Penn Station redevelopment, it’s Federal, New York, and New Jersey governments in charge of the pursestrings. So if they keep giving new offices the green light while workers stay firmly on red, the public wallet will be left a lot thinner.
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