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Okay….and now for my Real Estate Philosopher article:



Remote Work Will End With a Thud – Offices Will Thrive Again

I recognize that at least so far I have been wronger than wrong about office, i.e. in predicting an imminent recovery – I have been far too soon and I have to own that.  However, I do believe that those who invest in it today – at the discounted prices increasingly coming on the market – will be over-rewarded for the risk. 
One of the reasons I have been too bullish on office is that I expect remote work to diminish.  I continue to believe that that will happen; however, it is not happening quickly enough to save many office deals from disaster.   
In terms of remote work issues, here are some obvious ones:
First -- as for me, I find it not that much fun.  Being home one extra day a week is great, but more than that is like being forced to eat ice cream at every meal – although I love ice cream, I get tired of it.  When I WFH, I am lonely as there is just no one there.
Second – bosses have figured out that for the most part people working at home are not as productive as the ones in the office.  They know that remote workers have to answer the door – take in the mail – do a few errands – make lunch – clean up and do the dishes – and do all the other stuff that human beings naturally do when they are home.  And for many, it is worse than that as many workers just do a lot less when no one is looking.  So intelligent bosses will make sure that working from home is as minimal as possible, to the extent they can.  In a booming job market they haven't gotten there; however, almost every day you hear a big company announce – come back to the office or get another job.  IBM did this only last week.
Third – if you are one of the workers enjoying working from home, you may not realize how much it is crimping your career.  There are two reasons: one (obviously) you don’t make the necessary contacts and learning that you get by being in the office.  The other (less obviously) is that if you really want a great career and would have worked hard – say five days a week – the only one you are truly hurting by working four days a week is yourself.  Your career success is now only 80% of what it would be.  Who’s fooling who here?
Fourth – I have said this for about two years and now it is on the front page of The Wall Street Journal that the first people fired are the remote workers. 
Fifth – I predict that it is going to get significantly worse for remote workers.  Here are three reasons:
If you used to work in NYC and earn $200,000 and then you moved to Oklahoma and are still getting the $200K, there is a good – great – chance your boss eventually is going to knock that down to $190K and then $180K and then… get the picture.
If you used to work in NYC and earn $200,000 and then you moved to Oklahoma your boss – sooner or later – will wonder if someone in, say, South America might be able to do your – remote job well enough for maybe $20,000.  That will be pretty awful.
I am not one of these people freaked out by AI, but I do believe that as AI takes hold, a first order of business will be to replace those people who aren’t around.
Finally – the worst thing of all is the next recession.  It isn’t here yet, but when it happens, the next recession will leave you in Oklahoma with disastrous prospects.  [Note: I have nothing negative to say about Oklahoma – it is just a metaphor for a place with a lower cost of living – I don’t mean to offend.]
But none of this is necessary, oh remote workers.  You can just come back to the office or recognize the risks of not doing so.  I mean that is where your job started, isn't it?  So what’s wrong with that?

I need to add a note here, which is to say that I am by no means against remote work even if it sounds that way.  I am essentially looking out for remote workers in this article in pointing out the dangers.  Sometimes working remotely can be the best choice for a family.  It can make a lot of sense for some companies to have fewer than five days in the office if there is a business purpose for it.  Some companies may figure out how to thrive with everyone remote.  And sometimes remote work may be the only way a company can keep a star employee if, say, his/her spouse moves to another location for their career or family. There are many ways to do business successfully.

Now, for office owners – and investors – if I am right, when you consider what the future will hold, I predict that, as remote work goes out of style, or at least becomes less in style, there will be an upside tailwind to your assessment of future returns on office investing.  Yes, of course, you should be dire in your outlook and financial projections; however, I think that there will be more likely unexpected upside in office future, as one way or another a lot of remote working people will heed – or be forced to heed -- the warnings herein and get back to their desks in…….offices…..
Finally, I add one last cautionary note to protect my predictive accuracy.  That is to say that office investments in cities where the economies are otherwise getting slammed or declining will – obviously – not perform well until these cities right their economic – and likely political - ships.  I won’t embarrass those cities by calling them out, but we all know where they are.

Bruce Stachenfeld aka The Real Estate Philosopher®


Client Corner

As time goes on I see more and more clients seeking more and more opportunities in real estate.  To the extent any of them are not middle-of-the-road or proprietary, I am referencing them here in hopes that readers may contact me about these opportunities and be introduced to my clients.  Here are the ones that come to mind:

NYC Office: We have clients seeking to invest in NYC office properties, including fee purchases, loan acquisitions, restructurings, preferred equity, and much more. 

Preferred Equity:  We have (many) clients seeking to place preferred equity into real estate deals nationwide, but mostly in major US markets, including both (i) development and value-add transactions and (ii) rescue capital for challenged deals.

Ground Lease Financing:  We have clients seeking to make fee-level ground lease investments nationwide, with a particular focus in the top 20 MSAs. Such ground lease transactions can provide a lower cost of capital for both: (i) acquisition and development transactions and (ii) pre-existing deals seeking repatriation of capital.  

If you would like to interact with our clients on any of the foregoing, please let me know.