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The war on remote work has nothing to do with productivity - the goal is avoiding a commercial real estate crash
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- Title
- The Elite's War on Remote Work Has Nothing to Do with Productivity
- Published
- Aug 11 2023
- Word count
- 930 words
There's a great scene in Detriot: Become Human around Productivity & The Economy.
The USA is seeing 35% unemployment and millions turning to lives of crime, just to get by. The economy however? It's the best it's ever been. The president and her goons are extolling the virtues of the android economy and how it's doing wonders for everyone.
It's doing great for the stock market and elites. It was killing thousands daily from lost lives.
Of course it's a game. But I work in Data Engineering, I'm on the front of removing bullshit work from peoples professional lives in order for them to achieve higher productivity for the business. But so rarely do we see that actually happen. Over Covid I spent time automating essential reporting on the health of the business. 325 man hours a week reduced to just over 3 (checking and ensuring accuracy), what did they do with those peoples jobs? Replaced them and sacked the staff. The productivity was never seen to the actual grafters, but it was to the elite who own the vast majority of shares.
We all know that's the case. But with the advent of easy to process data, ChatGPT and the ilk... this could get out of hand very quickly.
Especially as we're talking about trillions locked into properties where the actual value is a lot less. Residential and Commercial 'markets' are going to go bang one of these days, they need someone to hold the bag. So they're looking collectively at everyone else... same as they did in 2008.
Capitalism absolutely sucks, and probably has very little place in the world of the future. Regardless of what the current techbros really think.
It's a convenient narrative, but the reality is corporate landlords just aren't the cause of the housing crisis. Even Vox agrees and puts the percentage of big corporate home buyers in the single digits. Many countries have simply underbuilt housing for decades now, and the bill is finally coming due.
If it feels like everywhere is having a housing crisis, it's helpful to know that the issue is worst in English-speaking Anglican countries because they all follow the same NIMBY single-family-home development model. Other countries like Japan and Germany do housing a lot better.
Japan is dealing with housing on easy mode though. The population has been declining for fifteen years. Tokyo has had rather modest growth since the 80s, mostly by absorbing people from more rural areas.
But Tokyo is still growing and building the housing to match (unlike NYC, London, Vancouver and most English-speaking cities). I recommend reading this article to understand just how incredibly successful Japan is when it comes to building housing and livable neighborhoods: https://www.sightline.org/2021/03/25/yes-other-countries-do-housing-better-case-1-japan/
This is really surprising to read. I remember that Japan had a huge housing bubble that popped in around 1990 or 1991, and they had a decade of economic stagnation IIRC. They even created the 100 year mortgage, just to make it possible to stretch out the debt across generations. I'm glad to hear they figured it out because it sounded worse than the US housing bubble.
One thing to note is the need for new housing to handle new earthquake regulations. That said the large number of abandoned homes that are freely available (akiya) are a fun rabbit hole to dive into on youtube. Tokyo Llama in particular has a great series.
I work in municipal development, and the new trend is developers building houses for rental ONLY. They're not even wanting to individually plat the lots or give each house a water meter.
100% of new housing developments that have approached the city with new projects have been rental-only.
If you manage the group of properties as condos they can have a shared water meter and stuff. What’s the difference between a development fine for rentals and one done to be sold as condos or as a CoOp?
Condos are weird, sloppy things that we avoid. If the houses are to be sold as individual units, they need to be platted on individual lots and have separate utilities. If nothing else, it's super annoying when we can't turn off utilities to a single unit for unlicensed work or non-payment or bills, and we have to decide between shutting off water to 5 homes, putting a lien on a house for $300 of water, or just letting people not pay their bills.
I'm in a townhouse that's managed as condominiums. It's been fine, I actually like the fact that we can get some returns to scale on things like landscaping and a porter service for taking our trash to and from the curb.
Townhomes can have lot lines and HOAs to achieve the same thing while retaining more ownership and flexibility for future changes.
A condo board can be as restrictive or as flexible as you want it to be. It's not meaningfully more restrictive than an HOA, which is also as restrictive or flexible as the membership wants it to be. I really couldn't care less about an abstract notion of "ownership" as long as the value of the property is retained and able to be improved upon.
The thing about this that, to me, doesn't mesh, is how these corporate landlords are convincing their tenants to force their employees back to the office.
I'm not sure that they are.
I'm sure they have some influence. Maybe they're offering rent cuts for occupancy or other incentives. But that's only going to get them so far. All these tenants (some as large as Fortune 500 multinationals) have their own financial staff who knows the numbers. They know how much they're spending on real estate and how they were able to boost profits without using that real estate.
Eventually someone's bean counters are going to convince the organization to jettison a significant percentage of its real estate. Once that happens, I think it'll look like a slow-motion demolition as leases expire and corps race each other to trim that expense from their balance sheets.
I think the principal driver of "return to office" is the desire to cut payroll without layoffs.
The issue is the length of the leases. Office space leases are often really long term, like 25 years long term. If you're locked in for that long and you're going to be paying no matter what, there's a pretty strong psychological incentive to get something for your money.
In reality it's the sunk cost fallacy at work, but the sunk cost fallacy is pretty much hardwired into our brains.
In my experience 3-5 years is common with 10 usually being the upper limit. 25 would be an outlier. But even if we assume 25 is common, you're still going to have some percentage of those expiring every year. That's why I believe it'll be a slow-motion demolition. Short of tenant bankruptcy, landlords know when their vacancies will be, which tenants have options, are likely to renew, etc.
And I agree that the sunk cost is a factor but I'm saying that eventually the bean counters will win that arguement.
Even if it's a long lease, they could very likely sublet. It might not make money since the market is down, but it would cost them a lot less than not subletting and not getting any revenue for that space.
Remember seeing articles, trying to argue this very point, that started to pop up right around the time companies starting talking about returning to work:
Anything to convince people that office work is actually a good thing for them.
I don’t think that argument is particularly wrong though. I need clear boundaries between my work and my home life. As a remote worker, having a dedicated home office has been essential for me. I can’t just set up on the dining table and expect to get anything done. I have to go into my “work” room and close the door, and all my work-directed mental energy is compartmentalized into that space. At the end of the day, I physically exit the room and close the door behind me, and I switch off that part of my brain and don’t think about work again until tomorrow. There’s a ritual to it, that I need, otherwise the lines between mental contexts blur in unhealthy ways.
But the “commute” is missing. The buffer time when I can clear my head of one context and prepare it for the next. The bit of solitude I get between crunching to make project deadlines and wrangling my rambunctious kids. Now, I slam directly from one mode into the other. It’s jarring and I still don’t have a good solution for it.
In the old days, my commute was 45 minutes by bus. For the most part I could pop in some headphones and listen to podcasts. I got some fresh air, there was a brisk walk component that let me stretch my legs, and I got to see my city along the way. Now I barely leave my neighborhood, and need to find new ways to fit exercise and podcast listening into my schedule. I recognize that not all commutes are created equal, and there were parts of mine that I hated too, but let’s not pretend there wasn’t some good to be found there too.
Have you considered taking walks before and after work? I find that helpful, though I definitely do it less often in the winter when it's dark, cold, and raining.
The main issue with these things is that they are entirely artificial which means they can easily be dropped. The commute was non-negotiable. You simply had to do it in order to go from work to home and vice versa. I rode the train and it was a great for mandatory personal time.
I don't have that anymore working from home. Fortunately, I do just fine with the kneejerk switch between home and work life. I do sometimes miss the non-negotiable me time, but I manage to find plenty enough to fill the need.
I have a hybrid schedule but I do this on my WFH days to provide a bit of separation between work and home. I've always used my commute as a time to switch between the two mindsets so without being able to dedicate a separate physical space in my home for work, I've had to figure out other ways to distinguish my "home office" from my home.
In the mornings, I'll spend my commuting time with a coffee on the balcony before setting up my computer for the day. In the afternoons, I'll disconnect my work laptop, put it out of sight, and get out for a 45-60 minute walk. By the time I get home, I'm usually out of the work headspace.
And the thing is, remote workers aren't saying offices shouldn't exist. We definitely recognize that for some people, the commute and dedicated office space works better for them. The office should be optional, not forced. That's the big kicker. Let each worker choose which working environment works best for them. For people like you, you'd be able to get your commute to clear your head and have the dedicated space. For others where that doesn't work, they'd be able to have their home office. Best of both worlds.
People aren’t always honest with themselves about what working environment works for them though. Work is generally done as part of a team, so it’s the working environment that makes the team work best together that matters. It’s not an individual decision.
In my experience, teams are most productive when their members are most productive. Depending on the nature of the work, they don't all need to be doing the same thing.
I work on a team where working remotely or in the office is fully optional. In practice, about half the team work remotely 100% of the time, half the team coordinate to all go in to the office together one day a week for social purposes, and a small handful go into the office several days a week (this one is especially popular with parents of young children who find it hard to concentrate at home).
I live too far away to go into the office regularly, but that suits me well because I live in a very quiet location and I find I work better using remote collaboration techniques. I hate being interrupted in the middle of a thought, and I am likewise reluctant to interrupt other people, so I love using chat programs to contact my teammates. When we collaborate using the traditional methods, I find myself spending a large fraction of the day either trying to regain my lost focus or waiting (often a long time) for signs that one of my teammates is at a stopping point so I can go ask them something. (My only gripe with remote work is that I lose track of time. When I go into the office, we all take breaks together and leave together, so I don't accidentally work longer than I intended and burn myself out.)
I don't think I'm alone in this regard. Ever since my team started working remotely all the time during the lockdowns, even people working together in the office have switched to using the new remote work techniques. The office is much more quiet and less interactive than it used to be; everyone is messaging each other rather than talking. Thus the office does not meaningfully improve collaboration; rather, it offers a quiet working environment for those who can't get that at home.
That being said, this does not hold for training new employees. For that, I really think face-to-face interaction is vital. Some training can be done remotely, like demonstrations, but trainees really need someone looking over their shoulder for at least a week or two.
100%, wfh is amazing for adhd people who can’t get work done in a traditional office setting, especially now that a traditional office setting is an open office plan.
When I started my career it was 10x10 high walled cubes. Then 8x8 high walled cubes. Then 8x6 short walled cubes where you were subjected to the visual and aural noise of the entire floor. Then they just went tables with no partitions full open office. Over the last 23 years it’s just gradually gotten worse.
I now only take remote jobs and anytime my employer forces me back to an office I just find a new job that pays more money and quit. It’s happened to me at the last 3 jobs, I’m never gong back to commuting and office work.
When the team is scattered across the country and none of them are going to even be seeing each other in person anyway, I find it hard to believe that's actively best for the teamwork to make them all go into different offices to sit on virtual meetings still.
In any case, the point isn't "all office work is bad". There certainly can be cases where if all of the members are centrally located and they have a project that does truly need in-person collaboration, then sure, an in-person environment can be coordinated.
The issue is the blanket "everyone return to the office" mandate that takes no consideration for actually what is best. Individuals and teams can make that decision.
that break is not worth the anxiety and time-loss that the commute causes me. watching assholes break traffic rules constantly (making my trip last longer), traffic congestion earlier and earlier in the day that is getting harder and harder to avoid, climbing gas prices, over an hour of lost time every weekday, wear and tear on the car.... it's just not worth it to me.
I was a high school student during the 2020 online learn from home thing. I find the same thing. I found that I do more work when doing school at home then when doing school at school. That travel time helps provide a buffer and a time to switch between between work/school modes and home mode.
It is absolutely mind blowing to me that anyone even tries to make this argument. Like even if this were somehow true and it was great to spend an hour a day in your car, couldn't we just finish work and go sit in our driveway for 30 minutes
Yeah I've always thought the "I can't separate my work life from my home life unless they're literally separated by distance" thing to be a bit bizarre.
The addition of a chore everyone hates having an intangible benefit that only works when it's forced upon you, makes even less sense.
People spend huge piles of money to live in locations that reduce their commute. But once it's gone they're clamoring for it's return?
I just don't see how it's both something so important and beneficial that we should make everyone do it, yet even the people who like it can't be bothered if they're not forced.
Just wanted to point out: physical exercise happens to exactly fit your description too.
For a lot of people, if they’re not forced then they can’t be bothered, and yet it absolutely does provide significant emotional and mental benefits.
Hell, I fit into that category; rationally I know that my life would be better in so many ways if I exercised regularly, and yet I still just don’t. I switched from a fairly physical job to a desk job last year, and I’m in the worst physical state of my life.
I am a real person and I legitimately preferred the way white collar work was done before the pandemic. We need different teams/companies to just do things in different ways. Then workers can pick what they want. No more hybrid - which is everything and nothing at the same time. Give me an in person team. Give others 100% remote. That’s how it worked before.
That's good for you and the remote workers, what about the vast majority of people who sit somewhere in between?
I do one day a week in the office, otherwise I go spare. My teams do between one day a week and one day a month depending. I don't want my engineers coming to a stuffy office, to work in sub-standard conditions (All offices are compared to home) to work on the same things they could at home. I want them in to do social activities, planning, thought mapping and all sorts.
There's a balance. True flexibility is what people need.
I’m not trying to force people to do what they don’t want. I’m just shocked I haven’t seen any employer take the approach where you can actually pick between the options. Some teams will benefit from being in the office together (for hardware, or faster-moving teams), others are significantly benefitted by a distributed remote team (SRE for example). Why not take that into account and give people guarantees on their experience? Most employers are in a dance of trying to get everyone to do a nebulous hybrid schedule with an undertone of eventually forcing all employees back to the office Monday through Friday.
The reason employers are moving away from the "you pick what's best" approach is because most are choosing to work from home and that's negatively affecting corporate's real estate investments.
If they can force people back in then they create artificial demand which gets their portfolio values back up.
Most retail head offices in the UK do just that. I've got mates all over that industry who are fully hybrid, no dedicated days in the office.
It's literally come in when needed. SRE and SOE teams are helpful to have in the office... Sometimes. But only when they're contributing to project expectations. Anything else is just pointless.
Also, apologies if messages come across as arsey. Not the intention, text can be very formal!
So... I got about halfway through this "article" before I realised it wasn't an actual analysis of real estate and office work, but just one person's rant about people being forced to work in the office.
Because it only takes a hot minute to figure out that this:
... is total bullshit.
It's not the owners of the office towers who are requiring employees to come to work. Even if they desperately wanted to... they can't. The real estate moguls have no such power to order their tenants' employees to come to the office.
This is coming from the individual companies, not from the owners of the buildings.
This whole "article" is just one person's opinionated rant, and it's flawed at its core, because the people who are supposedly doing the bad thing being ranted out... don't have the power to do that bad thing.
Maybe I'm just too tired, but I don't get it. The tenants don't care if their landlords want employees back in the offices. It's the tenants/employers who get to decide. Why would they waste the rent money to save the landlords?
Many big companies own their buildings outright. If the resale value of those properties fall their books start to look like shit.
So the thought process is: if there is less demand for office space, we are screwed. Therefore we must force our own employees back into the office because.... this will magically change the rest of the market too?
I still don't get it.
Sounds like the broken window fallacy, right? By breaking windows it'll give work to glass makers. Or in this case, by forcing people into useless buildings we'll make useless buildings valuable.
The time and energy people spend on commuting can go to something else. Anything is better than travelling to the office.
i've never heard this used this way. the "broken windows" approach i am familiar with has to do with policing the little things (like broken windows) so that it looks like the community cares and the criminals won't set up camp there.
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
Although perhaps commuting isn't "destruction" in the original sense of the parable, it's still a huge waste of time and energy.
yes, i didnt know there was another usage of the term
So... sell the buildings? If you have the option of not needing to own an expensive building, it seems better to have a bunch of cash to do whatever you want with than to have your money tied up in an expensive building, even if "a bunch of cash" is less than you paid for the building years ago. This sounds suspiciously like the sunk cost fallacy.
The economics of big companies is one of those fields I look at and can't tell whether I'm much smarter than everyone in that field, or much dumber and Dunning-Kruger-prone.
That would require buyers though, wouldn’t it? Demand is way, way down.
So all these articles that have titles like "admit it, you miss your commute" or whatever are just... advertisements for office buildings? No wonder they annoy me so much.
I literally can no longer stand advertisements. They annoy me so much that I inevitably end up rolling my eyes and getting angry. Adblockers are a life saver for me. Especially since actual happiness is hard to come by due to mental illness.
They could also convert some of the empty offices to apartments. I'm guessing many employees would prefer a five-minute-walk commute to a home office.
I read the article and skimmed the comments and it seems to be very much viable. It has already happened. The article even says so:
It's tricky to maximize the profit from converted office buildings, but if it is empty otherwise, your profit is negative, so converting just some of that space into apartments should be economically viable.
As far as I understand, the arguments against conversion come down to:
Even if it is impossible to get light into the center, you could put facilities or, well, offices in there. And regulations can be changed, which has already happened.
I'm a little confused by the article you posted and your follow up comment. The article doesn't seem to support your comment - it sounds like office to residential conversions have been done before and may be possible for a number of existing office buildings. What does the article have to do with laypeople believing that they are real estate experts?
I did a little searching and according to some experts about 10-25% off office buildings are good candidates for conversion to residential. This report "predicts that office-to-residential conversions could become profitable within the next five years.".
Some cities have already started working on conversion initiatives. Here's one in NYC that just started.
Yes, I read the article when it was initially published. I've read other articles about current initiatives from cities around the US and different conversions that are in process since reading the NYT article. I am not an expert, armchair or.otherwise - I am only seeing what has veen reported or studied by other people, and there seems to be a movement towards these conversions, even if on a modest scale.
The Deloitte study I linked to predicted that office-to-residential conversions would be financially viable after 5vyears. I think 15% of all office buildings is a significant amount.
I feel like I've read a different article than the one you linked to.
The article says that office conversions have been done, even on modern office blocks. You say conversion is not viable.
The experts say "few conversions are physically impossible if you’re creative enough". You say "they say it's not currently reasonable".
You completely ignore the pretty obvious idea that even the largest, blockiest office buildings have perimeters with windows where people could live while the inner space could be used for other purposes or simply stay empty, which would be an improvement over the whole building being empty. Instead, you state that every apartment would have no natural light whatsoever.
You are, of course, correct. I do have no idea what I'm talking about. But instead of explaining why my ideas won't work, you contradict your own sources.
You assume that, if conversion were viable, we would already be doing it. But people aren't rational. Racism, pollution, addiction, poor dietary habits, and lots of other things aren't viable, yet extremely popular. Sometimes things arent' happening for stupid reasons, not because they are impossible.
The people who say change is simple annoy me too. I think a reasonable compromise position might be that it's not simple, but maybe in some cases, with enough creativity, it might be doable and the least bad option?
In other cases, the least bad option might be a teardown, or waiting to see if the market changes.
Property is only worth what someone is willing to buy it for imo.
The theory goes:
Personally I think it's more the correlation between extroverts and senior management, combined with senior management hubris to think everyone works like them. But I'm sure there's a non zero amount of property sunk cost going on too.
This could work as a way for a VC that separately owns a real estate company to transfer funds from the VC fund’s investors to their own accounts. If done blatantly, it would be a form of fraud, but it at least makes sense as a form of corruption.
But the management trend towards making people come in to office seems larger than startups? It doesn’t explain why big companies do it too.
You’re still engaging with the conspiracy theorists on their terms. Here’s how conspiracy theories work:
That’s it. I always prefer the UFO guys because at least their grainy photos demonstrate an understanding that evidence should be required.
This isn't a serious article, analysing real estate and office work. It's a blog. It's just one person's crazy rant.
That's what you're not getting.
I had the same problem with this article -- it didn't draw any connection at all b/t the corporate landlords and the employers forcing RTO.
I expect the other replies to this are correct, that it's a combination of employers who own their buildings (e.g. AMZ) and ones that otherwise have substantial investments in commercial real estate (not mutually-exclusive subsets to be sure). In either case they're panicking about the CRE crash cratering their portfolios/bottom lines. But I haven't seen any actual evidence of this connection in anything I've read (like this article), it's all just (perfectly reasonable imho) speculation and inference.
The companies that care usually have some kind of investments in commercial real estate. There's someone going on which effects their bottom line, even if it's not in exactly the same way for each company.
One of my local companies buys commercial real estate when they're flush with cash (something about taxes), then sells it when they need funding.
Yes, there are ways to make money in real estate, but making people come in still doesn’t make any sense in real estate terms. A landlord makes money by leasing out space to someone else. They can’t make money by using it themselves. At best, they save on rent.
A vacant office is ready to rent out.
It's not the offices, it's the supporting businesses, like restaurants.
How do restaurant owners tell other business owners how to run their business?
They don't. This is so about real estate. If they're are no people around, the restaurants can't stay in business and the property owners lose money.
I don't see how this works financially. Companies want their employees to work at the office so their employees sometimes spend money on lunch at a restaurant where the employer somehow gets some of that back as rent? This will be hardly anything compared to what companies pay their employees.
It wouldn't even work if all the employees had to eat at a pricey company cafeteria every day.
I have to be honest, the first time I read the idea that return-to-work pressure is about real estate value I thought it was BS from an anonymous user on slashdot.org.
Now, I've seen several stories about the White House pushing for a return-to-work as congressional republicans are creating a stink about all of the underused federal buildings.
It’s possible that managers wanting people to return to the office is a dumb fad and there’s no genuine increase in productivity. It’s also probably true that commercial real estate is in trouble; there’s good reporting on that.
But on the face of it, this theory connecting the two seems unlikely and financially illiterate. How could a business use its real estate to increase revenue or lower expenses by making its employees come in to the office? It doesn’t directly make any money. Employees don’t pay rent.
When a company has excess office space, leasing it out to anyone else is how they’d make money. This is essentially becoming a landlord. Alternatively they could decide to sell a building or not to renew a lease. Shrinking companies do this all the time to cut expenses, and a profitable company could do it too.
The closest I can see to it making sense is that sweetheart deals for office space are probably available. The space still needs to be used productively to make money in some other way, though. Even nearly free office space wouldn’t be a good deal if you don’t need it.
Also, there’s probably some reduction in travel expenses from having people in one place, but they could also cut the travel budget.
There are many things in finance that are counterintuitive. Maybe there’s some tricky theory explaining how this all makes sense, and that might be fun to read? But the article doesn’t offer any theory about how it could happen, let alone evidence for it actually happening. The anecdotal evidence isn’t about real estate.
Depending on the municipality and state in the U.S., many corporations receive massive tax rebates, if not outright subsidies, for "creating jobs" in specific locations. Those benefits may be contingent on maintaining workers in the locale, not just owning a building.
I haven't done deep research on how much money might be at stake, but it's another potential contributor to the problem.
In some cases, sure. Apple invested a zillion dollars in their campus so they actually want to use it; understandable. But there are a few major reasons why companies are pushing RTO policies, and my spidey-sense goes off when folks try to distill complex global trends into a simple answer. For me, I'm also seeing:
Headcount reduction. How can you have a layoff with the negative press and severance associated with it? RTO, baby. Everyone's read the headlines about how ~80% of workers would rather look for jobs elsewhere than return to the office. That's something that employers are counting on too. When you have a company like Grindr suddenly giving workers a month's notice to relocate across the country, to an office they don't even have yet, it's fairly clear what their intentions are.
Lack of trust. Companies may not actually trust their workers if they can't see them in person warming a seat.
Better collaboration. I hate to say because I love remote work, especially as an individual contributor, but in a collaborative role, remote can be like pulling teeth. It also removes a huge part of the social element, for better and worse, but for me, it makes me feel less connected to my team.
This Vox article is interesting because it contains a nugget about how managers report being under increased pressure to show productivity gains (as every company tries to squeeze more work out of fewer workers). But workers are already burning out, so basically managers are resorting to productivity theater to prove they (the managers) are doing their jobs. But that's suuuuuuuper hard to do remotely, and mostly requires really invasive monitoring. Getting people in the office makes it much easier for the managers to look like they're actually doing their jobs.
(Which is not to say that the pressure to return to office coming from the owner class, as opposed to the middle manager class, isn't about protecting their and their friends' investments in property. Although I also think the owner class needs to feel like they own the people they pay for.)
I couldn't care less if the fat cat landlords finally lose. And don't let your heart break for them, they won't be bankrupt out on the streets, they will still be plenty well off. Let them spend some chunk change converting their now useless big office buildings into housing or selling the land. The world has evolved and their cash cows needs to change along with it if they want to keep lining their pockets.
And it seems so, so dumb to artificially keep the demand/prices up AND force unnecessary commutes upon the work force.
It's just a question of a justifiable setback for few (landlords) or unnecessary for many?
So like residential loans, commericial loans get bundled, packaged into securities and sold as investments. It's not just the landlords who would be losing money. It's a lot of investors, although not nearly as many as were impacted by the residential mortgage backed securities crash in 2008 and 2009.