Will the pandemic reduce construction of office skyscrapers long-term
 

With many businesses encouraging employees to work at home and with the IT infrastructure in place to make home offices even more reliable and convenient,
will businesses decide that they really do not need thousands of square feet of offices in expensive cities like NY and SF? Or will office building continue but more old 'inefficient' offices be converted into other spaces, especially residential?

Long term? No. But a lot of projects that don’t have shovels in the ground or at least financing in place are as good as dead.

I was talking to a colleague about this. We think this is a watershed moment for remote work and that it will become more prevalent after the pandemic. I work for a development/construction company and a significant portion of our workforce works on project sites. However the office work can be done remotely and starting tomorrow the office will be closed and all work done remotely. It remains to be seen if the jobsites will shut down.

I don't know about that, remote work sucks in a lot of ways. It works well for some people but it's definitely not more productive for most. I think many people will find that it sucks that don't already know.

Maybe it's a balance of both with companies supporting remote work days and employees sharing desks while "in the office". I know for me I am more productive when working away from the office, either at home or at a coffee shop (preferred). But I understand the value of actually being present especially when working with a team.

Decentralization is probably a good compromise between the two. It doesn’t have to be like the suburban office parks in the 80s-00s, but having more regional centers for employment instead of putting all your eggs in one basket in a few cities that already have trouble with their limits. For all the positivity that goes with centralization, one fuck up in New York or the Bay Area can fuck up a major part of the dominant industries that are mostly located in those places.

Operational capabilities aren't centralized...that's mostly leadership and invention. Data centers, back offices, etc., can run most things, aided by limited central leadership and existing contingency plans.

As for working from home, I suspect we'll see a jump up, if only a small one. Working from home isn't easy or productive in many cases. Meanwhile, to the point about offices downsizing, when companies move or renovate they tend to go with denser offices...a lot of 150-200-sf vs. the old 250, half of that being common areas, circulation, etc. I've been expecting an overall office downsizing for years.

No, most people don't like working from home in the first place or can't for certain reasons and are less productive or dont have all the tools they need.

The mass work from home idea has been a thing for how many decades now? Corona ain't changing this.

most people like waking up early and being stuck in traffic for hours? everyone i talk to say they wish they worked from home.

FWIW this is the exact opposite of anyone I know.

Yeah, I don't that it'll spur a big rise in working from home post-pandemic. Companies are doing this because they have to, but I think most will find that productivity suffers as a result (to be fair, there's also a lot more going on - eg. parents have to deal with both work and looking after their kids).

Like most people that I know that get to work from home are treating this as a kind of semi-vacation. As is, I find working from home is mostly just a thing on slower days (usually a Friday) or on days where a person can't otherwise make it into the office (snow days, sickness, etc).

I have a sinking feeling that the office building boom is over for a good little while, but that's because I believe we are on the precipice of a real depression rather than a simple recession. I just hope the buildings currently under construction (office and residential) are completed. It would be morale busting to look at stalled out partially completed buildings. They were a common sight in the early years of the Great Depression. Even construction on the Empire State Building was halted for a year or so. Ditto Rockefeller Center.

If they lock down the nation for a while, will definitely see delays in time tables but I don't think it will be for long. Once this settles, I think the market will bounce back. Large spikes too, as life returns to normal.

In the acute sense, oh yeah... the damage is very very real.

The folks that will lose money are those that sell in a panic with respect to the market. Or if they invest in smaller emerging companies that don't have the resources or contingency plans for a prolong period of inactivity.

This is not just about a bunch of 401Ks. Corporate credit crunch is likely to derail banking system that already has liquidity problems. Major debtor corporations may default on corporate bonds as revenue declines rapidly due to shutdown. Consumers will be hard pressed to spend us out of this hole. Probably 60 % of American households will start sinking in debt as soon as layoffs kick in. It will be a while before they are able to get back to the table. This thing is shutting down the global economy. That has never ever happened in peacetime in modern times. I'd love to be wrong, but I think folks are whistling in the dark right now.

We appear to be heading toward expanded unemployment benefits. That would ease things substantially. That wouldn't cover people on reduced hours or tips of course, or the self-employed. Stimulus packages are also pending.

Otherwise, while we're cutting off big chunks of corporate and consumer spending, we're also adding other chunks, like investing in healthcare. People with steady incomes might spend less in the short term but that part will snap back to normal when possible.

I'm having a hard time predicting this. It'll be down but the "how" and "how much" are unclear.

Unemployment for the gig economy and 1099 folks?? How is that going to work? The Fed just shot it's wad. Nobody really knows what kind of stressors are operative in the banking realm. Supposedly the bond markets are behaving very strangely. Not enough buyers or liquidity for all kinds of debt that keeps the system afloat. I just don't see this as a one-off quick turnaround event. It is historic and structural. All the fissures in the global economy are going to be revealed. Monday is looking to be a blowout of the worst kind for stocks, bonds, and energy prices.

https://www.reuters.com/article/us-g...-idUSKBN2121BM

Nah, sorry. Both the ESB and the Rockefeller Center rammed through the early days of the depression. The ESB was built in 13 months and the Rockefeller was built in many phases but never halted for extraneous circumstances.

The Empire State Building sat empty for years and didn't become profitable until 1950; almost 20 years later.

Yes, but there was no work stoppage. If anything, that thing flew by without anyone noticing. Besides, they built it at the very start of the Great Depression, and the ESB and Rockefeller contributed to a glut in office space, obviously.

before all of this insanity, Hines was due to start construction on a new large office tower here in chicago this spring. with anchor tenant Salesforce already signed on, it is proposed to be ~1.5M SF and 835' tall.

we've heard that financing has already been lined up, and with Hines, that's generally a pretty safe bet under normal circumstances, but we are no longer under normal circumstances.

it will be very interesting to see what happens with this one in the coming weeks/months. it could be the canary in a coal mine.

https://i.imgur.com/OJ15bqF.jpg?1