
American Cities May Have Hit 'Peak Office' - Brajeshwar
http://www.forbes.com/sites/joelkotkin/2013/11/05/american-cities-may-have-hit-peak-office/
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ChuckMcM
I'm still waiting for Forbes to hit 'Peak Linkbait'

Maybe when Priceonomics does an article on it I'll have another look :-) But
seriously there are so many unconstrained variables in their questions that
they cannot draw any conclusions whatsoever.

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Spooky23
IMO, this is a tax policy problem. You can go to a city where 80% of the
buildings are vacant, but the property owners want insane rents.

Real estate developers have an incentive to hold on to property to let it rot,
because they can use the losses (real and imagined) to avoid taxation. The
carrying costs for the property are often largely driven by taxes, and
assessed value is usually driven by rental income.

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VLM
I would agree with your remarks about crazy rent demands although I'd make a
mild correction that nobody has ever been foreclosed due to an imaginary loss,
but real losses result in real problems.

So if you can't rent some shack for $20K/month and you've got a loan for half
the value of the property, at least for awhile you can get away with telling
the bank that you haven't found the right "fit" or "personality" or "match"
and much as you're not allowed to criticize single people for such language,
the bank will back off as long as you're somehow making the monthly payment.
But the day you rent that "$20K" property for $5K the bank is going to freak
out at the implication your 0.50 LTV ratio just insta-rose to 2.00 LTV even if
you somehow can make the payments.

Its an accounting trick... unrented space is a temporary cost of sales... even
if temporary turns into a couple years. But a contract proving the property is
worth less because the rent has dropped, is an instant semi-permanent hit in
the balance sheet, which you can't just paper over with "cost of sales" BS.

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encno1s3
Company I work for has offices all over the place. Every time I go to one of
these places for meetings, the offices are usually empty.

Most everyone I work with is telecommuting. I do sometimes miss goofing around
with folks in the office, but working in boxers is the best perk ever.

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blackjack48
Interesting to note: San Francisco adopted an annual limit on office
development in 1985 of ~1M sq feet per year [1]. For the past decade, new
office development has been under that limit and the remaining allocation has
been carried over to subsequent years. Fast forward to today and planned large
office development in the city is projected to exceed the allocation in the
next year or so.

[1] [http://www.sf-planning.org/index.aspx?page=3254](http://www.sf-
planning.org/index.aspx?page=3254)

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codex
I think we may have to wait until the unemployment rate drops to pre-Great
Recession levels before we can draw firm conclusions.

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toomuchtodo
The only way the unemployment rate (the true unemployment rate, U6
[[http://www.bls.gov/news.release/empsit.t15.htm]](http://www.bls.gov/news.release/empsit.t15.htm\]))
is going to drop is if more people continue to permanently exit the workforce
[[http://data.bls.gov/timeseries/LNS11300000](http://data.bls.gov/timeseries/LNS11300000)].
There just is not enough consumer demand, even with prodding by the Fed with
QE to increase employment.

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eli_gottlieb
Why on Earth would monetary stimulus to the lending markets create consumer
demand? Should we really continue believing that demand is supposed to come
from credit rather than wages?

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toomuchtodo
I completely agree with you, but I don't control US monetary policy _shrugs_

Too many people believe growth is a requirement, vs a steady-state economy.

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eli_gottlieb
Well I wasn't even talking about growth vs steady-state. I was talking about
_monetary_ policy vs _fiscal_ policy. A _traditional_ Keynesian stimulus would
have been fiscal in nature, and preferably direct state spending on productive
matters.

Here's a few things that could have been done:

* Increased spending on scientific research

* Reform the health-insurance system to a universal system for greater efficiency while pouring extensive funding into it

* Vast amounts of infrastructure and public-works projects (especially: bridges, sewage infrastructure, electrical grid, fiber-optic internet, etc)

* Refunding/renationalizing state universities

Most of these sorts of things were _utterly uncontroversial_ until the
"neoliberal bloom" of the 2000s, in whose wake Western politicians have
apparently forgotten how all their predecessors have managed recessions ever
since the Great Depression.

And that's _before_ we talk about undoing financialization and fixing the
world's iniquitous trade policies! _Those would be controversial!_

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VLM
Article didn't have any exurb commentary, as employees are pushed out of
cities, the appeal of a long commute declines.

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_Adam
Interesting. My understanding is that office space is a function of the number
of white collar workers in the economy.

I expect this number to increase slowly over time. But perhaps we're
approaching a point where a sort of equilibrium exists. Further societal and
technological changes will need to occur to significantly shift it.

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MarcusVorenus
>My understanding is that office space is a function of the number of white
collar workers in the economy.

Telecommuting makes this rule obsolete.

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walshemj
You have been drinking the telecoms company's cool aid - they want to sell
expensive teleconferencing solutions which have higher profit margins than the
regulated services.

face to face co-located teams are still be best for many jobs especially
complex software development.

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icebraining
What parent or you consider best is irrelevant, what matters to this
discussion is what most employers think. And most office work is not software
development.

~~~
walshemj
And your point is? Most employers like bums on seats as its easier to manage.

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programminggeek
If we really have hit 'Peak Office' and Windows is on the decline, then no
wonder Steve Ballmer is resigning from Microsoft. </joke>

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smoyer
I for one welcome our new remote boss overlords!

It's about time for this to happen.

