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Remote Work to Wipe Out $800B from Office Values, McKinsey Says (bloomberg.com)
36 points by toomuchtodo 11 months ago | hide | past | favorite | 52 comments



What are the savings on commute times and unused fuel?

What are the C02 savings and losses to ExxonMobil et al?

It's not just about the landlords and commercial renters locked into long term contracts.


You can have an apparently growing, thriving economy that consists of nothing but cancer treatments and divorce lawyers. To that list we could add people driving long trips from Points A to Points B.


I'm sure working from home is remarkable for the environment. So it's a great question.


The fact that people are moving out of cities says otherwise


You seem confused, define work from home in your own words.


I think they mean that living in cities is better for the environment (on average) but wfh enables more people to leave cities


But then you need to reassess why cities are better for the environment.

I'd gather most is due to saving the commute by car to work, which is already failing in many US cities, but holds pretty well in the rest of the world.

If you move to the countryside and don't commute to work, is that really worse for the environment?

Especially since cities are overbooked in terms of space anyway. Every family that moves to the countryside frees up apartments for those that have to commute to work and can then live in the city instead.

I think remote changes a lot of these calculations.


People are not moving to the countryside to be subsistence farmers, they are moving to the suburbs and exurbs where they are living in massive houses, making far trips to get groceries, etc.


>But then you need to reassess why cities are better for the environment.

I'm not even sure they are. 50% of the world's population live in cities but cities produce 70% of our CO2 emissions.


That's not a fair metric. Industrial production is not done only for urban populations any more than farming is only for rural population.


This is the case in poor countries where rural populations have a minuscule carbon footprint, and city dwellers have a greater one.

It is absolutely not the case here in developed countries. A city dweller who bikes to work is not equivalent to a suburbanite driving around their SUV just to pick up bananas from the grocery store.


Suburbs are, in my opinion at least, urban areas and part of cities; at least when looking at statements concerning human migration from rural non urban areas to urban areas.

FWiW I have mostly always lived and worked in rural | remote areas and where I currently live most people walk to the local shop and are almost all eating the bulk of their food from sources in the surrounding area.

It's small town that was once a first inland european settlement point in Australia - lot of large scale farmers with big town lots that have old fruiting trees, food plots, chickens, etc.

Lots of meticulously restored, maintained, and used cars from the 1920s - 1960s, and a surprising amount of bleeding edge tech.


Regardless of your personal definition, suburbs and urban areas are a very meaningful distinction. With regards to both human migration due to covid, and waste/consumption patterns.


>A city dweller who bikes to work is not equivalent to a suburbanite driving around their SUV just to pick up bananas from the grocery store.

A city dweller tends to be richer which affords more consumption.


Is it? Now I run my a/c at home all day.


I certainly hope you are not running your A/C literally all day. The compressor should rarely run unless you have garbage for insulation.


First, many homes do have poor insulation. We're talking about the average across the country (or developed world) here.

Second, no amount of insulation is going to make air conditioning cheap or efficient in Texas or Florida.

If you assume a commute by EV then you can directly compare the kwh used to get to work vs run the a/c at home. As it happens, the way I actually commute is bike and public transit, so the calculation is more difficult. But I do know that my electricity bill is dominated by EV charging and a/c in the summer.


I own a 3000 sq ft house, the local weather has been 85-95 every day, my electric bill is $105, my house is 30 years old, and its comfy inside.


Yeah but you don't drive your car to work to run the A/C


As opposed to working in an AC-equipped office? No net change.


You have 100 workers.

You can have one office for the 100 workers and they all share the same AC.

If they all work from home, there might be 100 houses that have the AC on. The office AC energy usage might be the equivalent of 2 houses. So you're increasing energy usage by 50x.

The difference in energy use would be substantial - especially with McMansions.


>The office AC energy usage might be the equivalent of 2 houses. So you're increasing energy usage by 50x.

I'm pretty sure there are savings, but not 50x. In terms of output my company office has about 4 ACs of my scale for my office with a capacity for 12 people.

And since the office has huge windows trapping a lot more heat, I don't think they're very much more efficient.

I'd gather the overall inefficiency is there, but it's way lower than 50x, more like 3x. And commuting to work by car burns a lot more fuel than that.


I think it can be 50x or less. It depends a lot.

Also, a cooling an entire McMansion, where a lot of Americans live, would be similar to cooling an office for 50 people.

>In terms of output my company office has about 4 ACs of my scale for my office with a capacity for 12 people

It doesn't matter how many AC units there are. What matters most is the volume of space. No matter how many AC units there are, once the desired temperature is reached, they will turn themselves on/off to stay at that temperature.


I only cool down my office tbf.

But the ACs in my office are constantly working, due to the large windows trapping all the heat. As soon as you turn them off it heats up very quickly.

It's probably the building that's at fault here. I do admit it could be more efficient without the office windows.


Yes, at home one only runs AC in the relevant rooms. At the office there is no personal incentive to turn off the AC, in fact its not possible to turn it off unless you are the caretaker.

I've even seen people open the windows or doors to let in hot air while the office AC is running.


I know you have your own unique case, but the fact is, providing AC for an office would be magnitudes more efficient than providing AC for everyone at home. The volume of space that needs to be cooled can easily be 50 - 100x more.


Considering how every American I know leaves their AC on when they leave for work, I wager we're kinda crying over spilt milk here.


I don't know any American who leaves their AC on when they're not home. In addition, quite a few have smart thermostats now which will turn off AC if it doesn't detect anyone home.


In many more cases home AC is retrofitted into inadequate construction with a window unit, etc, with no legal consequences.

Shortcuts can be done in small offices but the larger the office the more likely there is an overall climate control plan where the envelope has actually been checked for adequate insulation.


Where i live (hot, non US) most detached homes have AC per room. So one can cool only the relevant parts. Say the home office during day and bedroom at night. This while office AC runs 24 hrs 7 days a week. They never shut it off.


I work from home and even though I'm hot, I choose to use a fan and not an aircon, I can't make that choice in an office.


losses ahahahaha, they jacked up prices and scored record profits

>ExxonMobil earned nearly $56 billion in profit in 2022, setting an annual record not just for itself but for any U.S. or European oil giant.Jan 31, 2023

https://www.npr.org/2023/01/31/1152776315/exxon-mobil-earnin...


Time for another round of millennials should go back to the office think pieces.


Maybe they can lure them back by offering private workspaces without the open floorplan nonsense.


Hahahahaha…I wish this could be a serious contender, but seems not. I will go work construction for 1/3 the salary than work in an open-office ever again.

I’ve done manual labor jobs in the past, so not hyperbole.

I’d probably figure something out in the middle if faced with it, but I’m willing to throw down the gauntlet for my own life.


We can’t afford rent, so how about a capsule for sleeping in the office.


Work from home. Home from work? Nice


Isn't McKinsey the George Costanza of the real world so we should expect 1T of additional value added to office values?

I mean anecdotally, the NYC office is complaining they've switched to hot desking. I've never heard of anybody switching to hot desking because it was too empty... This is of course after previously the space-per-person has decreased.


> This is of course after previously the space-per-person has decreased.

So… you’re using less office space like the article says, yeah?

And no, the “McKinsey is always wrong” meme is completely divorced from reality. They’re wrong a lot, sure, but they do put out a lot of very high quality work. It’s just HNers like to put software engineers on a pedestal above everyone else.


> So… you’re using less office space like the article says, yeah?

No.

If you have 100 people in 1000 sqft then that's 10ft/person. If you have 1000 people in 1000 sqft then that's 1ft/person.

Still using 1000 sqft and you don't go from 8ft desks to 6ft desks because you're gathering too much empty space.


Got it so your company is growing their New York headcount and not growing their real estate… which would be another indicator of the exact claim being made.


Driving in cars is one of the more dangerous activities most people find themselves doing.

I wonder how many lives are saved by remote work in a country like the USA, where cars are the primary means of transport?


This is the real reason for the RTO push. Lotta VC's leveraged in to commercial real estate




Oh no! Anyway...


One of the large commercial real estate office parks near where I live is mostly owned by the state employee pension fund of New York State. Taking $800B out of office value isn't only going to affect rich landlords, it's going to affect everyone.


Lots of exposure to go around, but doesn't seem to be excessively concentrated or systemic. There will be losses though.

https://www.axios.com/2023/04/12/commercial-real-estate-regi...


Round two of banks getting hammered. It’s going to be a bumpy ride.


The value never existed, we are just realising that now.


Is this supposed to be a good or a bad thing?


Believe it or not, you get to decide for yourself




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