Thanks for tracking. Maybe commercial real estate will have to become residential to survive the shift in demand? Economics of a skyscraper vs. residential are different, but the building still exists (I can see how not opening could be cheaper, but still, I'd like to ponder this situation.)
Whoa there silver. Just because a few tech companies are giving up their space doesn’t mean commercial office space is doomed. There are still plenty of non-tech companies and local businesses (like law firms) that I doubt will be going away.
Tech companies have a huge incentive here - they can now start hiring engineers at non Bay Area prices. Which, if enough companies do it, means your salaries are at risk. Nobody cares that it’s expensive to live here, they only pay because they all insisted on in person offices. By going remote they can stop paying Bay Area rents and compensation levels.
Interestingly the law firm our company uses has converted to permanent remote only just now. So it's not just tech companies.
I think, once the boss gets a taste of working from home, they too want to enjoy their fancy homes and spending times with their kids instead of sitting in traffic all day. And Covid now provides them a generally acceptable way to push that change through.
I agree this not a private sector overall trend, but seed for the thought experiment.
Recent news and surveys do indicate significant change expected in remote work changes and real estate footprint changes.
"Large companies already expect more of their workers to continue to work remotely and say they plan to reduce their real estate footprint, which will, in turn, reduce the foot traffic that feeds nearby restaurants, shops, nail salons and other businesses." [1.]
This is part of data from a deport by Deloitte [2.][3.]:
> "In a year, 75% of CFOs expect more of their workforce to work remotely and nearly half expect a smaller real estate footprint."
> Which, if enough companies do it, means your salaries are at risk. Nobody cares that it’s expensive to live here, they only pay because they all insisted on in person offices. By going remote they can stop paying Bay Area rents and compensation levels.
There would be a transition period, probably on the order of years to even decades, before they would cease considering the cost of living in where their remote workers live. Hopefully by that time, rents in the Bay Area will have dipped as people slow moving in/start moving out because of flexible remote work situations.
Hard to know what net impact will be. They aren’t getting rid of space, just allowing digital first. Fewer people in the office, but Covid19 may result in people in the office getting more space per person than previously.
The productivity gains of WFH might be only in comparison to awful open office plans, and may disappear when compared to more private office layouts. There are still major questions about long term impact to new hires and their growth, where retention takes a hit (employees feel more like free agents and consequently switch jobs more frequently), etc.
It seems incredibly short sighted to be making these decisions on the basis of a 3 month experiment with confounding factors (to say the least!).
I'm keeping track of announcements here: https://airtable.com/shrC1mvKjwntaqocO/tbl73UY1jDmReLge7