Comment on ‘Zombie Offices’ Spell Trouble for Some Banks - The New York Times

versionist@lemmy.world ⁨9⁩ ⁨months⁩ ago

• Dangdoggo@kbin.social ⁨9⁩ ⁨months⁩ ago

  These companies tend to own or have long term leases, so either they are stuck paying rent and have to justify the expense or they own an asset that is depreciating in value and they could stop that from happening by spending no money to force their employees back into the office. You have to think about the big money, too. Real estate is a cornerstone asset for big money, many banks and real estate empires hold these enormous office buildings and society trending towards WFH means those buildings are rapidly losing their value.

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  • Winter8593@lemmy.world ⁨9⁩ ⁨months⁩ ago

    Justifying the rental expense doesn’t really make sense, because they end up paying more in utilities in addition to the rent. If you’re still on the hook for a lease and have most employees WFH, just downsize when the lease ends or move everything remote if possible.

    Seems like banks are worried about the loan holders defaulting and are pushing companies to bring employees back to bring up demand for commercial real estate?

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    • HorreC@kbin.social ⁨9⁩ ⁨months⁩ ago

      these leases are like 10 to 30 years, its not like a yearly one.

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      • lemmyvore@feddit.nl ⁨9⁩ ⁨months⁩ ago

        Why would anybody get into an unbreakable office lease of 10 years? Let alone 30.

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      • Winter8593@lemmy.world ⁨9⁩ ⁨months⁩ ago

        I’m aware, but that doesn’t negate my point. The tenant company still has to pay more in utilities and such to bring people back to the office. Whether they pay that cost for 10, 20, however many years is extraneous.

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• kambusha@feddit.ch ⁨9⁩ ⁨months⁩ ago

  Yes, thank you! I hate this constant narrative that back-to-office is always tied to commercial real-estate investments, or that there’s some magical tax incentive.

  Usually what you have is: bank lends money to a commercial real estate company that owns the building. Commercial real estate company leases out office space to one or many companies. When those companies reduce or terminate their leases, the commercial real estate company struggles to pay their mortgage and defaults. Commercial real estate loses. Bank loses. And if commercial real estate had pooled investments to fund the building (along with bank loan), then those investors lose as well.

  There are some large companies that own their own buildings, but that’s more of an exception.

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  • roofuskit@lemmy.world ⁨9⁩ ⁨months⁩ ago

    But those rent paying companies have very wealthy boards who are invested in commercial real estate.

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  • TheFrogThatFlies@lemmy.world ⁨9⁩ ⁨months⁩ ago

    And the companies are controlled by venture capitalists, who are smart and distribute their investments. So they have interests in various companies, including the real estate companies.

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