Commercial real estate has lost its value.
Since the pandemic, only 50% of employees have returned to the office.¹ The demand for office spaces has drastically dropped, and many corporations and banks now risk going bust. This is why they want us back in the office.
To save themselves.
Imagine you’re a company.
You invest $100 million in an office building financed with a loan. Your business goes as planned, your employees do well, and life is great.
Suddenly, boom: pandemic lockdown. The working-from-home era begins. Several years later, only half of your employees have returned to the office.¹ Since you no longer need all your office space, you look to sell parts of it. You quickly realize other companies are doing the same and that the market price of your asset has drastically decreased.
So far, it’s okay — they’re only unrealized losses. But, if you were to sell today, you would go bankrupt.
Meanwhile, your bank is sitting on something worthless: no one wants a loan where the debtor is at risk of default. And if a bank run starts, they would be forced to sell at a loss — causing them to go belly up, 2008-style.
So, what’s the plan?
Force people back to the office. Bring everyone back, restore solvency, and draw a sigh of relief. Meanwhile, tell tales of productivity and company culture.
Say whatever it takes.
Just don’t tell anyone we’re trying to save our asses.
Footnotes
¹Kastle Systems, based on analyzing data of keycards and other metrics of physical presence, estimates that 50.4% of US employees worked in the office in week 7 of 2024.[1]
Disclaimer
In case it isn’t clear, this is a lot of speculation. The thought came to me as I was watching Coin Bureau’s interview with Arthur Hayes: https://youtu.be/cwk_l-U-0D4 (accessed February 22, 2024). No one can predict the future, and none of this is financial advice.
Bibliography
[1] Kastle Systems website. “Getting America Back to Work.” Accessed February 22, 2024. https://www.kastle.com/safety-wellness/getting-america-back-to-work/.
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