It is lolfukt. We've opened negotiations on a space in Bellevue. We'd like to know the going rate. The city has a population of 140k and in a week of asking, my real estate guy couldn't find a single comp. In other words, not a single lease has been written in the entire city in six months. I have a friend whose business is, coincidentally, in Bellevue. Their current shop is going to be a train station in approximately 18 months so they need to move. They have put an offer in on an abandoned warehouse in the middle of prostitution central that has been vacant (except for squatters) since 2016. The county has written the structure down to $1000, which is government-speak for "this is a teardown, you will never receive an occupancy permit." In kinder times the bank would say "there's no way we're going to finance this you idiots, this isn't a building it's a money pit." In the land of double-digit interest rates? By the time they realize they'll never be in that building the bank has made their money back. Except of course if it's a regional bank, which do something like 40% of the real estate lending in America, they're probably dead. Of the office workers who went remote in 2020, slightly less than half have come back. If you've got a 5-year lease with 5-year extensions you're statistically closer to not renewing than you are to making the best of all the space you've got. I'm discussing office, medical and warehouse space that's surrounded by (A) Microsoft (B) Facebook (C) Google (D) Adobe (E) AmGen and ain't nobody buying or leasing shit. If you look at the national charts, manufacturing is making a comeback... but manufacturing is different zoning than office in most municipalities and it requires different permits. And if you're looking to ruralize you're dealing with a whole new set of challenges. There's a community we'd like to expand to. First problem is there's a 50-year-old viaduct that pretty much dominates all commuting in and out, and there are no plans on the books to augment it or replace it despite the fact that it has been the impediment to commuting for fifteen years or more. Second problem is I can buy an 8ksqft three story medical dental building downtown (with underground parking!) for about a third as much as I can buy a Chipotle out there. There's all sorts of batshit stuff happening in "opportunity zones" because there are lots of unsophisticated investors who have never seen what creeping blight looks like. Who are borrowing money. At ruinous rates. From regional banks. While contracting rates are at an all time high. ______________________________________ Thanks for the soapbox
The Return to the Office Has Stalled As long as unemployment remains low, workers have the leverage to entrench these policies, said Robert Sadow, Scoop’s chief executive and co-founder. “Employees are saying we are going to push really, really hard against being required to be in the office five days a week,” Mr. Sadow said. “Most companies in the current labor market have been reluctant to push [back] that hard.” An anecdote: Once upon a time there was a talent agency called William Morris. They built 116,000 square feet in Beverly Hills, a block away from Rodeo Drive, back in the '80s. William Morris' 250 agents (and 550 non-agents) had an out-sized footprint in that they mostly did deals and entertained rich people. Most people think of "Beverly Hills" as a bunch of luxury retail but that luxury retail was very much supported by luxury dining and luxury hospitality. William Morris merged with Endeavor in 2009. Endeavor did four things: (1) fired 100 William Morris agents (and pretty much all of the support staff) (2) Moved the survivors to Westwood, where Endeavor's own pretentious offices were (3) skeletonize Beverly Hills (4) build up Westwood. Beverly Hills pre-2009 was a place to be seen, where there was a thriving culture of rich assholes. Beverly Hills post-2009 is a place of Russian dentists and expensive watches. It has a thriving jewelry district because if you're going to have a West Coast boutique it's where the Chinese and Russian tourists go. And it has a lot of dentists because "beverly hills dentist" is a thing that the vainglorious of Los Angeles really like. Westwood on the other hand went from having a kind-of spendy mall to having a thunderously spendy mall. The food court went from Sbarro to Spago. All because of 800 employees.The number of companies that require employees to be in the office full time has actually declined to 42%, from 49% three months ago, Scoop said. Employees at companies with hybrid strategies work an average of 2.5 days a week in the office.