Could be nothing.
Could be something for LA and nothing for any other place.
My Guess: The economy is a lot worse than most people think and, going forward
inflation of everything except real estate might become a very interesting measure.
By John Gittelsohn
February 14, 2023 at 11:47 AM EST
Brookfield Corp., parent of the largest office landlord in downtown Los
Angeles, is defaulting on loans tied to two buildings rather than refinancing the debt as demand for space weakens in the center of the second-largest US city.
The two properties in default, part of a portfolio called Brookfield DTLA Fund Office Trust Investor, are the Gas Company Tower, with $465 million in loans, and the 777 Tower, with about $290 million in debt, according to a filing. The fund manager had warned in November that it may face foreclosure on properties.
With the shift to a more work at home economy this does not surprise me.
I go into our office a few times per month as does the majority of our employees. The exception are the thousands of front line customer service reps who never come into the office.
We have an entire second building at my location lying empty and that is duplicated throughout the country.
The pandemic certainly changed our working habits permanently and the need for centralized real estate has diminshed.
I will add that
I am making a list of jobs that can be worked from home
but if and only if a NY or LA salary is paid
and can never be done by someone in Iowa or India or central Pennsylvania.
If you live in Virginia there is a lower cost of living. If you are living in Virginia, but work at NY or LA rates then (a) your income will be higher, and (b) your expenses lower.
Right.
And New Yorkers want/need New York salaries.
If jobs switch to telecommuting, won’t the bosses, over a period of time, stop hiring New Yorkers at New York salaries and start hiring people in Boise and Bombay?
Taxes are only one aspect of teleworking that has evolved and will continue to evolve. They are probably the highest profile. Then you get into benefits administration (home state or employer state?), workers compensation, etc.
On one of the HR/Payroll community groups I belong to, some larger employers are going the route of establishing a local presence in states to accommodate teleworkers. So you work for a company based in New York, there are a number of colleagues that telework out of Vermont. It can actually be cheaper (time, labor, and complexity of the legal landscape) to open a small satellite office in Vermont. Technically the Vermonters work at the “branch” office, then there is only one states taxes and employment rules to deal with.
I was under the impression that even if an employee works at a branch office in another state, the employer still has to comply with the employees state tax and employment laws.
Regardless working from home is here to stay with a hybrid approach becoming much more the norm.
I was thinking that over time
ABC bank can HQ in NY and then pay high salaries to attract people to live in high-cost NY
or
HQ in IOWA and pay Iowa wages
or
Open a teensy weensy HQ in NY and pay Iowa wages,
etc…
Taxes aside. The shift to telecommuting is likely to mean a shift to lower salaries.
But that is offset with much reduced gas consumption, wear and tear on a vehicle, cost to eat in a city etc. Plus the obvious quality of life improvements. Society will adapt it always does.
It does.
It will hurt people who rely on city incomes, and finding eventual buyers for their cty-priced homes etc., but it would not be the first economically disruptive mass migration in this country’s history.
I think if anyone (especially if they are paid NY or LA wages) is sticking tother guns about work-from-home . . . their next task might be to train their Indian replacement. Maybe they should not object to “return to office.”
They’re going to have to do something to get people back to work if the cities want to survive. I saw were remote work was costing NYC alone 12 billion.
I do remote work since covid and I am starting to miss the office some, less things are getting done at least were I am at which requires a team and when one of the members who have to check in the code is unavailable for 30 minutes because they are walking their dog it pretty much sucks and puts a bottle neck in the project. Of course they never tell you that’s what’s happening.
Off shoring was an issue before Covid but even then many companies were seeing not all operations can be off shored. My employer tried that in the mid noughties and with some areas it was a miserable failure.
What i am seeing from my experience and talking to clients is a more hybrid approach. Maybe once a week in the office or a few times a month.
I never thought member service reps could work productively from home and o was wrong. All our service areas KPIs have increased, productivity up, absenteeism down and retention rates increasing.
