I like the model, but I question long term economic viability of owning that much office space with mostly low utilization and only occasional spikes.
Or just downsize the office to the point where utilization is high and rent out co-working space themselves during the "spikes".
For instance, even before the remote work shift in 2020 many cities were heavily competing on conference and hotel space allocations for an interesting variety of economic reasons (tourism dollars that float alongside, for instance). As more "corporate Downtown" downsizes their office footprints to go more remote, some of that real estate inventory is going to go to apartments and condos, but also I would expect that there would be just as much pressure to convert it to hotels and conference space and WeWork-style hoteling office space.
I wonder if that's going to snowball into dirt cheap conference prices in a growing list of cities. Especially if you start to factor in non-traditional "hub" cities (especially those non-traditional for tech). I've heard that's an appeal of Denver, Colorado as an annual onsite retreat city for remote first orgs as it has a large conference and hotel inventory that still has some very cheap periods outside of the usual tourist periods. I can point out that cities like Louisville, KY and Indianapolis, IN have massive inventories of hotel and conference (and exposition) space with some incredibly cheap calendar windows and still heavily competing among each other for more hotel/conference inventory every year. (I can also suggest which of those two cities in particular has better tourism options, but that may as much be hometown bias, so I'll save it.)
You could do a lot of travel with a 5-7k budget per month.
There are a ton of variables- agree more analysis is needed.
But yes, you're right that typical high rise office space in the bay is around $50-80/sf/year or $4.50-7/sf/mo. Or $450-700/mo per employee at 100 sf per employee.
Oh for sure it doesn't make any sense, and is driven solely by the inertia of already having the office space. You'd let it go over time as leases lapse until you're down to just a tiny amount that's facing high utilization.
It didn't really take off afaik, but with more bigger and stable tenants making a larger bulk of these it might actually take off a bit as a model.
Would there be opportunities for further efficiency by fully closing them and renting space a few times a year? Possibly, yes. But that doesn't mean the current model isn't an improvement on the previous one.
If you spend 10M/annum on salaries, is your 1M/annum for an office really a big burden?
1) Open offices for collaboration
2) Shared offices for collaboration (like co-working spaces) with reservations, as well as off-site retreats to places like Hawaii. This is cheaper than leasing in big cities.
3) Cost-cutting during the next recession killing those fancy co-working spaces and retreats
4) Loss of team cohesion
If no one is working there anywhere it doesn’t need to exist
Also, human connnection isn't irrational, but expecting all or most of your human connections to come from your job may be.
I was responding to that part. Office create a rational connection in an irrational setting.
My grandfather and most of my great uncles were coal miners in Shamokin, Pennsylvania. They all talked about unions and striking in the mines. And they formed close bonds which made going on strike much easier as well as created a huge social bond when they where striking supplying each other with food and pirated coal.
The irrational attachment I was talking about is about having a large, status-symbol office with ~20% average occupancy. Downsizing to a smaller office harms morale even though most people work most of the time at home, yet they feel attached to almost always empty office, that's the irrational/sentimental part for me.
But I used to have a walking commute, which I also miss. Certainly I wouldn't miss a commute longer than 30 minutes. And I'd probably miss it less if it were in an office park somewhere, rather than a city I could walk to lunch at various places.
But yeah, I have a remote job because that's the job I have that I'm well-suited for that was available. (And sure, ability to work from one 1 or 2 days a week or as needed would certainly be convenient regardless). But I don't actually prefer working remotely, and also think there are real losses to quality of collaborative work, as well as quality of life. I know this is heretical to say these days in these circles.
I work like crap in cubicle farms and typical corporate offices. I feel like I'm on display.
I work best in a private office, with a door that closes, a window that looks out on nature, and a very large whiteboard. Ideally, I'd like my team members have similar ones.
Home is in between.
I can work much longer hours if I can:
- do basic basic bodily functions (stretching, eating, drinking, scratching, a short power nap, etc.)
- change work positions (e.g. lie down with a laptop)
- make noise (phone calls, music, etc.)
- have my papers and books spread out as I see fit
... and so on.
I have never seen a tech firm where I was comfortable in the office, and it's especially hard in places like SFO/BOS/NYC/etc. where square feet cost so much.
My past few jobs weren't with tech firms, and I really enjoyed working in proper offices.
source: wrangled a few impromptu "conferences" at a local hotel near data centers.
Would you choose an additional 600$ a month and remote only, or would you vote for permanent variable spaces in major cities for events and team building?
I think this will be the new version of "free lunch" that tech companies offer. Come work for X, we pay for quarterly travel to meetup with your remote coworkers!
What is effective in attracting employees depends, at least partly, on what employees want. That might be either some amount of money into ports or more salary. Paying shareholders more will not attract employees.