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newaccount2021

I am likewise convinced, and always have been, that Google's downtown San Jose campus will never be fully built

All of these tech companies are overinvested in real estate

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In contrast, REI’s management is looking pretty smart for a move that a lot of people questioned at the time.

https://www.outsideonline.com/outdoor-gear/gear-news/rei-sel...

Thanks for this info. I love REI and am one of their members but had no idea this happened. Sometimes biting the bullet is the wise decision.

MEC, which used to be Canada's equivalent of REI, went bankrupt a couple of years ago (the C used to be co-op, currently stands for company after they got rescued by a fund). Talking with a long-time employee, a big reason was ~100M spent on big fancy headquarters (new owners promptly sold them to EA)

EA are leasing it, they didn't buy it.

Every single company that owns commercial office space is currently overinvested.

Prior to the pandemic, these companies were doubling headcount every 6 years.

Unless their growth rates sink a lot lower than pre-pandemic growth, they'll grow into that space in 10 years.

"Disco Stu: Didn't you know that Disco record sales were up 400% for the year ending 1976? If these trends continue, eyyy!"

Good thing I invested in pumpkins!

This place is gonna smell classy all week.

Amazon and Google and MSFT and Apple were doing that through 2 recessions over 15+ years.

Eventually it'll come to an end.

But not sure why you're so certain the end is now.

I'm not saying it is but everyone has survivorship bias. Kodak and other titans of industry of yesteryear also had their large campuses and projected growth too.

My point is that nobody can predict the future and nothing is guaranteed. Surviving isn't even the norm. We're down to about 50 companies from the original Fortune 500.

Very much so.

I work for one of the largest health care companies in the country. About 20 years ago, they started buying up the office buildings they were putting their employees in. Made sense in a lot of ways.

Then COVID hit.

In the post-COVID era, they've sold at least four of their buildings, two are sitting completely empty and still on the market and they've consolidated a majority of the employees (in my state at least) into three or four newer buildings. I've heard rumors over the next few years, more consolidation is in the works as they sell off most of their holdings.

> they've sold at least four of their buildings, two are sitting completely empty

Numbers like that don't mean anything unless you provide the proper context. How many buildings? How big are they? Where are they located?

I wonder which company that is. In my area, a local health insurance company is somewhat well known for remaining "non-profit" by directing a lot of their extra money into local real estate, much of it commercial buildings downtown. Seemed clever years ago, but hopefully they're feeling some pain now.

For San Jose's sake I hope it's not completely abandoned. But the combination of the failure of RTO and interest rates rising above zero is going to be pretty hard on commercial real estate developers for quite a while.

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