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Comment by jarym | Hacker News Reader

The asking rent chart shows its been flat for the last 2+ years with only a bump before the pandemic.

Is this a case also of landlords not being realistic? I do think plenty of startups would love an 'office' but the costs are quite high while remote work has much lower overheads and keeps more staff happy.

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Under US accounting rules, it is much better for a landlord to leave a property unrented at a higher price than to rent it at a lower price.

If the property is unrented, the landlord can use the proposed rental price in calculating the value of the property.

If the landlord accepted the lower rent, they would have to use that lower price in calculating the value of the property.

That could cause all sorts of problems with any loans that the landlord has on the property that are secured by the value of the property.

Which specific "US accounting rules" are you referring to? I'm not aware of anything in GAAP to justify your claim.

There may be covenants in certain mortgage agreements related to lease rates and occupancy levels, but those are terms negotiated individually with lenders rather than being dictated by accounting rules.

I think GP meant mortgage terms (or covenants). Accepting a lower rate will trigger all sorts of cascading effects. This article covers some aspects: https://www.horizoncreok.com/post/why-is-it-better-to-leave-...

That may well be true, but the downside of not renting the property out is that you get zero income.

That has to be more important in the long run at least?

When you're paying nearly zero interest that doesn't matter.

Most loans right now still haven't hit their maturity dates and are still on old, low interest rates.

Shit is gonna get absolutely wild as loans hit their maturity dates in the current interest rate environment:

https://cred-iq.com/blog/index.php/2023/04/20/mounting-matur...

During the GFC, most US CRE defaults were from maturity default. I'd like to see a heat map of where and how much CRE loans are maturing in the next 6, 12, 18, 24, etc. months out. Or I'd just like to know where to even find the CRE loan data in the first place (county clerk's records?). Would make some nice data is beautiful charts.

A big chunk of CRE paper is on amazingly short terms. I grew up in an era where 7-10 year paper was common on CRE, but these days 2-3 year is apparently the norm. If so, the liquidity and in some cases solvency drying out in CRE lending deals will get spicy.

Everybody is hoping they can cash out at pre-pandemic prices before it all comes crashing down. The real estate valuations are mostly wishful thinking at this point. Only question is how long the bluff plays out.

We have stopped investing in startups that have offices for no good reason. It is often a sign that they don’t have ways to measure their employee progress and productivity, and that they are wasteful with money. Scalability of startups that cling to physical office culture is also poor, as they lack experience tapping into the global market of talent, artificially constraining themselves to locals or those employees willing to relocate.

Offices are a big corp’s game, not fledgling startups.

What is a “good reason” in your classification?

Probably collaboration hubs, client meetings etc.

Not the OP but something like a hardware / chemistry lab or the need to comply with government-classified secret protection would be a good reason. Basically, stuff that you can't legally and/or reasonably do from home, or from other countries.

Additionally, in some jurisdictions regulations require that certain kinds of documents - mostly HR and finance - are to be kept in offices as well.

Not the GP but our example is we have a lab (chemistry lab with fume hood etc). But nobody has to go there every day; it’s used 2-3 days a week.

The facility has some cubicles and conference rooms as well. I go in when someone’s in the lab and work in one of the cubes (sometimes I assist in the lab since I’m qualified to do so). But most of the work can be done remotely (including data analysis, so why drive in? We have a remote culture that works for us so going in isn’t that different than going to a field site.

If you need manufacturing facilities, a workshop, or a lab, having a central office still makes a lot of sense. You can't ship every engineer tooling and equipment that costs 5x their annual salary, and they probably can't bolt it down or power it up in their home office.

I do prefer working remotely when possible, and can do so ~30% of the time, but when I'm needing to cause motion in a $500k CNC or $50k robot I really ought to be on-site, physically watching the equipment and physically checking wires. But if I'm just copying data from a PDF to Excel, just writing emails or sending Teams messages, or just programming a PLC or HMI (or, like most startup devs, programming a cloud-based webserver), I don't need to be physically present until the final commissioning. Send engineers home with a laptop and maybe a test bench or dev kit, don't expect them to have a full manufacturing office.

But hardware is hard and hardware startups are relatively rare.

If you're doing any work on classified (secret) materials then those have to be kept inside a secured facility. HN comments tend to ignore such issues but in the real world this is a huge industry.

OpenAI has an office, what do you think about that?

Completely unnecessary if they’re not maintaining some kind of physical infrastructure in those offices.

Reading “How Google Works” which came out before the pandemic and it emphasizes the true reason for radical innovation in early days of Google was putting truly intelligent people together in a closed space. Is there an example of a fully remote company doing generationally transformative innovation in the past few years? And no, VPN and git companies don’t count IMO.

My take is for “regular” tech work remote is perfectly fine but if you’re trying to do something magical it’s not.

Perhaps, but those sort of case studies don't really establish causality and tend to reflect confirmation biases from the authors and interview subjects rather than providing really rigorous evidence. There were plenty of other startups which also put truly intelligent people together in a closed space yet still failed to deliver radical innovation. Was the office space really the key factor in Google's success or just an irrelevant detail?

Remote work became mainstream only 3 years ago. It's early for this kind of considerations. Let's see in 5 years how many remote first unicorn there are going to be.

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