A lot of offices are still empty and it's becoming a major risk for the economy
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Or, you know, working a bit longer for their employer?
If landlords’ profit is the only measure then yes, this is a difficult time for commercial landlords who refuse to adapt in any way.
Less commuting will eventually equilibrate, one hopes, to: * lower $ and psychological overhead on jobs that used to commute * meaning more jobs and businesses get to exist * wages might go down due to competitive pressure, or might go up, depending on the shape of the landscape * some of the money and saved will be diverted to other activities like the things you listed * or things get worse! who knows! it's path-dependent!
Mostly just starting the chant for bailing out the really, really wealthy and those who benefit from CRE. (City governments, insurance companies, mega corps, and commercial banks).
This is not a public outcry, but watch how they do it by creating a story then an echo chamber, making it part of the "recovery", blah, blah. CRE will get a fat earmark in some recession funding, just watch.
Anybody who tells you the economy is good or bad is priming you for some other form of propaganda.
[Yossarian takes a bite]
Yossarian: What is it?
1st Lt. Milo Minderbinder: Chocolate-covered cotton.
Yossarian: What are you, crazy?
1st Lt. Milo Minderbinder: No good, huh?
Yossarian: For Christ's sake, you didn't even take the seeds out!
1st Lt. Milo Minderbinder: Is it really that bad?
Yossarian: It's cotton!
1st Lt. Milo Minderbinder: They've got to learn to like it!
Yossarian: Why?
1st Lt. Milo Minderbinder: Look, I saw this great opportunity to corner the market in Egyptian cotton. How was I supposed to know there was going to be a glut? I've got a hundred warehouses stacked with the stuff all over the European theater. I can't get rid of a penny's worth. People eat cotton candy, don't they? Well this stuff is better - it's made out of real cotton.
Yossarian: Milo, people can't eat cotton!
1st Lt. Milo Minderbinder: They've got to - it's for the Syndicate!
Yossarian: It will make them sick! - why don't you try it yourself if you don't believe me?
1st Lt. Milo Minderbinder: I did - and it made me sick.
* As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore.
* Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft.
* Many regional banks are loaded up with loans to office buildings likely to default in the near term.
* Downtown restaurants, pharmacies, shops, and other retail operations have lost a lot of foot traffic. Many are on the verge of shutting down.
* City governments depend significantly on downtown economic activity for tax collections. Local governments are likely to see a big hole in their finances.
All of this has been on economists' radar for well over a year:
Those who built smarter buildings that are easier to convert will come out on top. Those who didn't... maybe they should have put their money in VC instead of rental properties!
The future is now and the pandemic showed that it's feasible to do a lot of the work remotely. Companies that jump on it will thrive, the ones that do not will slowly sink.
I'm fairly certain you understand the intention behind his statement. Markets ebb and flow in accordance with forces of supply and demand, and the government pumping liquidity into a market falls naturally into the same metaphorical linguistic space as "cash flows". Money is as liquid as water.
If the motive behind the argument is suspicion that characterizing capitalism as natural is painting it in too positive of a light, then I'd figure that capitalism is as Hobbesian as the jungle.
To the extent economists today recommend propping things up, it's only because they believe the alternatives are much worse. Judging by the historical record, I'd say they're right to focus on minimizing damage, akin to doctors with their Hippocratic oath.
Economic engineering to save an economy aligned against our interests doesn't as much.
And you can apply some of that engineering toward easing the transition to a more aligned economy.
Building bankruptcies were always going to happen - even before the virus many urban areas had out of control office building. I was in the metro DC area for 20 years there were buildings never occupied along the Dulles tech corridor - and yet they kept building more. It's a rubber band that has needed to snap for a long time now, and artificially delaying the inevitable yet again isn't going to make the inevitable any more palatable.
Small businesses come and go all the time. Small businesses will die where people no longer are, but new small businesses will sprout up where people now are. And if you truly care about small business you would have railed more against the asymmetric covid restrictions that fostered the largest wealth transfer in human history - it's a collective shame we all share. Amazing that the virus was smart enough to not infect people in big box stores or certain political protests, but freaking lethal in small businesses, schools, churches, etc.
Regional banks participated in the overbuilding - even before covid. Oh well - natural selection at work. What's amazing is that somehow only the big banks get bailouts, not the regionals. It's almost as if consolidation is being government sanctioned.
As for regional tax collection - if those regions were more appealing then people wouldn't be fleeing them and they wouldn't have tax problems. Maybe those regions with new tax collection issues should explore spending less in the first place rather than only trying to increase tax revenue? Actually providing city services and taking care of fundamentals like crime rather than making excuses for or flat out encouraging it?
The stock and market losses are only in one sector. Anyone with a decent investment strategy will be diversified to mitigate one portion of their portfolio taking a hit. If you are all in on real estate that's on you, not all of us.
Also my local taxes are going down due to the tax base increasing from everyone fleeing the sinking cities. Maybe you just need to move to change your tax base - or make your area more attractive so it will expand instead of contract.
Once again, NONE of your concerns justify artificially propping up people who have made piss poor decisions. Indeed, industries continue to make piss poor decisions because they assume someone will be there to bail them out. Screw that. It's time to just let crap fall on the floor, people to learn their lessons and make better decisions in the future. You can't legislate common sense.
To the extent economists today recommend propping things up, it's only because they believe the alternatives are much worse. Judging by the historical record, I'd say they're right to focus on minimizing damage, akin to doctors with their Hippocratic oath.
Who is "they"? Surely you're not suggesting that every economist alive today shares the same belief
Surely you're not suggesting the health of economy runs on the beliefs of cherry-picked economists.
2008 was a crisis you conveniently left off your list, also 2020. Bailing out people who make bad decisions and throwing insane amounts of money at people and businesses isn't the answer.
Where were these economists in 2008 and 2020? Have they changed their opinion since then? Do you know what their opinions even were?
Make sure noone goes homeless/starves Then let the market decide.
True, but the solution shouldn't be to return to the way things were before.
- vacant buildings suck, but there's no urgent cost to ignoring them for 5-10 years
- multi-use "free-for-all" buildings like those big apartment blocks in Hongkong. Doesn't mesh w/ western sensibility.
- convert to apartments. Works in theory, but city centre would have to remap target customer from <office worker> to <resident>.
This must be really hurting influential wallets.
Adapt or die, economy. And get used to it, the disruption has hardly gotten started.
Without predicting any specific outcome or scenario, though, I do think we are just-getting-started,
the triple threat of climate change impacts, AI, and inequity-cum-ascendant-fascism, broadly construed, make for a lot of destabilization... more than the tiger-jockey plutocrats are ready for.
If I did make a prediction, it would be that disequilibrium is going to as per usual be felt first and hard by those who always take the first fall.
But I am hopeful that we emerge from disequilibrium with the current order dismantled.
Revolution etc. are funny, as with so much else, slowly then suddenly. Etc etc.