Is this actually happening? I have seen this idea thrown out a lot online but it always feels like a conspiracy theory to me (akin to "fine art is a tax write-off")
This is the case for the city of Boston. The city derives the vast majority of its budget from commercial property taxes, it's why residential property taxes are so low in the city.
Use to work for a company that was literally told by the city that if they don't have X amount of people in the building they will lose their tax incentives they got for having the company there. The company slowly mandated hybrid then RTO everyday in about 6 months. Got out 2 weeks before it was implemented. My coworkers were extremely jealous that I got a WFH job.
I think part of the equation is that less people are going into the office so values of buildings are going down, less people in downtown the less money that goes to all the restaurants/shops/stores during the week.
I can't speak for other cities since I don't live in them but Boston has never really recovered from the pandemic in terms of office workers.
Because that’s what feeds local businesses especially shops and service oriented jobs. I’m not saying I care that happens because remote workers can do that closer to their home so it’s a net zero game, but not in the eyes of business owners downtown or the mayors of said downtowns.
People being downtown are people more likely to spend money downtown then someone who lives in the suburbs and doesn't come to downtown. Therefore more sales taxes collected, more businesses in downtown, etc...
For Boston in particular, governmental borders are close to downtown. The city is composed of several unconsolidated abutting Towns and Cities. The City of Boston[1] mostly extends from downtown to the south-west. So MIT/Harvard are Town of Cambridge, not City of Boston. Downtown-vs-suburb revenue tensions extend into the city.
For analogy, imagine the historical City of New York (Manhattan and Bronx) never consolidated with the City of Brooklyn and the city and towns of Queens County, to form a City of Greater New York. WFH Queens would be as bad for Manhattan as WFH New Jersey. Not only loss of going-to-work-associated revenue, but little home-associated. As it is, the mayor vocally pushed for back-to-office (real-estate interests are powerful in NYC, transit budget income, CRE better-vacant-than-cheaper dysfunction, etc).
Because then transit, services, restaurants, stores, dry-cleaners, gyms fail, and the taxbase collapses (every city has a different mix of commercial vs residential property tax vs sales-tax).
DowntownRecovery.com project mapped this (using cellphone user data, at least)
It's not just downtown that matters, it is the total population living in the city. People working from home will live away from Boston or other major cities. If they need to work in a downtown office the same people will be forced to live in Boston or close by.
Yes, Amazon needs people to fill their expensive offices in Seattle, or otherwise explain to investors that they wasted billions of dollars building new offices that were used less than 5 years.
>> otherwise explain to investors that they wasted billions of dollars building new offices that were used less than 5 years.
So what? I mean companies write down things all the time. "We've revalued our $billion office and adjusted our balance sheet to match. Cause was a global pandemic which we considered as a risk factor in 2019, but it was negligible."
Stock will drop a % or two for a week, then recover and move on (especially as the Amazon machine continues to print cash.)
Microsoft wrote off the Nokia purchase with a shrug and the world just moved on.
Explaining a change of work environment to investors seems like a pretty minor bump, not a major factor in decision making.
I agree in that I don't think explaining a write off is a problem, per se. But I do see Amazon taking a long term view of their real estate investment and saying "OK we have it in our power to make this payoff" which dynamic is not in play with most writedowns.
I bet there are some incentives in there but it's not the whole picture. It's probably the combination of many things but mostly management that don't know how to manage people remotely, or they started to realise that most middle manager positions are obsolete/unnecessary.
“You don't need a formal conspiracy when interests converge. These people went to the same universities, they're on the same boards of directors, they're in the same country clubs, they have like interests, they don't need to call a meeting, they know what's good for them and they're getting it.”
