[oceanplexian]

The companies I worked for in San Francisco signed like 10 year leases for premium real estate in the city (millions per year). Before COVID it was a “sure thing” that prices would only go up, incentivizing longer and longer leases.

I suspect this is the real reason big companies are so incessant about RTO. They have to stay or breach the contract which would cost a ridiculous sum of money. Funny enough I’ve observed the exact same behavior when buying colo space or circuits in a datacenter. The previous person would sign a 10yr contact and act like we saved a ton of money, then we’d be stuck paying $10,000/mo for a 100Mb internet connection long after prices dropped an order of magnitude. Unfortunately there is no requirement for critical thinking skills to sign a contract.

[singleshot_]

It’s a little astonishing that so many companies reacted to “we made our own lives difficult by signing a contract for a thing that, it turns out, we don’t need” with “we can solve the problem by deeply annoying a lot of our employees.”

I know it’s a little more complicated than this, and I know there are jobs with Reasons to be in the office (I enjoy one) but still… now you have TWO problems.

[adam_arthur]

I have noticed this as well, companies leaning on the sunk cost fallacy to feel more comfortable throwing away the rent by having the office occupied. In the end its much better for companies if office rents fall substantially, so why fight it?

In general there tend to be conventions around lease durations, and in a hot market you don’t have much bargaining power to change the terms. The better the tenant, the more leverage you have though.

In general the risks of locking into long duration contracts needs to be weighed carefully, as we saw with SVB