[mulmen]

I mean, sure. But let's acknowledge that "global pandemic" was justifiably considered a low probability before 2020. Even today should companies price in a meteor strike? Will they be out-competed in an existential timeframe if they do?

[tessierashpool]

a) "global pandemic" was _not_ considered a low probability by epidemiologists or by governments. the US set up a pandemic office during the Obama administration for exactly this reason. partly because everybody knew climate change and globalization increased the risk of pandemics, and partly because pandemics tore through Asia and the Middle East in 2002 and 2012.

b) remote work has been making office buildings obsolete for decades now. it is fundamentally absurd to say that you need people to get together in one room in order to build a distributed system. neither office buildings nor the "open plan" spaces inside have made any real logical sense for the tech industry in a very, very long time.

[mulmen]

I agree with you in general but in the context of real estate investment I'm not sure the sudden normalization of WFH and effect on commercial real estate was reasonably predictable.

[cudgy]

From a macro perspective it certainly was predictable given the trends that have been mentioned. From a micro “make as much money from the most suckers now” and “build it and sell it to a REIT” perspective it was able to be ignored.

[mulmen]

Ok so who were the big winners who bet on the pandemic?

[cudgy]

In the example I provided, it would be those that sold their commercial real estate before the pandemic. Other winners would be pharmaceutical companies, residential builders, internet retailers, people that prefer working from home, and families that enjoy each others company to name a few.

However, I was not addressing that.

[mulmen]

Who sold their commercial real estate pre-pandemic? Who is the big winner here that saw the thing everyone else missed?

[BeFlatXIII]

What responsibility do the rest of us have to keeping the commercial real estate market healthy?

[RestlessMind]

None. But that's orthogonal to your GP's point - "They should have done their homework." This was not a case of missing "homework". This was literally a once-in-a-century event no one plans for.

[cudgy]

There are many once-in-a-century possibilities like flooding, fires, terrorism, pandemics, structural failures, wars, ecological disasters, eminent domain, etc. Add them all up and you actually have a many-in-a-century event scenario. Companies that are already setup for remote work will be at an advantage, by not having a large percentage of their resources at a single or several large locations, and able to continue operations with little or no disruption.

In short, the remote model is decentralized and therefore more resilient and less risky.

[mulmen]

Sure but what you do about these events is very different. Eminent domain and business districts are almost synonyms and much different than a war or terrorism. How do you price all of this into your real estate buying decisions? I don't dispute the benefits of remote work but can we at least admit that the world changed drastically and unpredictably in the last few years?

[cudgy]

The impact is the same regardless of event. A centralized location being affected by any of these events is going to impact business negatively to a much greater degree than a company whose workers are spread out in different locations.

As for real estate buying decisions, it depends on the industry of course. So, given a standard tech business, you buy what you need for positions that cannot be performed remotely and estimated space for those workers that desire to work at that location hopefully in a location close to where these workers live (which is likely not in a typical downtown city location). Basically, smaller satellite offices near where the people that have to go to a physical location live.

[mulmen]

> The impact is the same regardless of event.

It isn’t though. Eminent domain increases property values. Pandemics and terrorism decrease it.

> So, given a standard tech business, you buy what you need for positions that cannot be performed remotely and estimated space for those workers that desire to work at that location hopefully in a location close to where these workers live (which is likely not in a typical downtown city location).

This is divorced from the reality I live in. My city developed a business district complete with housing and entertainment near downtown. That area is dead now and the city is understandably concerned. It wasn’t a bad idea before but now it hasn’t worked out. But I can’t blame the businesses who invested. They seem to have made all the right decisions. It wasn’t clearly a mistake pre-pandemic. In fact it was all very progressive and forward-looking.

[mulmen]

None. I’m just pointing out the decision making isn’t surprising from a corporate perspective.

[sgu999]

Remote working was already a trend before the pandemic, it only accelerated it massively.

[mulmen]

“Only” and “massively” are in conflict here. The massive effect of an unexpected event is how we got to this exceptional situation.