Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Don’t Return to the Office for Your Boss. Go Back for Yourself.

In the conversation about returning to in-person office work, it sometimes seems like bosses and workers are operating in different realities.

“Many young workers on the first few rungs of their career ladder do not see offices as welcoming places, buzzing with collaboration and mentorship, despite what their bosses promise.”

Meanwhile, many senior executives are mystified by calls for change to office systems and cultures that, from where they sat, looked like they were working just fine.

2. Google’s Future of Work Plans are a Bright Spot for the Office Market

Google has always been a believer in the power of the office. And when giant, innovative companies like Google make waves regarding the workplace, whether it’s their design or strategies, many corporate occupiers follow suit. An example of this is open-plan offices. The roots of the much-maligned design go back further than many think, but Google popularized the concept in 2005 when they reinvented their HQ. Since then, open-plan offices have become the norm for many corporate occupiers, though that could change soon because of the intense backlash against them.

“Because of Google’s outsized influence on office trends, it’s no surprise that landlords, occupiers, and investors are closely tracking their plans for the future of work. Since the pandemic started, Google has struggled like many companies to get employees back to their desks. Nevertheless, Google’s investments in office space and persistent push from top executives for a return to the office signal that the tech giant has not given up on the office by any means whatsoever.”

In April, Google announced it would spend $9.5 billion in the U.S. on offices and data centers and open at least 12,000 new full-time jobs by the end of 2022. At the time, Google said the office investments would be spread out nationwide, going toward new construction and building out existing spaces. New spaces would include offices in Atlanta, Austin, and Portland as well as upgrades to their existing offices in Pittsburgh, New York, and Cambridge, Massachusetts.

3. WeWork Offices Are Now Just as Full as They Were Before the Pandemic

WeWork Inc. said offices were 72% full at the end of the second quarter, matching the occupancy rate from before the Covid-19 pandemic in late 2019 for the first time.

“WeWork’s occupancy rate — the percentage of its total desks that were rented out — dropped dramatically during the first year of the pandemic, when many tenants canceled their rental contracts and decided to work from home. That metric hit its low point of 46% a year later.”

The company pitched a turnaround story when it went public last year in a blank-check merger. WeWork’s buildings have slowly filled back up. WeWork management has maintained that more customers are drawn to its flexible office space offering as they attempt to figure out long-term real estate strategies in a new world of hybrid and remote work. It now has 62,000 subscriptions to its All-Access pass, a product that allows customers to book space for shorter increments of time.

4. Remote Work Is Over In These Markets — And Here's What They Have In Common

While bosses and workers continue to wrestle over workplace return policies in the largest U.S. employment hubs, in midsized and small cities, employees are largely back at their desks full time.

“The return to the office has been far more robust in places where the government-mandated lockdowns were shorter and where people use cars to commute, The New York Times reports, citing research led by economists Steven Davis, Nick Bloom and Jose Maria Barrero.”

Specifically, they found in cities with fewer than 300,000 people, the percentage of full-time, paid work-from-home days fell to 27% in spring, down from 42% in October 2020.

5. Ask for What You Need at Work

I was two years out of graduate school when I was offered my dream job. It had almost everything I wanted: work in a field I loved in a mission-driven organization, an impressive title, smart colleagues, global travel, professional development opportunities, and an easy commute from my home in New York City.

“But it was missing two things I had hoped for in this next professional move: a third week of vacation and an additional $10,000 in salary.”

I reached out to the hiring manager with my requests, and a few days later, she called me back: “I’ve been told that I can offer you one or the other — the vacation time or the salary bump. Which one is more important to you?”

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. The Lonely Office Is Bad for America

Where are we in the office wars? I think there’s an armistice between the return-to-the-office side and the work-from-home forces. Perhaps hostilities will resume in the fall. Bosses are hoping the old reality will snap back as the drama of 2020-22 recedes, that people will start to feel they need to come back, or can be made to. The work-from-home people are dug in, believing they’re on the winning side, that the transformation of work in America, which had been going remote for years, was simply sped up and finalized by the pandemic. In this tight job market they have the upper hand. Employers are fighting for talent: Fire me—I’ll get a better job tomorrow, and you’ll get 50 hours with HR onboarding my replacement. The balance of power will change if the slowing economy leads to layoffs and hiring freezes.

“The benefits of working from home are obvious: freedom, no commute; it’s easier to be there for family, the dog, the dentist appointment. Less time wasted in goofy officewide meetings. I’ve wondered if there is another aspect, that office life was demystified by what began in the years before the pandemic, the rise of HR complaints and accusations of bullying, bad language and sexual misconduct. Add arguments over masks and vaccines, and maybe office life came to be seen less as a healthy culture you could be part of and more like a battlefield you wanted to avoid.”

Arguments against working from home are largely intangible, and I focus on these. They are less personal, more national and societal.

2. Google, TikTok Among Tech Firms Looking For Big Offices In NYC

Technology companies have stepped back leasing in the Manhattan office market, but there are still companies on the hunt for space — at least for now.

“Google is in the market for a 500K SF office as of the second quarter of this year, according to a Savills tech tenant report this week. MongoDB is actively seeking 300K SF, and Oracle is looking for 200K SF, according to the brokerage.”

While these large requirements could be massive windfalls for some New York City office owners, tech firms are shifting their approach to their workplaces rapidly, and those requirements could change at any time, Savills Northeast Regional Research Director Marisha Clinton told Bisnow.

3. Amazon Buys Up Thousands of Acres as It Eyes Future Real Estate Needs

Amazon, the world's biggest retailer, roiled the real estate world earlier this year when it said it would slow its pace of warehouse leasing and begin to sublet some of the tens of millions of square feet it had committed to as part of its pandemic-era expansion. But the fallout may not be as dire as some initially feared.

“The pullback could say more about a strategic shift than a retreat from real estate. The company has spent billions of dollars over the past couple of years to buy undeveloped land as well as properties for conversion to logistics centers, signaling it may have designs on leasing less and owning more in coming years.”

The company, which had more than $34 billion in cash on its balance sheet at the end of the first quarter, spent at least $2.3 billion to acquire dozens of properties totaling more than 5,000 acres since early 2020, CoStar data shows. Included in that tally are nearly 400 acres it has bought over the past three months, a period in which Amazon has scrapped or postponed large office and industrial projects across the nation and revealed plans to shrink its U.S. footprint of delivery and fulfillment centers by millions of square feet.

4. Big Tech Is Proving Resilient as the Economy Cools

No boom can last forever, even for the technology industry’s most affluent companies. Investors punished the biggest tech companies earlier this year, erasing $2 trillion in market value over fears the industry would falter in the face of rising inflation and a slowing economy.

“But this week, as the United States reported that economic output fell for the second straight quarter, Microsoft, Alphabet, Amazon and Apple posted sales and profits that showed their businesses have the dominance and diversity to defy the economic woes hurting smaller companies.”

Microsoft and Amazon proved that their lucrative cloud businesses were continuing to expand even as the economy cools. Alphabet’s subsidiary, Google, demonstrated that search advertisements remained in demand among travel companies and retailers. And Apple papered over a downturn in its device business by increasing its sales of apps and subscription services.

5. Google Confirms Plans To Buy Thompson Center in Downtown Chicago

Google plans to buy the spaceship-like James R. Thompson Center in Chicago, a deal that will further the tech giant’s growth in the city and provide a much-needed boost to the Loop business district.

“The Mountain View, California-based search engine provider, Illinois Gov. J.B. Pritzker and Chicago developer Prime Group announced the plan Wednesday, saying Google would buy the building after it’s renovated.”

Google has not said how many employees it plans to add in the Thompson Center, but the modernized building will have enough space to accommodate thousands of workers.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. 3 Ways Companies Make Work Purposeful

In the aftermath of Covid-19, many companies have boosted pay, and offered greater flexibility in order to recruit and retain the best people. At some, senior leaders have attempted to inspire employees by emphasizing a corporate purpose or mission, in the same hope.

“But these initiatives haven’t had much impact on aggregate quit rates. The data shows that U.S. employee turnover was rising steadily before the pandemic and then spiked in 2021. Meanwhile companies that tried to attract people with promises of higher pay and/or greater flexibility are finding it harder to keep those hires: A recent Harris poll indicates that 20% of employees who left their jobs in 2021 to join other companies for those reasons now regret their decision.”

Sure, we want the basics.  We want to feel safe in the workplace, have the resources we need to be productive, be rewarded fairly, and have some flexibility in where, when and how we do our jobs. We like working for companies that take values seriously. But while these factors can make the difference between employees being satisfied or dissatisfied, they are not enough to drive high levels of loyalty and retention.

2. The Future of the Workplace

The COVID-19-pandemic caused a tectonic shift in where, when, and how we work, with significant implications for workers, employers, and buildings. McKinsey experts in real estate, people and organizational performance, and operations are collaborating to help leaders understand how the workplace is changing and how their organizations can best prepare for a vibrant future.

“Flexibility is the new amenity employees want—especially those in diverse groups—and will embrace if you offer it.”

The workplace needs a new purpose—and companies that clearly define it can unlock competitive advantage.

3. The ‘Great Resignation’ Started Long Ago

We’re in the midst of breath-catching revolutions in how America lives and works. Working from home, as an issue, is still shaking itself out, but its implications are huge. If an entire class of people who used to go to the office stay home, it will upend the commuter model on which modern cities are built, and on which they depend for revenue.

“Another great question has to do with the shortage of workers. You see this all around you. There aren’t enough people to fill available jobs.”

Retailers big and small struggle to find and retain employees. Beaches and pools can’t find lifeguards. Police forces can’t find young men and women to apply. The U.S. Army can’t find recruits. Doctors offices strain to fill a job when somebody leaves. Airlines are so short-staffed there’s no one to help you find luggage that’s been lost for two weeks. There’s no one to keep it from being lost. The other night a Midwestern city official told CNN, of the struggle to hire cops, “It’s like the American workforce vanished.”

4. Peter Linneman: CEOs Need To Do Their Jobs For Office To Make A Comeback

Peter Linneman has a simple motto that he operates under: Don’t bet against the U.S. economy. At 71, the economist, professor and researcher has held onto this motto through recessions, political turmoil, wars and countless other challenges to the economy, and he still believes it to be true to this day. 

“So on this week’s Walker Webcast, Walker & Dunlop CEO Willy Walker kicked things off by asking Linneman one question: What could go wrong? Linneman started off by drawing attention to his Zoom background, a picture of Niagara Falls. He said the most powerful waterfall in the world is an excellent analogy for the U.S. economy because, just like Niagara, what the economy achieves is stunning and it keeps going, even if at times it might be moving a little slower than others. ”

“The economy is 3.5% bigger than it was before Covid, before the social unrest, before the contentious elections — what a remarkable achievement,” Linneman said.

5. What History Teaches Us About Inflation And Commercial Real Estate

Despite the concern it generates, inflation has always been a natural occurrence in our economic cycle. Because of this, I believe investing in asset classes like commercial real estate, which historically outperform the market during inflationary climates, is one of the best ways for investors to diminish risk during this point in the cycle.

“As an investor in commercial real estate (CRE) for 28 years, I believe that by studying economic periods of the past, we can be better informed on how inflation is likely to affect our industry now. Because history, like CRE, is known to repeat itself, what happened decades ago can lend insight into today’s market.”

First, let’s look at economic policy and inflationary episodes of the mid-1940s and late 1970s/early 1980s and compare them to our current economy. Both earlier periods show patterns of inflation increasing and then decreasing, which is what other experts and I anticipate will happen soon.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Welcome to the Full-Employment Recession

Is the U.S. economy in a recession? Real gross domestic product contracted at an annual rate of 1.6% in the first quarter of 2022, according to a recent estimate by the Bureau of Economic Analysis. The Federal Reserve Bank of Atlanta estimates that the economy contracted by a seasonally adjusted 1.2% in the second quarter. If those estimates turn out to be correct, the U.S. economy will have contracted for two consecutive quarters, the technical definition of a recession.

“This recession—if that’s what it is—isn’t like other recessions. According to the latest employment report issued by the Bureau of Labor Statistics, the economy added 372,000 new jobs in June, with the unemployment rate remaining stable at 3.6%. Over the past 12 months, according to the same report, average hourly earnings increased by 5.1%, another sign of a tight labor market. What explains a full-employment recession? The answer lies in long-term developments in the U.S. labor force.”

The economy grew by 5.7% in 2021, the largest annual gain since the 1980s, with an addition of some 6.1 million new jobs. But those gains were in the form of bounce-backs from unprecedented losses in 2020 because of the coronavirus pandemic. The economy contracted by 3.4% in 2020 and some nine million jobs disappeared. When the GDP changes from 2020 and 2021 are combined and averaged, the annual growth rate over these two years comes in at just above 2%, very close to the 2.3% rate in 2019, before the Covid lockdowns began.

2. Tech Workers Long Got What They Wanted. That’s Over.

Tech workers used to asking for the moon are starting to hear an unfamiliar word as startups and giants such as Google and Microsoft MSFT 1.04%▲ get more cautious: No.

“For much of the pandemic, tech companies big and small went on hiring sprees where would-be employees could name their price and expect rich, work-from-anywhere perks. Now, as fears of a recession loom, more employers are scaling back or freezing hiring, rethinking how many of their positions should be remote and in some cases even rescinding job offers.”

Microsoft Corp. this week said it would lay off a small percentage of its staff, following earlier layoffs at Netflix, Coinbase Global Inc. COIN 0.69%▲ and Twitter Inc. Alphabet Inc.-owned Google’s CEO Sundar Pichai also told employees this week the company would slow the pace of hiring for the rest of the year. And the head of engineering at Meta Platforms Inc., parent of Facebook, told his managers to identify and report low-performing employees to manage them out.

3. A new challenge for employers: Growing anxiety for workers

If Google searches are any indication, workers are getting increasingly nervous about what a recession might mean for them.

“Searches for “Will I lose my job in a recession?” are up 9,900% compared to a year ago, while searches for “What to do when you get laid off?” are up 336% over the last 12 months, according to data from Lemon.io, a marketplace of vetted software developers.”

While anecdotal in nature, the search patterns show heightened anxiety among workers despite a still-robust job market and predictions from economists that a potential recession might not be accompanied by the same broad-based layoffs as past downturns.

4. Nobody wants to be in the office on Fridays

Haley LaFloure picked up a couple dozen doughnuts on the way to work. She forgot it was Friday.

“The surprise she’d planned for her colleagues turned out to be on her: The office was empty. Everyone else at the St. Louis investment firm where she works had decided to close out the week from home, which meant LaFloure was stuck at her desk with enough sugary fried dough to last her a month.”

“I don’t even like doughnuts,” the 25-year-old said. “I sat down and was like, ‘What am I going to do with these?’”. As white-collar workers across the country settle into hybrid work routines, one thing is becoming clear: Nobody wants to be in the office on Fridays.

5. The Trouble With Zooming Forever

If, as it is said to be not unlikely in the near future—the principle of sight is applied to the telephone as well as that of sound, earth will be in truth a paradise, and distance will lose its enchantment by being abolished altogether,” the British author Arthur Mee wrote in 1898.

“So, fellow Zoomers, how do you like paradise? It turns out that in nirvana, the customary greeting is “I think you’re on mute” and your colleagues may or may not be wearing pants.”

Zoom and related technologies were necessary during the COVID-19 shutdowns. At a time when more than 40 percent of the U.S. labor force was working full-time from home, videoconferencing arguably saved the economy from much worse collapse. Even as workplaces have opened back up, these technologies have allowed some workers to increase their productivity and given businesspeople options if they want to avoid the appalling state of commercial air travel.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Hybrid Work Is Doomed

I noticed the shoes first. That I was wearing them. Real shoes, the leather kind, with laces. After a year and a half, I was finally returning to the office, and that meant giving up the puffer slippers and slides that had sustained me for so long. Real shoes, I quickly remembered, are terrible. Likewise pants. Likewise getting to work, and being at work. Whew.

“That was summer 2021. I’ve since acclimated to the office once again: I don the uniform; I make the commute; I pour the coffee; I do my job; and then I go back home. There are costs to this arrangement, clearly. I lose some time—time I could spend working!—transporting myself, in shoes and pants, from one building to another. I miss the chance to finish household tasks between my meetings, or fix myself a healthy and affordable lunch. As a university professor and administrator, I have more flexibility than most professionals, and I’m not required to go in each and every day. But even so, I have less control over each hour of my life than I used to—a fact that could very well be making me less productive overall. Indeed, it’s possible, or even likely, that my employer—and yours—could help their workers and the bottom line, simply by allowing us to work from home or come in on a hybrid plan. Remote, flexible employment might be a win for everyone.”

But actually, it isn’t. A rational assessment of your time and productivity was never quite at issue, and I think it never will be. Companies have been pulling employees back to work in person irrespective of anyone’s well-being or efficiency. That’s because return-to-office plans are not concerned, in any fundamental way, with workers and their plight or preferences. Rather they serve as affirmations of a superseding value—one that spans every industry of knowledge work. If your boss is nudging you to come back to your cubicle, the policy has less to do with one specific firm than with the whole firmament of office life: the Office, as an institution. The Office must endure! To the office we must go.

2. Industrious Bets On New Office Lure, the ‘Work Club’: Desk, High-End Eatery and Full-Service Bar

industrious

Industrious, a flexible space provider that counts brokerage giant CBRE among its investors, is joining a major real estate owner, Nuveen, in opening what’s billed as the latest lure for office workers: an upscale workplace lounge concept in New York that includes a full-service bar, restaurant and coffee shop run by hospitality group DMK. There’s even a park.

“The partnership represents the latest iteration of attempts seen nationwide to feature amenities and other offerings to entice workers back to the office. This concept also aims to help landlords such as Nuveen, the property arm of teachers retirement fund investor TIAA, find ways to use space to lure more than just building tenants.”

Described as “the first-of-its-kind collaboration between a leading workplace operator, landlord and hospitality group,” the partners on Thursday opened an 18,000-square-foot flexible “work club” at Nuveen’s renovated The Gardens building located at 780 Third Ave. in the Midtown East neighborhood of Manhattan. Called The Clearing, the space includes a 12,000-square-foot publicly accessible park as well as DMK’s restaurant and grab-and-go offerings, providing access to shared work spaces and meeting rooms with “fine dining,” classes and events “all in one place,” they said in a statement.

3. ​​​​Working from home has become a perk like free lunch, and it could be replacing higher salaries

Workers who aren’t afraid of being laid off in this economy have another question: How do I get a raise that keeps up with inflation?

“The Bureau of Labor Statistics’ June job report, released today, shows workers’ wages continue to lose to inflation; average hourly earnings rose by just 0.3%, and 5.1% year over year. Accounting for inflation, that’s negative, Fortune reported. ”

The widespread shift to remote and hybrid work during the pandemic has coincided with the labor shortage and associated Great Resignation, when workers have taken advantage of the most power they’ve had in decades. But what if remote work is keeping salaries down, too?

4. Lonely Last Days in the Suburban Office Park

The wooded campus that once housed the global headquarters of Toys “R” Us in Wayne, N.J., is 85 percent vacant today. On a weekday, the parking spots for 1,900 cars are mostly empty. The helipad is unused. So is the corporate dining hall, with its views of the serene grounds. Hundreds of cubicles — the spacious old-school kind with the high walls, not the little hot desks popular with employers today — sit empty as the property awaits redevelopment into something entirely new.

“The site, first built for the chemical conglomerate American Cyanamid in 1962 and later bought by Toys “R” Us, was a grand version of an idea that ruled the postwar American workplace at varying scales: the 200-acre secluded corporate headquarters, the leafy 50-acre research campus, the three-acre spec-built office park shaded by a bit of tree canopy.”

These places were decidedly suburban in nature and car-dependent in design. In every form — executive park, business park, corporate park, innovation park — the park was an essential part. “Pastoral capitalism,” the landscape architecture scholar Louise Mozingo has called it, naming the very American belief that office workers would do their best work if they could look out at manicured nature instead of the frenetic cityscape.

5. Be the Most Persuasive Person in the Room: 9 Things Highly Influential People Always Do, According to Science

Every successful person I know is extremely good at persuading other people. Not manipulating or pressuring, but genuinely persuading: Describing the logic and benefits of an idea to gain agreement.

“When you think of it that way, everyone needs to harness the power of persuasion: to convince other people your idea makes sense, to show investors or stakeholders how a project, or product, or business will generate a return, to help your employees understand why they should embrace a new process.”

Having the ability to persuade is critical in every career. That's why successful people are extremely good at persuading others.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. A Rude Awakening Is Ahead for Young Employees

Workers of a certain age and attitude will have to reckon with the coming recession. Rising inflation and a market downturn guarantee layoffs. The days of expecting employers to be grateful for your application will be gone soon.

“People who started work in the past dozen years are about to experience their first tough job market. Younger employees—not all, but many—will need to make more realistic demands of the workplace.”

The last recession ended in mid-2009 with unemployment at 9.5%, about 2.5 times what it is today. Anyone who finished college since 2010 has known mostly good times in the job market. The same is true of many who entered the workforce directly from high school. There was competition, but it was for employees rather than jobs.

2. Millennials Were Optimistic About Their Financial Future—but Now, Not So Much

This is a nerve-racking time for me and my friends. As I’ve written before, many of my millennial peers did pretty well during the pandemic (so well, in fact, that I felt some guilt about it). We kept our jobs and saved more money, because we had fewer opportunities to spend. Many of my friends also took the opportunity to rethink their lives—changing jobs, getting married, moving to new places—in search of greater fulfillment.

“That rosy picture has suddenly changed. After being lucky enough to ride the longest bull market in U.S. stock-market history, my cohort is now facing the first prolonged market slump to hit our entire generation as adults. On top of that, surging inflation is diminishing our spending power and general quality of life. And talk of a recession is adding to our fears and eroding the confidence we had in our ability to retire comfortably.”

After a couple months of treating my 401(k) balance like a plague, I recently decided to rip the Band-Aid off and take a peek. Yes, I winced. But truthfully, it wasn’t until I foolishly googled, “How much should you have in your 401(k) by 36?” that I felt the sting of the moment, with a sense of both frustration and futility washing over me. According to many estimates, I wasn’t close to where I should be—just when it feels like the good times are over.

3. The Office Tower Has a New Job to Do

As workers opt to stay home, developers are packing commercial buildings with amenities that mix private and public spaces. 

“In 2015, private equity giant Blackstone Inc. purchased the Willis (née Sears) Tower and began a half-billion-dollar renovation that would radically change the role the former tallest building in the world would play in downtown Chicago.”

Today, anyone — not just workers in the 108-story office tower — can sample from a wide range of new public amenities inside the building. At a new multi-level food hall, you can grab breakfast at Do-Rite Donuts and Chicken or spend $19 on a bluefin tuna roll at Sushi San. The Color Factory, an interactive (as in: Instragrammable) art museum, opened up in June, beckoning tourists and locals with chromatic thirst traps. A 75,000-squre-foot conference center hosts group meetings, and weddings are in the works. On the tower’s podium, yoga classes and concerts can be held on a new 30,000-square-foot landscaped roof garden. Office workers in need of an early happy hour can find one in a new bar on the 33rd floor that opens at 3 pm.

4. Open Office: How LinkedIn Redesigned Its Flagship for Hybrid Work

At LinkedIn's new flagship office, desks are no longer the primary focus.

“With dozens of different work settings and conference room setups, the company is using its office as a hub for its hybrid workforce.”

WSJ gets an exclusive look inside.

5. Are Zoom Layoffs An Inevitable Part Of The Future Of Work?

When Better.com’s CEO fired 900 workers over Zoom at the end of 2021, the backlash was swift and fierce.  

“However, the concept of mass Zoom firings has since become a commonplace in today’s distributed workforce. For instance, Carvana recently fired 2,500 employees via Zoom and email, while fintech firm Klarana laid off 700 staffers using a pre-recorded message. ”

The sudden wave of layoffs comes just months after corporations went on hiring sprees to meet skyrocketing demand in society’s self-proclaimed post-pandemic era. But now that demand is waning due to inflation’s burden and companies’ profit margins are slimming, leaders are realizing they may have overhired.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. With 900M sf of office leases expiring by 2025, owners are getting more aggressive

Office owners have been dealing with more than two years of uncertainty around the future of their properties, but the demand for their space is about to get an even tougher test. 

“Roughly 11% of the leased office space in the U.S. is set to expire this year, according to JLL, which equates to about 243M SF — a 40% jump from 2018. By 2025, 900M SF of office leases nationwide is set to expire.”

There's an anticipation that so much space will become available over the next two years, and landlords are reacting by giving even more concessions,” Vestian Global Workplace Services Chairman Michael Silver said. “It's extraordinary how compounded the situation is, and fierce competition for tenants is breaking out into the open.

2. Wells Fargo renews 620K SF lease in win for San Francisco office market

In a win for San Francisco’s office market, Wells Fargo is renewing its lease at 333 Market St., keeping its 620K SF for another decade, the San Francisco Business Times reports.

“Wells Fargo earlier this year exited its space at 45 Fremont St., while making plans to sell its current space at 550 California St. But it is not leaving the city entirely.”

“We are committed to our San Francisco-based employees. We will continue to have a major employee presence in San Francisco, but we have more real estate than we need to support these employees. San Francisco remains the location of our company’s headquarters," Wells Fargo told the SFBT.

3. ‘Deals are still happening’: What to expect in Atlanta real estate.

A recession is a possibility, in the words of Federal Reserve Chair Jerome Powell, who anticipates continued interest rate hikes to bring inflation under control. Just last week, the Fed raised rates by three quarters of a percentage point, the biggest hike in 28 years.

“But ask 10 different economists and you’ll get 10 different opinions on where “this thing” is headed, Colliers’ national director of research Steig Seaward said. It’s true — analysts with Morgan Stanley predict a 35% chance of recession by the first half of 2023. Goldman Sachs forecasts 30%, up from its 15% prediction in April. Forecasters with Deloitte say a recession is less likely than some analysts would have you believe.”

Atlanta’s real estate ecosystem is beginning to see the effects of record inflation and rising interest rates. Some key players report companies are pulling back from leasing activity until more encouraging economic indicators emerge. 

4. Labor shortage stymies construction work as $1 trillion infrastructure spending kicks in

WASHINGTON—Construction projects across the U.S. are running short on labor just as $1 trillion in federal infrastructure money starts to kick in, leading companies to get creative in their quest to attract and retain workers.

“In Southern states, contractors advertise sunny weather and 12 months of work on help-wanted websites in the frostier Northeast and Midwest, where highway construction goes dormant during the winter months. Project managers in remote areas are luring employees with signing and referral bonuses and per diems for housing, knowing they won’t be able to find enough workers locally.”

Central Florida Transport, one of the state’s largest aggregate haulers, created a full-time driver advocate position to help its truck drivers with tasks that are tough to do during a busy workday, such as scheduling healthcare appointments or finding a loan broker.

5. Amazon shows off its latest warehouse automation: Fully autonomous robots, high-tech scanners and more

Amazon will show off four new pieces of robotics technology, including fully autonomous robots and high-tech scanners, at its re:MARS event in Las Vegas. The new technology comes ten years after Amazon’s purchase of Kiva, which set up an arms race among retailers to deliver products ever faster and more efficiently with help from automation.

“In addition to the autonomous robot and scanners, the technology that Amazon is showing off includes a robotic workcell for movement of heavy packages and a containerized storage system. The latter is currently being beta-tested in Texas, while the others are in early-stage alpha tests.”

“This is the real stuff,” Tye Brady, Amazon Robotics’ chief technologist, told Forbes in advance of his speech at re:MARS. “There’s a big difference between doing something in a lab or something you show on YouTube and something that we will deploy in our fulfillment centers.”

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. How to Know When Switching Jobs Could Get Harder

Nearly every labor indicator suggests the hottest job market in half a century is starting to cool as signs mount that U.S. economic growth is slowing.

“Employers are still hiring and layoffs are low, but the labor market is likely past its peak as the broader economy slows and could even contract in the second quarter.”

A labor-market slowdown means fewer opportunities for workers. At the same time, it is good news for Federal Reserve officials: The central bank is ratcheting up interest rates to bring down high inflation, and its officials say demand for workers also needs to come down to bring stability to prices.

2. Workers Don’t Feel Quite as Powerful as They Used To

Becca Smith will be back to work in no time. Laid off from her sales position at a startup a couple of weeks ago, she says she’s received more than a dozen inquiries from recruiters in response to a LinkedIn post about her job loss.

“Yet something has changed since the 40-year-old Indiana mother started at her former employer last summer. Back then, she was determined to work from home—and felt sure she could get her way. She also had the confidence to join a fledgling business amid a roaring economy.”

No more. “I will give priority to larger, more-established companies for this job search,” says Ms. Smith, whose old company was venture-funded and cut about one-third of the team to conserve cash. She adds she’ll consider reporting to an office part time. She’d also like her next job to involve selling a product customers need even in bad times, rather than a luxury that could get cut from the budget when money is short.

3. Office Occupancy Hits 44%, Its Highest Point Since The Pandemic Began

There is a long way to go, but a national report shows employers are making progress in their efforts to get workers back in the office.

“Average office occupancy in 10 major U.S. metros came in at 44% of pre-pandemic levels during the first week of June, the highest mark since the pandemic began in 2020, according to Kastle Systems. The week before occupancy was 41.2%, a drop from previous weeks in May that probably reflected the Memorial Day weekend.”

Metro Austin leads the country in office occupancy at 61.3% and remains the only city on Kastle’s 10-city Back to Work Barometer to have risen higher than 60% occupancy.

4. These are Gen Z’s top work priorities—and remote isn’t one of them

In the past few years, workplaces have changed significantly due to the Covid pandemic. Employees had an increased need for different perks and support like hybrid and remote work, child care, and expanded health benefits. Though many of these remain a priority, for Gen Z, expectations for the workplace have changed significantly, according to a survey from the National Society of High School Scholars (NSHSS).

“The 2022 Career Interest Survey from NSHSS dives into the “career motivations” for the next generation of talent, members of Gen Z, which includes individuals born between 1997 and 2012. The survey reveals the concerns and preferences of 11,495 diverse high school and college-aged people.”

According to NSHSS, workplace equity is a non-negotiable for Gen Z talent, and Covid concerns aren’t as prominent as they were in the last two years.

5. The future of the office is an open question, but this company is testing 3 designs to figure it out

As a company that specializes in tests and measurements, NI is used to figuring out how to gauge things. From oscilloscopes that track changes in electrical signals to monitors that sense the tiniest vibrations, its products weigh and quantify with precision. So when the company set out to renovate its aging offices in Austin, Texas, no new design was going to slip past its scientists and engineers without some scrutiny.

“The test-centric nature of the company has become part of a unique new design process that could be a model for how offices get designed in a pandemic-inflected world.”

Working with the global architecture firm Gensler, NI is currently testing out different prototype office designs ahead of a grand renovation of its headquarters. Through detailed analysis and feedback, the company and the designers will measure each of three different layouts built into a corner of one of its buildings and then use that data to determine a wider rollout.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Most Billionaires Don’t Think Employees Will Stay Fully Remote, Forbes Survey Shows

Elon Musk touched a nerve last week when he said he would be requiring all Tesla employees to return to the office for at least 40 hours a week—or leave the company. The strong stance from the world’s richest person sparked a firestorm of reactions, including from Australian billionaire Scott Farquhar, the cofounder and CEO of software giant Atlassian, who blasted Musk’s mandate as “something out of the 1950s.”

“The whole public debate revealed a wide discrepancy in how business leaders are viewing the future of work. Some billionaire-led companies like Dropbox, headed by Drew Houston, have sold off much of their office space and given employees the option to work remotely forever; Twitter, which Musk has been toying with buying, announced in March its employees will have the same choice. Others are following a hybrid model, including Apple, which is led by Tim Cook and is currently requiring its employees to appear in the office twice a week.”

As it turns out, most billionaires think companies either go back to all in-person or remain hybrid, with at least some in-person time. We surveyed 65 of the world’s richest people and found just over half (52%) believe “hybrid” models that allow employees to mix in-person and remote work will be the way of the future compared to 45% who think most employees will return to offices physically. Just 3% say work will end up being predominantly remote.

2. Why Now Might Be the Best Time to Look for New Office Space

Many companies are sitting on their hands while figuring out how much office space they will actually need in a hybrid work environment.  But commercial real estate brokers say that landlords are willing to make good deals now as the market slowly recovers.

“While lease vacancy rates aren’t expected to return to the 30-year average of 15 percent until at least 2026, according to insights from real estate market research firm CBRE, leasing activity is picking up—totaling 45.8 million square feet, up over 26 percent from last year. Additionally, average gross asking rent increased by 1.2 percent to $35.10 per square foot. The improvement in office demand will be greatest in markets hardest hit during the downturn, including parts of Manhattan, Chicago, Seattle, and Dallas. ”

Though the market is getting more competitive, many companies are still hesitant, not wanting to waste time, effort, and resources on making large changes without more certain projections into when, and how many, employees will return to the office full time, says Julie Whelan, global head of occupier thought leadership at CBRE.

3. Return To Work Experience: The Reimagining Of The Office As A Destination

For the first time in recent history, work was intentionally decoupled from the traditional office. As the pandemic enters its third year, the longer impacts – supply chain issues, labor shortages and inflation – are driving competition as the world learns to live with some form of the virus for the foreseeable future.

“Design has offered innovative solutions to confront these tough new realities, and the resiliency demonstrated across industries has created a roadmap for how to move forward. Here we are faced with an opportunity to experiment and rethink the physical workplace to offer fluid, unique and meaningful experiences that can attract and retain top talent, whether that’s through new technologies or new types of spaces.”

Here in Austin, we’re seeing an unprecedented influx of workers from all over the world, creating a unique opportunity to design for and contribute to a rapidly growing city. As companies, developers and landlords look to optimize their real estate portfolios, the experience they deliver to tenants and employees will be a key differentiator.

4. Amazon To Delay Opening Of Multiple Fulfillment Centers

Amazon is delaying the opening of multiple fulfillment centers as the company continues to slow its industrial growth.

“The e-commerce giant has postponed fulfillment center openings in Iowa, Texas and Tennessee in the past two months, attributing the delays to slower-than-anticipated growth and supply chain issues, GlobeSt reported, citing multiple local media reports.”

A five-story warehouse in Davenport, Iowa, that was scheduled to open in September has now been delayed until 2024, an Amazon spokesperson told a local television station. Another fulfillment center in Alcoa, Tennessee, had its opening delayed from last month to June 2023. A $200M fulfillment center in San Antonio's East Side neighborhood has also been delayed.

5. From Walmart to Gap, Which Retailers Have the Most Excess Inventory?

Target Corp. TGT -3.57%▼ warned Tuesday that its profit would drop because it needs to cancel orders with vendors or offer discounts to clear out unwanted goods.

“The announcement was the latest sign that many big retailers are struggling to match supply with demand, as inflation squeezes shoppers and more discretionary spending shifts to travel and entertainment. Many of these chains had benefited during the pandemic, when shoppers used ample savings and stimulus checks to stock up on goods.”

Beyond the big-box stores, clothing retailers are also stuck with items they don’t want.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Can America’s Cities Make a Post-Pandemic Comeback?

Before Covid came to America in January 2020, only 5% of the U.S. labor force worked remotely all the time. Within a few months of the pandemic setting in, however, nearly every American who could work from home was doing so. Today remote work is a white-collar norm.

“f you take the U.S. as a whole,” says Edward Glaeser, chairman of Harvard’s economics department, office attendance is “down about 19%, relative to pre-pandemic levels.” That average masks some startling variations among major cities. While Houston sits squarely on the mean at 19% and Los Angeles is “looking pretty good” at 21%, New York and Boston are both down 32%”

“And then you go to San Francisco,” Mr. Glaeser says with an almost unseemly gusto. “San Francisco is still down 52%. The tech hub is the most extreme.”

2. How companies are shifting their office spend to lure reluctant workers back

As companies and workers continue to try to figure out where and how work will take place in a hybrid environment, the costs being spent on existing office spaces previously built around the 9-to-5, five-day workweek are being closely examined.

“Flexibility has become the buzzword for both sides of the employee-employer power dynamic. Workers have been leveraging the empowerment gains they’ve made amid the pandemic and a tight labor market to maintain the personal time that has come with working from home. Companies, many fearful of eroding culture that could increase turnover as well as stifling innovation by having a mostly remote workforce, have tried to meet workers somewhere in the middle by gently prodding, not pushing, workers back to the office.”

The question becomes then, how does that impact budgeting and spending on typically costly workspaces when a large portion of your workforce won’t be there every day, if it all? Is there an opportunity to cut costs, or do those spaces now require additional investment to try to draw workers who are at home back into the office?

3. What do workers really want in the Covid-19 era? Here are a few must-haves.

About 20% of workers plan to quit their jobs within the next 12 months, but many more plan on asking for a raise instead. That's according to a new global survey of 52,195 workers in more than 40 countries by PwC LLP.

“The survey found 35% of workers are planning to ask for a raise in the next 12 months, and the total was even higher in specialized fields like the tech sector, where 44% of employees are planning to ask for a raise over the next year.”

PwC's survey sheds additional light on what employees want at a time when workers have considerable leverage and pay is rising rapidly.

4. Cubicle farms and open floor plans are out. The post-pandemic office layout will invite employees in

Corporate America’s real estate footprint has changed significantly since the start of the COVID-19 outbreak. While some companies are adapting to new remote- or hybrid-friendly futures, others are insisting that employees return to the office full-time. Regardless, the typical office layout has undergone a complete turnaround from prioritizing desk allocation to focusing on spaces that enable collaboration and high-quality experiences.

“Mark Dixon, founder and CEO of IWG, a commercial real estate firm that works with 83% of the Fortune 500, calls the new office transformation one of the “biggest changes since the start of the typewriter,” with design preferences changing now more than they’ve changed in the last century.”

Getting people into the office is also much harder today than it’s been for the past hundred years, when in-office presence was required for nearly all employees, he says. Companies have altered office spaces to reflect the new work experience and meet employee demands, by increasing public areas, using technology to track space usage, and expanding conference rooms and shared spaces.

5. Brrr! Air-Conditioned Offices Give Chilly Reception to Returning Workers

Public-health nurse Becky Graham brought a suitcase of winter clothes from Minnesota to a springtime conference in Atlanta where it was 80 degrees.

“It wasn’t a crazy idea. Ms. Graham was trying to prepare for one of the worst excesses of modern life—meeting rooms air-conditioned to Arctic levels.”

“I have a tank top, a long-sleeved shirt and a sweatshirt on and jeans, and I’m still cold,” Ms. Graham said as she exited shivering from one session. She lent what layers she could spare to those who arrived ill-suited for the deep chill of conference rooms in Atlanta’s convention center.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Office In 'A Period Of Creative Destruction' As Owners Search For What Actually Gets Workers In

In the slow return to the office, landlords are in a fight for survival, and amenities have become their weapon of choice.

““What I’m seeing in the boutique office market ... is a bifurcation of products into winners and losers, there is a certain group of product that has amenities and intrinsic features that draw employees back to the office that allow employers to help employees, and this is what is very much in demand,” Rockrose Development Director Ted Traum said at Bisnow’s State of the New York City Office Market event this week.”

“You have to be very surgical … in the past, you could say, ‘I just want exposure to the New York office.' Almost anything within certain parameters would do," he added. "Now you have to be extraordinarily cognizant of what it is that makes it a winner.”

2. Amazon Looking To Shed 10M SF In Warehouse Space

In an effort to shed its excess warehouse capacity and shore up its bottom line, Amazon has reportedly made plans to sublet at least 10M SF in warehouse space across several key markets — including Atlanta, New York, New Jersey and Southern California — with plans to potentially vacate triple that number.

“Sources speaking anonymously to Bloomberg said the company may even attempt to negotiate ending existing leases. ”

If Amazon indeed lets go of 10M SF of warehouses, it would represent only 5% of the space it added over the last two years, Bloomberg said. It also reported Amazon is being cautious by considering short sublease periods of one or two years in case it sees demand to expand again soon. E-commerce sales are down from their early 2020 peak but are fluctuating quarter-over-quarter and are still well above pre-pandemic levels.

3. Lumber Prices Slump With Rising Interest Rates

Lumber prices have come crashing down in a new sign of how rising interest rates are deflating markets that boomed during the pandemic.

“Wood prices were a leading indicator of the supply-chain problems and inflation that followed pandemic lockdowns. Prices shot up in the summer of 2020 as cooped-up Americans remodeled en masse and demand for suburban houses soared. By last spring, lumber cost more than twice the prepandemic high. Now, two-by-four prices are flashing caution.”

Lumber futures for July delivery ended Friday at $695.10 per thousand board feet, down 52% from a high in early March. On-the-spot wood prices have plunged, too. Pricing service Random Lengths said Friday that its framing composite index, which tracks cash sales, fell about 12% last week to end at $794. That is down from $1,334 in March, just before the Federal Reserve raised interest rates for the first time since 2018.  

Lumber-futures price, weeklySource: FactSetNote: Random length, continuous contract

4. The Tech Crash Could Be a Talent Bonanza for Big Tech

The battle for tech talent is entering a new phase—and the winners are likely to be the world’s biggest tech companies.

“Apple, Amazon, AMZN 3.66%▲ Microsoft, Google and Facebook FB 1.83%▲ parent Meta Platforms have spent years battling for engineers and other skilled workers with each other and the rest of the tech landscape—including legions of cash-drunk startups dangling stock that might someday spell megawealth. Now, as the tech industry is hit by tumbling stock prices and recalibrated financial projections, companies large and small are slowing their hiring and even laying off workers. Even given these challenges, though, the giants now offer safe ports for workers seeking shelter from the gathering storm.”

The ingredients of that storm are: Rising interest rates leading investors to panic and sell their shares in growth-over-profits tech companies. A similar rout in cryptocurrency. Institutional investors freezing their later-stage investments in risky startups, leading many to pause efforts to raise more money, or accept lower valuations. At the same time, privacy changes by Apple and challenges to the world economy brought on by China’s Covid-19 lockdowns and the war in Ukraine are causing revenue growth at bellwethers like Meta and Snap to drop, further spooking investors.

5. WHERE DO U.S. PROPERTY VALUES GO FROM HERE?

In this two-part series, we take an in-depth look at how the shifting economic outlook and interest rate environment will impact the future trajectory of property values.

“As strong headwinds continue to collide with strong tailwinds, the macroeconomic environment is becoming increasingly complex for real estate investors to navigate. ”

In this first part, we review the historical relationship between the economy, inflation, interest rates and commercial real estate price movements.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Google, others adding office space in anticipation of the great return

Since January 2020, Google’s parent company Alphabet has spent nearly $100M on expanding its U.S. commercial real estate portfolio, including a $28.5 million office it bought in Sunnyvale, CA. at the height of the pandemic.

“More recently, Alphabet announced in January it would spend $1 billion for a campus-like office setting in London.”

“We'll be introducing new types of collaboration spaces for in-person teamwork, as well as creating more overall space to improve wellbeing,” Ronan Harris, managing director of Google UK wrote in a blog post. “We’ll introduce team pods, which are flexible new space types that can be reconfigured in multiple ways, supporting focused work, collaboration or both, based on team needs. The new refurbishment will also feature outdoor covered working spaces to enable work in the fresh air.”

2. Officials: Leasing activity signals downtown ATL office comeback

In the first Q&A to ever appear on these pages, Duda Paine Architects principal Jeff Paine effused optimism that Atlanta’s next true skyscraper was likely to move forward soon, despite a lingering pandemic and general reluctance to head back to offices en masse.

“Nearly a year and a 1/2 later, the 45-story shard at 50 Allen Plaza—dubbed “Fifty” for short—still hasn’t begun its ascension over the downtown Connector. But at an associated property next door, recent leasing activity is evidence that downtown’s office market is healthy and that WFO (work from office) culture could be making a broader comeback, according to leasing officials.”

After negotiating two new leases at 55 Allen Plaza, a 14-story building located a block east of Centennial Olympic Park, officials with Lincoln Property Company Southeast noted that downtown was Atlanta’s only submarket to finish Q1 this year with a positive office absorption. Having added more than 28,000 square feet of leased space, downtown’s vacancy rate stood at 19.1 percent, lower than both Midtown and Buckhead, per Lincoln reps.

3. Confidence in tech demand sparks plans for a new office tower

The calling card of West Midtown’s Brickworks development is its converted warehouses and loft-style buildings. 

“Turning the property into commercial space was an early bet that rapid growth would eventually spill into the district. It did — with 500,000 square feet in office space developed since 2020. Now, two years after adding Brickworks to its portfolio, owner Asana Partners plans to develop the first ground-up building at the property.”

The Charlotte-based real estate company will develop a 14-story office building on a 1.2-acre vacant lot, expanding Brickworks’ leasable office space by another 225,000 square feet. Sterling Bay, a real estate investment and development firm out of Chicago, will partner with Asana. The partnership has not yet secured construction financing.

4. Tech Industry Warns That More Remote-Work Jobs Are Headed Out of U.S.

Tech-industry representatives are coming to Capitol Hill this week to warn that the remote-work trend will lead to more offshoring of software developer and other technology jobs unless the U.S. admits more high-skilled immigrants.

“Remote jobs in tech jumped by more than 420% between January 2020 and last month, growth that was intensified by the pandemic, according to a jobs data review by Tecna, a trade group for regional tech councils. In February, more than 22% of all tech jobs were listed as remote, compared with 4.4% in January 2020.”

“The level of remote tech positions that are open is drastically higher than it was prepandemic,” said Jennifer Grundy Young, Tecna’s chief executive officer. “That means workers can live anywhere in the U.S., but it also unfortunately opens the door to more outsourcing—workers staying in India, in China, or moving to places like Canada that have more flexible immigration policies.”

5. WeWork Narrows Loss as Sales of Desk Space Reach Highest Level Since Beginning of Pandemic

Global flexible office space provider WeWork narrowed its first-quarter loss as it cut costs and its consolidated desk sales reached the highest level since the pandemic’s start.

“The loss was reduced to $504 million, or 47 cents a share, from $2.03 billion, or $14.34 a share, a year earlier, New York-based WeWork said Thursday in a statement. Revenue rose 28% to $765 million, beating the company’s previous forecast of revenue rising to as much as $760 million, while total expenses fell by almost half to $1.12 billion. WeWork still expects its adjusted bottom line to break even by year’s end.”

Consolidated gross desk sales, which excludes franchise and joint venture markets in Israel, India and China, totaled 166,000 dedicated workspaces, or 10 million square feet, up from 120,000, or 7.2 million square feet, a year earlier. That was the highest level since the first quarter of 2020. The company relies on providing space for flexible lengths of time to both large numbers of workers for major companies and small groups or individuals.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Amazon Gobbling Up SoCal Office Space, Taking 439K SF In Santa Monica, Irvine, San Diego

Amazon may have too much warehouse space and too many warehouse workers, but they are apparently still short on the white-collar side.

“The e-commerce giant announced plans Tuesday to add more than 2,500 corporate and tech jobs in three Southern California cities, snapping up nearly 450K SF of office space in LA, Orange and San Diego counties to make room for its new staff. The commitments would “[contribute] to local job creation and the revitalization of downtown areas,” Amazon said. ”

In Santa Monica, Amazon is planning to add more than 1,000 jobs “in the coming years” and has inked a 200K SF lease at the Water Garden in the beach city to support that growth. The Water Garden is owned by J.P. Morgan Asset Management and managed by CBRE. The first employees are expected on-site in mid-2023, according to Amazon.

2. U.S. unemployment rate remains at pandemic low of 3.6 percent

U.S. employers added 428,000 jobs in April, capping a year of solid growth and adding more fuel to an already robust recovery. The unemployment rate remained steady at a pandemic low of 3.6 percent, the Labor Department said Friday.

“The labor market has added more than 6.5 million jobs in the past year and is on pace to return to pre-pandemic levels this summer, although economists say there are signs that this record streak of employment gains is beginning to moderate. The number of people working or searching for work, for example, declined by 363,000 in April after six months of gains. And the pace of average wage growth slowed slightly to 0.3 percent, from 0.4 percent a month earlier.”

“This has been an extraordinary jobs recovery, but this kind of growth can’t last forever, especially now that the unemployment level is as low as it is,” said Scott Anderson, the chief economist for Bank of the West in San Francisco. “It’s getting harder to find folks to come back into the labor market, even if you’re paying higher wages.”

3.American Consumers Are Shopping, Traveling and Working Out Like It’s 2019

In early 2020, many companies said the pandemic would change everything for consumers. And it did—for a while.

“Now many Americans are resuming their prepandemic habits: rocking out at crowded concerts, doing deadlifts next to strangers at the gym and stocking a standard supply of toilet paper. Airlines, restaurants and child-care centers, which relied on government loans to stay afloat during Covid-19’s peak, can now hardly keep up with demand.”

Live Nation, which owns Ticketmaster, said concert ticket sales were up 45% as of February 2022 compared with the same period in 2019, the last full prepandemic year. As of February, the company had 30% more concerts planned for 2022 than 2019.

4. Russian Oil Ban, Ukraine War Present Risks to Global Economy, Janet Yellen Says

source: international monetary fund

Treasury Secretary Janet Yellen said the U.S. economy remains strong despite the fact that it shrank in the first quarter of this year, adding that both persistently high inflation and spillovers from the war in Ukraine present economic risks.

““The outlook is very uncertain. The dangers at the global level are high,” she said. “I do worry about commodity prices, I am worried about spillovers from Russia and Ukraine that can have adverse impacts not just on the U.S. that is strongly positioned, but on Europe, on emerging markets.””

Adding to the challenges to the global economy is the recent European Union decision to ban imports of Russian oil, she said. Oil prices jumped on Wednesday in the wake of the EU announcement.

5. How Austin Lured the Most Workers Back to Offices

AUSTIN, Texas—Companies nationwide are struggling to get employees back in the office, but not in Austin. 

“These days, the city’s workforce is putting in more face time at offices than those in any other major U.S. metro area. ”

Austin offices are 59%-occupied—and cracked the 60% threshold last month—according to data from Kastle Systems, an office-security firm that records workers’ comings and goings by measuring badge swipes into skyscrapers and corporate campuses. 

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. In Another Good Sign For Office, Tours Jump 20% In March

Tours of U.S. office spaces spiked in March, rising 20% over February numbers and 8.2% compared to March 2021, according to the latest VTS Office Demand Index.

“VTS tracks the number of unique in-person and virtual tours that prospective tenants take of office properties, which tend to be precursors of lease signings. The company’s national index now stands at 66, up 11 points over the month before. Before the pandemic, in March 2020, the index stood at 102. ”

Nearly all of the markets forming the index recorded monthly increases in tours in March. Boston, Chicago, Los Angeles, New York City, San Francisco and Washington, D.C., all saw demand rise. Boston and Washington experienced monthly gains of 38% and 30%, respectively, giving Boston the largest percent increase of any market, while Washington had demand levels not seen since July 2021. 

2. Despite Lower Preleasing, New Office Buildings Still Offer the Most Upside

Although the amount of office space underway nationally has moderated from a cyclical peak just before the pandemic, an increasing share of that new construction is being built on a speculative basis, with no preleasing, which may present increased risk given higher remote-working rates.

“However, despite some challenges in the near term for new unleased office supply, the larger secular shift of tenant demand toward modern, high-quality buildings and the dearth of availability of that type of space in many markets should result in new office space outperforming older properties in attracting credit tenants over the longer term.”

Roughly 158 million square feet of new space was underway across 54 major U.S. office markets in the first quarter of 2022, equal to 1.7% of the existing inventory. That marks a decline from 186 million square feet in the first quarter of 2020 and lower than the amount of space that was underway at the peak of the last cycle.

3. U.S. Hotel Rates Hit Record High

Travelers are continuing their return to hotels, and they are paying record rates for their rooms.

“The national average daily rate for a room in March was $146.61, the highest for any month on record, according to hospitality data provider STR. However, STR did note that, when adjusted for inflation, the March ADR was about 2% below the same metric for March 2019.”

For example, the average rate in Miami last month was $329.50, an increase over the average rate of $252.80 in March 2019, according to The Points Guy, citing STR data. 

4. Worker Pay and Benefits Grow at Record Pace, Pressuring Inflation

Compensation for American workers grew rapidly in the first quarter, as a tight labor market put more money in workers’ pockets while also keeping pressure on inflation.

“Business and government employers spent 4.5% more on worker costs in the first quarter compared with the same period a year earlier, without adjusting for seasonality, the Labor Department said Friday. That marked the fastest increase in records dating to 2001, and the gain eclipsed 4.0% annual growth in the fourth quarter.”

Compensation for workers also accelerated on a quarterly basis, rising a seasonally adjusted 1.4% in the first quarter compared with a 1.0% increase in the fourth quarter. The growth reflected strengthening wages, salaries and benefits.

5. ‘Prepare For The Worst And Hope For The Best’: How JPMorgan Chase Exec Views Today’s World

Since the dawn of the stock market, financial advisers have cautioned investors not to get distracted by geopolitical events that are outside of their control. That bit of wisdom remains true today, but it doesn’t mean it is a good idea to put one’s head in the sand in the hope that events such as the war in Ukraine or the threat of inflation will not impact the market.

“Instead, said Mary Callahan Erdoes, CEO of JPMorgan Chase’s asset and wealth management business, smart investors and their advisers need to understand and prepare for the risks they face in today’s world. Appearing on this week’s Walker Webcast with Walker & Dunlop CEO Willy Walker, Erdoes shared her thoughts on a range of topics including risk management in light of current events and JPMorgan Chase’s plans for a new headquarters.”

A 25-year veteran of JPMorgan Chase who today oversees $4T in client assets, Erdoes has faced her share of market challenges. Still, words like “confused and uncertain” best describe the investment community’s mood at the moment, she told Walker.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. With 1 Sentence, Google's CEO Revealed the Best Reason to Return to the Office I've Heard Yet

Google's CEO, Sundar Pichai, published a blog post this morning to highlight the release of the company's economic impact report. The report details things like the number of jobs Google has created, as well as the effect it has on small businesses through tools like Google Ads. 

“For example, Pichai says Google contributed “$617 billion in economic activity for millions of American businesses, nonprofits, creators, developers, and publishers last year. In addition, the Android app economy helped create nearly two million jobs last year, and YouTube’s creative ecosystem supported 394,000 jobs in 2020.””

Numbers like that can be hard to fully grasp. What does it mean to provide "economic activity"? How do you count that?

2. Google Set To Invest $9.5B On U.S. Offices And Data Centers This Year

Google says it plans to invest about $9.5B in U.S. offices and data centers this year, opening new facilities and expanding existing ones. The total is up from $7B in similar investments last year.

“Over the past five years, the tech giant has invested more than $37B in offices and data centers in 26 states, it said. Last year, the company announced plans to buy the massive St. John’s Terminal office project on Manhattan’s West Side for $2.1B, doubling down on its office presence in New York City.”

The company is also expanding its footprint in Washington, D.C., with a sublease of 130K SF at 655 New York Ave. NW, the Washington Business Journal reports, citing Transwestern data. That represents the largest office lease in the market during the first quarter of 2022.

3. Google Negotiating Major Expansion of Offices in Chicago’s Fulton Market

Google is in advanced negotiations for a big expansion of its offices in Chicago’s Fulton Market, the first known deal to emerge since parent company Alphabet’s announcement this week that it plans to invest $9.5 billion this year on U.S. office space and data centers.

“The tech giant is close to finalizing a lease of at least 200,000 square feet in the recently completed 16-story Fulton Labs building at 400 N. Aberdeen St., according to people familiar with Google’s plans.”

The plans are a resumption of Google’s rapid growth in Chicago after previous real estate deals were put on hold early in the COVID-19 pandemic.

4. Microsoft gears up for Atlanta westside expansion

Microsoft announced their next steps as they look to build a campus on Atlanta’s westside. But before construction starts, they want feedback from those who live and work in the community.

“Microsoft will use a 90-acre parcel of land at the westside quarry yards for their new Atlanta campus.”

However, those living in Atlanta are worried the city is bringing in more companies than it has the capacity for.

5. Tide Could Be Turning as More Firms Head Back to the Office

The national office sector is slowly healing, although uncertainty remains high and multiple factors could prevent any notable improvement in office market conditions in the near term.

“More firms are signaling a return to the office, but this doesn’t necessarily mean a return to normal.”

Many are still committed to hybrid workplace models, and it remains unclear how this will affect demand for space.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. 'In The Room Where It Happened': How FOMO Could Disrupt The Death Of The Office

Let’s get one thing out of the way: We all look at the world through different lenses. A millennial might look at things from one perspective. A Gen-X CEO could have a very different opinion.

“Right now, many Gen-Zers and millennials believe work from anywhere is the future. It’s worked for two years, and they’ve Zoomed in from Des Moines or Denver. It’s also fun to see the social media posts of people who are working full time while on the road in extremely remote locations. What a way to make a living!”

As an office tenant representative broker, I think there is a stoplight on the remote highway, however: FOMO.

2. Most Federal Workers Coming Back To Their Desks This Month, A Turning Point For RTO Movement

The long-awaited return of federal government employees to their offices is now underway, a rollout that is expected to have major implications for Washington, D.C.’s economy, boosting downtown businesses and potentially spurring more private sector office use along with it.

“After President Joe Biden said during his March 1 State of the Union address that the “vast majority” of federal workers would be returning to offices “soon,” the government is now giving more clarity on just how soon that will occur. In fact, the vast majority of federal workers are expected to return to their offices at least part time by the end of this month, a spokesperson for the Office of Management and Budget told Bisnow.”

The administration has tasked agencies with implementing their own return-to-work timelines, and many of their plans have begun to come to light. According to various media reports compiled by JLL, 15 federal agencies have released return-to-office plans with return dates ranging from Feb. 28 to June. 

3. Do Yourself a Favor and Go Find a ‘Third Place’

On a Sunday last year, I was walking through a suburban neighborhood in Pennsylvania, heading home from an early-afternoon meditation class. One of the nondescript stucco houses had a curious sticker on its mailbox reading mac’s club. I checked Google Maps to see if I was standing next to a cleverly disguised business—what might pretentiously be referred to in a city as a speakeasy—but nothing popped up, so I peeked inside the house.

“That’s where I spotted a pool table and a middle-aged guy sitting at the end of a long, mahogany bar, drinking a Bloody Mary by himself. Apparently I’d stumbled upon a social club meant for residents of the neighborhood. Though at first the bartender was incredulous that I’d just walked in, he soon rewarded my sense of adventure with a Guinness on the house. The Eagles weren’t playing in the NFL that day, and he was grateful for the additional company. We talked about the upcoming deer season, and upon learning that I was a new hunter, the two guys showed me a rifle that was kept in another room.”

On the train back to Philadelphia, where I was living at the time, I felt much more euphoric about the unexpected hangout than I did about the supposedly spiritual experience that had preceded it. To me, the ideal hangout has a few components: spontaneity, purposelessness, and a willingness among all parties involved to go wherever the conversation leads them. This one met all the criteria. Two strangers took a chance on spending an hour with an outsider—a tiny woman of ambiguous age who is sometimes told she resembles the Disney character Spinelli—who was enticed by a simple sign

4. The Challenges of Returning to the Office (or Not)

Peter Cappelli has been studying the workplace and the forces that shape it for decades. The Wharton management professor and director of the Center for Human Resources thinks the choices we face as we consider the future of work after the COVID-19 pandemic could alter the white-collar working world as we know it.

“Cappelli explores these decisions in a new book published by Wharton School Press, The Future of the Office: Work from Home, Remote Work, and the Hard Choices We All Face.”

He examines the tradeoffs both employers and employees must make to get what they want while considering what’s best for their futures. Guiding readers with an evidence-based approach, Cappelli covers the history of remote work, the vastly different experiences workers had during the pandemic, and the adjustments both employees and employers have already made in preparation for the new work world. In a call to action for both groups, he urges that we make decisions soon.

5. ‘Do Not Bet Against The U.S. Economy’: Peter Linneman On Resilience, Growth And What Lies Ahead

Courtesy of Walker & Dunlop

Economist, professor and researcher Peter Linneman has one message for the American people: Do not bet against the U.S. economy. 

“On this week’s Walker Webcast, Linneman, who is the founding principal of real estate advisory firm Linneman Associates, the CEO of American Land Fund and KL Realty, and a retired professor of the Wharton School of Business, explained to Walker & Dunlop CEO Willy Walker why he believes the economy will stay strong and what lies ahead for commercial real estate. ”

Linneman started off by saying that throughout each year of his 71-year life, he has seen seven or eight things that have threatened the economy. But despite those threats, the economy moves forward — even during the last two years as the country faced a pandemic, an economic shutdown, a divisive election, civil unrest, closed schools and more. 

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. CREi Movement List of Influential Women

I'm very excited to announce a new list from #CREiMovement - (Commercial Real Estate Influencers). This list is special as it identifies 51 amazing women who are leading and changing our industry. Bravo to these women and thanks for all you are doing to make commercial real estate better!

2. S.F.’s Transamerica Pyramid is getting a $250 million redesign, the biggest in its 50-year history

The Transamerica Pyramid is getting the biggest makeover in its 50-year history. Owner Michael Shvo and his partners have hired world-renowned architect Norman Foster to redesign the iconic tower’s interiors and plan to invest $250 million to renovate the 1972 building and expand its Redwood Park. The owners also plan to roughly double the size of neighboring 545 Sansome St. and add a new facade to create a modern office building at the cost of around $150 million.

“The plans amount to not only the largest investment in downtown San Francisco since the pandemic began, but one of the largest building redesigns in the city’s history — and to one of the city’s most recognizable landmarks.”

“We want to make this place a focal center of downtown, and make sure people come here not only to work,” said Shvo. “It will not only transform the interior of the building but the landscape and the exterior and bring life to the entire site.”

3. FBI To Relaunch Search for New Headquarters in D.C. Suburbs

The FBI's search for a headquarters outside of D.C. is back on. President Joe Biden's administration made it clear that the federal government would be consolidating the FBI's headquarters outside of D.C. in the General Services Administration's fiscal year 2023 budget request.

“The move will consolidate the federal agency’s footprint in the D.C. area to accommodate 7,500 personnel, down from the 11,000 employees the GSA first proposed in a plan released in 2016.”

The GSA said it is actively seeking a new site, and "will also begin initial steps to acquire, if necessary, the site for the new suburban headquarters location." 

4. Should you take a dog to a co-working space? I found out.

Some trips feel friendlier for pets than others. Visiting national parks or staying at your parents’ place? Go ahead and pack the kibble. Traveling for remote work? That can get complicated.

“More people than ever are working outside of a traditional office environment, and we know demand for travel with pets is growing. Last fall, Airbnb CEO Brian Chesky told The Washington Post that the company saw a significant increase in guests wanting to travel with pets during the pandemic. “Pets allowed” is now among the top search terms for amenities on the platform.”

For travelers who desire a professional work setup, co-working spaces can be a helpful solution when a coffee shop just won’t do. And given increased demand from pet owners, some spaces allow you to bring your pooch along.

5. Location over age: 1986-era Midtown Plaza nabs deluge of lease renewals

Image courtesy of Atlanta Business Chronicle

The two towers in Midtown Plaza are straddled between the past and the present. 

“The office complex at the intersection of Peachtree and 17th streets was completed in 1986, an era of rapid growth and revitalization for the district. The Midtown and Arts Center MARTA stations opened four years beforehand, and over 2 million square feet of office space went live in 1987.”

The towers have remained in place as project upon project has sprouted around them over the past three decades, from offices to condos to apartments. Yet Midtown Plaza has seen steady leasing and rent increases over the last decade. 

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Blackstone In The Market For A 1.5M SF Manhattan Office

Blackstone is planning an office expansion in New York City, which could result in the private equity firm leasing new space or expanding its current location.

“In total, the firm is looking for about 1.5M SF, Bloomberg reports, citing an unnamed source. A new lease could mean the private equity giant leaving the headquarters it has occupied at 345 Park Ave. for three decades. Taking more space in the Rudin family-owned building is also a possibility, Bloomberg report, and Blackstone is also considering redeveloping an existing building.”

Both Blackstone and Rudin declined to comment. Blackstone has about 1.1M SF of offices in Manhattan right now, per Bloomberg, though its office ownership in the city has been in flux of late. The company now owns a 49% stake in One Manhattan West, after closing on a deal this month that valued the 2.1M SF, 3-year-old building at $2.85B.

2. As People Go Back To Offices, Competition Heats Up For Parking Spots

Fuller office parking lots are a good thing. Really. They’re a sign that workers are gathering again, helping coffee shops and lunch spots recover, and adding to a sense that we’re finally—finally—emerging from the pandemic.

“Just try telling that to the office-return pioneers who feel like their VIP status has been revoked.”

“I’m very self-centered, and I want my parking spot that’s really good,” says Hunter Palmer, an attorney who works in a 55-story skyscraper in downtown Dallas. 

3. Leading an Exhausted Workforce

Have your customers been unusually irritable lately? Are people taking forever to respond to e-mails? Are friends and colleagues making surprising life changes? Have you lost focus during important conversations?

“All of these behaviors, different as they may be, are responses to the overwhelming circumstances people are facing as we move into the third year of the pandemic. Nearly everyone has lost someone or something — a job, a relationship, their peace of mind. Any hopes for a clear, definitive end to the pandemic are dashed. We are post-emergency, but still in crisis.”

Leaders aren’t therapists and shouldn’t try to be. But people are coping with collective grief and trauma on a global scale, which means leaders have to learn and exercise new skills. There are steps you can take to foster healthy coping mechanisms and discourage unhealthy ones; help ward off some of the typical mistakes that people make under pressure; and ensure you don’t cause additional anxiety on top of what people are already dealing with.

4. 50% of companies want workers back in office 5 days a week–why experts say this strategy could fail

After two years of working from home – and seeing return-to-office plans derailed by new Covid-19 variants – a growing number of companies are eager to get employees back to the office. 

“About 50% of leaders say their company already requires or is planning to require employees to return to in-person work full-time in the next year, according to new research from Microsoft, which surveyed 31,102 workers around the world between January and February. ”

This number stands in sharp contrast, however, to what employees really want: flexibility. In the same report, 52% of workers said that they are thinking of switching to a full-time remote or hybrid job in 2022. 

5. S.F.’s Transamerica Pyramid is getting a $250 million redesign, the biggest in its 50-year history

The Transamerica Pyramid is getting the biggest makeover in its 50-year history.

“Owner Michael Shvo and his partners have hired world-renowned architect Norman Foster to redesign the iconic tower’s interiors and plan to invest $250 million to renovate the 1972 building and expand its Redwood Park. The owners also plan to roughly double the size of neighboring 545 Sansome St. and add a new facade to create a modern office building at the cost of around $150 million.”

The plans amount to not only the largest investment in downtown San Francisco since the pandemic began, but one of the largest building redesigns in the city’s history — and to one of the city’s most recognizable landmarks.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. Here's why Atlanta ad agency Fitzco is returning to in-person work

Return to office plans have been fraught with fits and starts as Covid-19 variants compete against workers' desire to get back to some sense of normal.

“Advertising firm Fitzco took the plunge, calling its employees back to their West Midtown office on Feb. 15.”

It's not that the company has not been growing during the pandemic. Its workforce increased by 50% since shifting to remote work in March 2020. It hired nearly 30 employees. But the company's CEO Dave Fitzgerald says, for the ethos of the business, it was time to begin operating in person again.

2. KKR Closes on $1.7 Billion Office-Portfolio Refinancing in Workspace Bet

KKR & Co. completed a $1.7 billion refinancing of a U.S. office portfolio in a long-term bet on demand for in-person workspace. 

“The deal roughly triples the value of the real estate since 2014, when KKR invested in Drawbridge Realty, co-owner and manager of the properties. KKR expects to double the portfolio’s holdings within two or three years from its current 45 buildings in eight states in the West and Southeast. ”

The investment comes at a time when offices, especially aging buildings in urban centers, face weak demand as employees continue to work from home and businesses re-evaluate their space needs. KKR’s portfolio focuses on suburban properties in markets with strong technology employment and population growth, according to Billy Butcher, chief operating officer of the firm’s global real estate business.

3. REITs Hit Record $126B In Capital Raised

Real estate income trusts had their best year ever — and it only took three quarters to do it. U.S. REITs raised more than $126B from equity and debt offerings, plus initial public offerings, during the first three quarters of 2021, more than any other full year, according to a new Nareit report. The final tally for 2021, once fourth-quarter figures are added, will be even higher, the organization says. 

“As of Q3 2021, equity issuance by REITs totaled more than $54B. The bulk of that was from $33B raised via common equity offerings, but it also included $15B raised in at-the-market offerings and $6B raised through preferred equity offerings. Total equity raised in 2019 was $50B, with $33B raised in 2020.”

Debt issuance by REITs in 2021 totaled $73B raised at the secondary market, roughly the same as in 2020 but more than the $63B raised in 2019. A majority of the debt, 57%, was raised in the form of secondary debt, with 38% from secondary common equity and 5% from secondary preferred equity, according to the report.

4. Commercial, Multifamily Lending Hits Yearly Record With $1 Trillion in Sight

Commercial and multifamily mortgage loan originations hit a record high last year at $900 billion and may not be done climbing, according to the Mortgage Bankers Association’s quarterly survey released this week.

“Even while the capital markets are widely anticipating the Federal Reserve will start raising interest rates as early as next month, the MBA expects the volume in 2022 to surpass last year’s new high. Total commercial and multifamily mortgage borrowing and lending is expected to break $1 trillion for the first time in 2022, a 13% increase from 2021’s estimated volume.”

“Part of the growth from 2020 was a bounce-back from the worst of the recession. However, rebounding property fundamentals and strong valuations, record sales transaction volumes, and low interest rates all fueled commercial and multifamily borrowing and lending activity that easily outpaced previous periods,” Jamie Woodwell, MBA’s vice president of commercial real estate research, said in a statement.

5. Developers Can’t Build Atlanta Warehouses Fast Enough

Atlanta’s industrial market continues to post record leasing and net absorption totals as industrial users look to expand their logistics networks in this super regional distribution hub.

“Despite a strong speculative supply pipeline, demand has consistently outpaced new completions over the past few quarters and the region’s vacancy rate has plummeted far below its historical average.”

While speculative supply will put some upward pressure on Atlanta’s industrial vacancy rate in the near term, owners have plenty of breathing room before Atlanta industrial vacancies come even close to the metropolitan area’s pre-pandemic average. Due to the unusually tight market, owners are enjoying unprecedented pricing power in Atlanta and continue to push rents. Double-digit annual rent growth is expected to persist through the end of 2022.

Your success blesses others. I wish you a great and hugely impactful week!

Power Reads: 5 Interesting Articles That Will Help You This Week

Each week, I select a few articles that rise above the fray and hopefully help you on your journey in leadership and the CRE world. They pull from one of four "corners": corporate real estate, technology, management science and anything positive. Each day we can become a better version of ourselves.

1. It’s not about the office, it’s about belonging

Leaders are increasingly worried about the impact of the past 20-plus months on company culture, connectivity, and cohesion. Our recent Great Attrition survey justifies their concern. More than half of employees who left their job in the past six months did not feel valued by their organization (54 percent) or manager (52 percent), or they lacked a sense of belonging (51 percent). Additionally, 46 percent cited the desire to work with people who trust and care for each other as another reason to quit. Employees want stronger relationships, a sense of connection, and to be seen.

“While leaders recognize these issues, their responses are missing the mark. Many leaders (52 percent) want an in-office workweek of four to five days to strengthen connectivity and collaboration. However, a return to the office will not necessarily solve the problem. In fact, without other significant actions, it could even backfire. The world has changed, and employee attitudes have shifted. To build community, cohesion, and a sense of belonging, organizations need to evolve their approach.”

With ample evidence that remote work is both convenient and productive, many employees are asking why they should go to the office at all. The office is becoming the new “off-site.” It needs to be planned and purposeful, with clear articulation of the benefit. Leaders should carefully consider who needs to attend and why, the objectives, the activities, and how to craft a structured agenda that still leaves room for emergent topics, spontaneous conversation, socializing, and collaboration. Consider a recurring schedule, like “Team Wednesdays” for social lunch and group problem solving, while remaining flexible to changing employee needs. Give employees a reason to want to come in!

2. Forget the Office—Salesforce Is Making a Wellness Retreat for Workers

Reinvigorating corporate culture and employee enthusiasm at Salesforce. com Inc. after nearly two years of remote work will involve the great outdoors as much as returning to an office.

“The software giant signed a multiyear booking agreement for a 75-acre retreat set among the redwoods in Scotts Valley, Calif., to create an employee work-and-wellness center for its nearly 70,000-person staff.”

Salesforce plans to use the property 70 miles south of San Francisco to onboard new hires and conduct off-site team meetings for social bonding and leadership training, said Brent Hyder, chief people officer.

3. Damn The Pandemic, Full Speed Ahead: U.S. Office Absorption Turned Positive In Q4

Nationwide office net absorption turned positive in Q4 for the first time since 2019, according to quarterly reports from brokerage houses CBRE, JLL and Lee & Associates. Though Cushman & Wakefield data showed U.S. offices still posting negative net absorption in Q4, it was easily the smallest increase in vacancy the company’s data showed since the beginning of the pandemic. Bolstering the sector’s outlook further is that the positive trends happened despite Q4 seeing the tail end of the delta variant and the emergence of the omicron variant.

“Despite the coronavirus continuing to wreak havoc on office-using companies’ plans to bring their employees back to in-person work, many of them pushed forward with laying out the future of their office usage anyway, the reports found.”

“We are just as busy now as we were pre-pandemic, and a lot of our clients are saying, ‘We’ve delayed these decisions for 18-24 months, and now we want to do something,’” said Ernie Jarvis, founder and CEO of tenant-focused brokerage Jarvis Commercial Real Estate. “So the planning stage is happening now.”

4. A new attitude toward the pandemic seems to be taking shape. But we’ve been here before.

Andrew Markert respects the coronavirus. It has messed with his livelihood, a D.C. pub called Beuchert’s Saloon, forcing him to close, move outdoors and adjust in countless other ways.

“But the time has arrived for him to move forward and stick to his plans, come what may in the next round of the pandemic. And he’s betting there are a lot of people like him.”

So Markert plans to open not one, but two new restaurants in the next couple of months — Fight Club, a few doors down from Beuchert’s, in February and the upscale Newland around the corner in April.

5. How To Want Less

Illustration by Paul Spella

I glanced into my teenage daughter’s bedroom one spring afternoon last year, expecting to find her staring absentmindedly at the Zoom screen that passed for high school during the pandemic. Instead, she was laughing uproariously at a video she had found. I asked her what she was looking at. “It’s an old man dancing like a chicken and singing,” she told me.

“I came over to her laptop, not being above watching someone making an idiot of himself for 15 seconds of social-media fame. What I found instead was the septuagenarian rock star Mick Jagger, in a fairly recent concert, croaking out the Rolling Stones’ megahit “(I Can’t Get No) Satisfaction”—a song that debuted on the charts when I was a year old—for probably the millionth time. An audience of tens of thousands of what looked to be mostly Baby Boomers and Gen Xers sang along rapturously.”

“Is this serious?” she asked. “Do people your age actually like this?” I took umbrage, but had to admit it was a legitimate question. “Kind of,” I answered. It wasn’t just the music, or even the performance, I assured her. To my mind, the longevity of that particular song—No. 2 on Rolling Stone magazine’s original list of the “500 Greatest Songs of All Time”—has a lot to do with a deep truth it speaks.

Your success blesses others. I wish you a great and hugely impactful week!