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. After Covid-19, Office Leases Largely Come With Bargain Rates
Big companies are making plans to stick with city-center office buildings, but they are cutting back on space and driving down rent prices for years to come, according to an analysis of U.S. office leasing trends prepared for The Wall Street Journal.
The Journal’s leasing information comes from the data firm VTS, which tracks tens of thousands of negotiations across the U.S. between landlords and tenants. Landlord and tenant discussions in seven of the largest office markets offer an early glimpse into the evolving workplace strategies for hundreds of companies after a year of largely remote work.
Rent proposals made during the first quarter suggest that many companies in the biggest markets—including New York, San Francisco, Chicago and Los Angeles—are embracing an emerging hybrid model: maintaining a shrunken office presence while allowing employees to work remotely at least part-time.
2. The Great Return: What Google, Amazon, Wells Fargo And Goldman Sachs Are Getting Right About The Office
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Each day last week another well-known company announced plans to return to the office, and they are doing the right thing. While working from home has been critical to business continuity during the last year (or year and a half!), it has not been without drawbacks, difficulty and decline. The office will be an important element for the future of work.
On Monday news broke that Goldman Sachs would proceed with their internship program, allowing interns to work in Goldman Sachs offices. On Tuesday, headlines announced Wells Fargo would bring employees back to the office in the fall. Wednesday, stories covered the announcement on the part of Google that they would limit future remote work. And on Thursday news outlets announced, Amazon would return to an “office centric” work culture. What a week.
We’ve learned a lot through the pandemic and companies will be wise to take those lessons forward for employee wellbeing, fulfillment, happiness and performance. Providing choice and flexibility is good for people and motivates their engagement. Being empathetic to employee needs has a positive effect on people’s mental health and productivity. And focusing on the bigger picture of the work experience—within and outside of the office—is important to the future of work. Studies show hybrid work models are likely here to stay. It will be a both-and: Being in the office together has compelling and undeniable benefits for people and for companies.
3. U.S. services sector gauge scales record high; cost pressures mounting
A measure of U.S. services industry activity surged to a record high in March amid robust growth in new orders, in the latest indication of a roaring economy that is being boosted by increased vaccinations and massive fiscal stimulus.
The upbeat survey from the Institute for Supply Management (ISM) on Monday followed news on Friday that the economy added 916,000 jobs last month, the most since August. Economic growth this year is expected to be the best in nearly four decades.
“Vigorous services activity in March sets the stage for robust expansion in the second quarter,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. “All the right pieces for a faster services recovery – expanded vaccine eligibility, reopenings, and historic fiscal expansion – are falling into place.”
4. REITs In 2020's Hardest-Hit Sectors Bounce Back As Economy Roars To Life
After a year of existential crisis, the portions of commercial real estate hit hardest have begun writing their comeback stories.
A potent mix of the coronavirus vaccine's accelerating rollout and the $1.9 trillion stimulus package signed into law in mid-March sent every economic indicator skyward, from a massive boost in official job numbers to a record in services industry activity, according to Institute for Supply Management data reported by Reuters.
The March explosion capped off a positive month for real estate investment trusts focused on the most embattled CRE sectors, The Wall Street Journal reports. REITs gained 9% in value over the first quarter, compared to 6% for the S&P 500, according to data from Green Street Advisors reported by the WSJ. Hotel-focused REITs gained 18% in Q1, and shopping mall REITs gained an eye-popping 32% over that period.
5. Despite pandemic, Google announces massive Bay Area expansion plans
COVID-19 and the rise of telecommuting have raised questions about declining demand for office and housing growth and a possible mass exodus out of the Bay Area. But for Google, the plan is to stay the course and grow fast.
In an announcement Thursday, Google officials say they plan to invest a whopping $1 billion in new and existing sites across California in 2021 alone, much of it centered in the Bay Area and Los Angeles. Nationally, the company anticipates creating 10,000 new jobs and investing $7 billion into its growth plans.
Google CEO Sundar Pichai said in a statement that the expansion is a means to support state and local economies rebounding from COVID-19 which, paired with tight public health restrictions, caused a huge spike in unemployment and deep deficit spending.
Your success blesses others. I wish you a great a hugely impactful week!
