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. REPORT: Office Tenants Have The Advantage To Get More Demanding In 2023

Commercial property tenants have gained enough of an upper hand in lease negotiations that the structure of new leases will see some significant shifts in 2023, according to CRE software specialist Quarem, a cloud-based commercial property platform that organizes and tracks lease data.

“Specifically, Quarem reports that lease terms for both renewals and newly leased space will continue to decrease and tenants will negotiate hard for more defined force majeure language and expanded concessions.”

Termination options have also moved from popular nice-to-haves to nearly imperative for tenants, especially if a longer-term lease is the landlord's objective. 

2. Some Firms Backtrack On Work-From-Anywhere Policies

Last week, software titan Salesforce — which owns Slack, the tool that enabled workplaces everywhere to be “from anywhere” the instant the pandemic hit — joined the ranks of Snap, Twitter and Comcast in telling some employees to return to in-person work after previous work-from-anywhere policies.

“Companies are continuing to tinker with their return-to-office policies, with a focus on which version of hybrid work will help them to retain employees in a bid to boost productivity and revenues as employers anticipate a mild recession in 2023. Workers may find themselves on the receiving end of stricter enforcement of in-person working days next quarter, experts told Bisnow, as employers seek to crack down on remote work in the hopes of boosting productivity and profit.”

“I think a lot of it depends on earnings and how companies are doing, especially with a looming recession," said Julie Whelan, CBRE's head of occupier research for the Americas. "And that's when you'll start to see companies maybe change stance, if they feel that their performance is faltering and that it has something to do with folks that are not coming into the office.”

3. 5 Questions for Business Leaders to Ask in Uncertain Times

These days, it feels like we are living in the business world’s version of Billy Joel’s 1989 hit, “We Didn’t Start the Fire.” Inflation, geopolitical tensions, energy shortages, labor shortages, employees’ evolving expectations, rising interest rates, increasing cyber and data risks, insatiable investor expectations — the list goes on. Just like the song says, today’s business leaders did not necessarily create this economic environment by ourselves, but it is ours to address and lead through.

“In spite of the headwinds, I see many business leaders and those charged with governance leading well. In fact, based on what we see in our client base, I’d argue that the glass is half full. Why? Not because we are naive to the multiple challenges businesses face today, but because we see resiliency, change agility, and innovation all the time and across all industries.”

So, what are today’s leading businesses doing? They are keeping it simple and are focusing on what they can control. They are working hard to grow operating revenues more than they are growing operating expenses. How? As I talk with CEOs, the commonality between companies is striking. Many are focused on the following five questions…

4. Goldman Sachs Plans Thousands of Layoffs, Expects to Eliminate Some Bonuses

Goldman Sachs Group Inc. is planning to lay off several thousand employees, according to people familiar with the matter, another consequence of this year’s deal-making slump.

“A person familiar with the situation said the bank will be leaner in 2023, but it will still have more employees than it did before the pandemic. Goldman had some 49,000 employees as of September, up from about 38,000 at the end of 2019.”

Goldman also expects to slash, and in some cases eliminate, the annual bonuses of underperforming employees, people familiar with the matter said.

5. Why Returns on Digital Real Estate Don’t Compute

The internet never forgets. Well, at least it has a very long memory, so that silly selfie from five years ago, your old bank statements and the flight reservations for next summer’s big vacation all have to live somewhere. Odds are they live in northern Virginia.

“Handling the explosion of data and cloud computing are hundreds of nondescript buildings filled with servers, kept at a constant temperature and humidity and hooked up to massive power lines. For reasons including utility connections and zoning rules, the region south of Washington, D.C. is now bigger than Silicon Valley as a host for our digital lives. It is approaching 2 gigawatts of capacity, according to real estate services company Cushman & Wakefield PLC—enough to power 1.5 million homes.”

The biggest creators and processors of all that data are known in the business as hyperscalers—Alphabet Inc.’s Google, Amazon.com Inc.’s Amazon Web Services, Microsoft Corp.’s Azure, Oracle Corp., Facebook owner Meta Platforms Inc. and Apple Inc. They spend heavily on their own data centers, but their needs are so massive that they have also outsourced tens of billions of dollars in investment in digital real estate to specialized investors.

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