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Economic Conditions - Nashville, TN, U.S., Global


Mr_Bond

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Interesting article in the USA today on the slight shift being seen in WFH world. A poll shows 23% entirely working from home, 25% hybrid and 52% entirely back. 22% of companies have no return to office plan down from 31% earlier in the summer. With the looming economic downturn companies are using the tightening job market to push for some amount of returning to the office. The folks who quit, if pushed to return, automatically trim the workforce.  Just my experience, the parking garage at my office is a noticeably a little bit fuller every week.  The Fooda lunch service, in my building, has added Mondays to the Tues.- Thurs. normal of the last year. I read somewhere a boss complaining about why should he pay folks working from home the same as those coming into the office? WFH is here to stay but it is evolving, which is a good thing if you want to see more office buildings built.

Edited by Nash_12South
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WFH will not survive a recession (layoffs). The people working from home will be the first to go, as they are out of sight and out of mind. You can debate the merits all you want, but management generally views that WFH is for lower achievers. The job market has been so strong for the past 2 years that it hasn’t mattered (and still might be strong), but I wouldn’t expect WFH to be the norm going forward. Hybrid, sure. 

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2 minutes ago, natethegreat said:

WFH will not survive a recession (layoffs). The people working from home will be the first to go, as they are out of sight and out of mind. You can debate the merits all you want, but management generally views that WFH is for lower achievers. The job market has been so strong for the past 2 years that it hasn’t mattered (and still might be strong), but I wouldn’t expect WFH to be the norm going forward. Hybrid, sure. 

None of us have a crystal ball, but you could just as easily argue the opposite:

Fully in-office work will not survive a recession. Expensive, underutilized office space will be the first to go, as its amorphous culture benefits are outweighed by its concrete costs. You can debate the merits all you want, but professionals generally view WFH as a major benefit, and companies that require office attendance will lose some of their most valuable employees. Many companies continue to micromanage employees and require daily cubicle commutes, but I wouldn't expect those companies to succeed against more agile, future-focused companies going forward.

Thankfully, Nashville is well-positioned to survive an office downturn. Our downtown is developing a good mix of office, residential, retail, entertainment, and is better diversified than many other cities. (See this fascinating NYTimes data from a few years ago).

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I agree that a full in office work style is history, but a lot of what I hear is that hybrid is where we are landing. Most, even forwarding thinking companies are seeing a lack of creativity with folks staying home all the time. Drudge style work is fine from home, but not all work is that type. Also, most office leases are 5 to 10 years, so a lot of companies will still have office space for a while and will try to find creative ways to lure folks in. It won't be either or, but a hybrid, and downtown Nashville will be in a good spot.

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2 hours ago, Luvemtall said:

Just a little FYI . My wife and two of my children all work in banking , during the Covid period they all had the WFH options. But in the recent weeks ,  all 3 different banks they work for have told their employees that WFH is coming to a end . It’s just not as productive and they see many employees taking advantage of not being in office, and numbers not meeting goals. I tend to agree that if a company is paying you , you need to be there where they can see you and manage your productivity. I mean there’s no way a doctor can not be in office, or truck drivers not showing up to drive , cooks not there cooking, etc. just because you work in a office and on a computer, shouldn’t be a reason that you don’t need to be present. Get your butts into your job, and earn your paycheck just like it’s always been. People are just becoming to lazy, and privileged. 

You’re right but no one wants to hear it. WFH is fine for some jobs, but if you are getting paid >$100k, you’re gonna need to show your face. 

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30 minutes ago, natethegreat said:

You’re right but no one wants to hear it. WFH is fine for some jobs, but if you are getting paid >$100k, you’re gonna need to show your face. 

IMO most jobs making over 100k need little facetime or can be done over zoom.  Very few of my over 100k friends are putting in more than 1 day a week at the office. 

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3 hours ago, Luvemtall said:

Just a little FYI . My wife and two of my children all work in banking , during the Covid period they all had the WFH options. But in the recent weeks ,  all 3 different banks they work for have told their employees that WFH is coming to a end . It’s just not as productive and they see many employees taking advantage of not being in office, and numbers not meeting goals. I tend to agree that if a company is paying you , you need to be there where they can see you and manage your productivity. I mean there’s no way a doctor can not be in office, or truck drivers not showing up to drive , cooks not there cooking, etc. just because you work in a office and on a computer, shouldn’t be a reason that you don’t need to be present. Get your butts into your job, and earn your paycheck just like it’s always been. People are just becoming to lazy, and privileged. 

Landscapers and farmers can't do their job indoors. Just because someone works at a bank shouldn't be a reason for them to work indoors.     Logistics and Transportation have to work holidays, so just because someone works at a bank doesn't mean they should get all minor/major holidays off.

Why is someone that gets to WFH not earning their paycheck? Sure it could be laziness or privilege for some people, but there are also people that like it for other reasons. For the 3 days I work from home I get at a minimum 1 1/2 more hours with family. I save on gas money. Both of those equal less stress. Then I also don't have to deal with office distractions due to walk-bys, chatty coworkers, etc.  

Edited by bigeasy
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20 hours ago, dmillsphoto said:

I've worked from home for five years now, but I am also customer facing. But I don't show my face at the office cause the closest one is in Chicago or St. Louis. I don't think you or @Luvemtallcan paint with such broad brushes. Some industries work well from home, some don't.

Well said--and I agree with this.

I work in the NYC market, and we have a huge office in a major skyscraper in the city, and barely 10% of work staff show up a few days per week. There is not a policy or mandate to go into the office, although it is encouraged, if you want to. 

Most of my work is more productive at home, and I am also client-facing. In-office work has its own share of multiple distractions. 

I realize that a lot of companies are stuck between a rock and a hard place, when it comes to this current work environment. Costly office space that is under-utilized and sitting mostly empty, but not forcing workers back because they risk many resignations. That's the fine line that is being walked right now.

 

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I know there are problems in NYC now with affordability not only with residential, but office vacancy and retail vacancy are starting to be a real issue there. I did notice that Century 21 clothiers is opening back up in their original location. I can't help but wonder if they didn't get a huge discount on the rent. There are a lot of vacant spaces around Times Square and even on 5th Ave and Park Ave. 

Even over in Queens Astoria noticed a lot of closed stores. I follow some youtubers there.

 

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8 hours ago, smeagolsfree said:

I know there are problems in NYC now with affordability not only with residential, but office vacancy and retail vacancy are starting to be a real issue there. I did notice that Century 21 clothiers is opening back up in their original location. I can't help but wonder if they didn't get a huge discount on the rent. There are a lot of vacant spaces around Times Square and even on 5th Ave and Park Ave. 

Even over in Queens Astoria noticed a lot of closed stores. I follow some youtubers there.

 

All the unused office and retail space in NYC and other major cities should be converted to short term housing (not short term rentals aka bachelorettes!). It's wasted space making no money and could be an alternative, particularly for class C and B office. 

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I WFH and almost the whole company is remote. I'm customer facing for clients across the country so if I wasn't on Zoom they'd have to fly me all over the place and waste tons of my time with travel (and also I'd quit).

17 hours ago, nashvylle said:

All the unused office and retail space in NYC and other major cities should be converted to short term housing (not short term rentals aka bachelorettes!). It's wasted space making no money and could be an alternative, particularly for class C and B office. 

IIRC there are a lot of physical problems with converting office buildings to housing. Stuff like, in an office building a lot of the plumbing infrastructure is in a central core and not spread across the whole floor, HVAC isn't necessarily designed to be segmented by small units, etc.

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19 minutes ago, GregH said:

IIRC there are a lot of physical problems with converting office buildings to housing. Stuff like, in an office building a lot of the plumbing infrastructure is in a central core and not spread across the whole floor, HVAC isn't necessarily designed to be segmented by small units, etc.

Flip side of this is that most commercial buildings have ~50% higher floor-floor heights than typical residential buildings, leaving some room to build out residential-specific infrastructure above/below.

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  • 2 weeks later...
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The owner of two hotels in downtown San Francisco has stopped making loan payments and turned over the keys to the loan owner, JP Morgan Chase.

https://www.bizjournals.com/sanfrancisco/news/2023/06/05/park-hotels-cmbs-hilton-union-square-moscone-pk.html?ana=RSS&s=article_search


This is significant because the properties' combined 2016 valuations was $1.56 billion, and the outstanding loan balance is $725 million. The owner had previously tried to sell the properties but was unable to finalize a deal. In my opinion it looks like property values have decreased so much since the 2016 valuation that the owner is currently underwater on the loan. I'm sure San Francisco's market conditions exacerbate the issue, but I wouldn't be surprised if we see similar stories come up in the CRE market around the country in the next year.

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26 minutes ago, Argo said:

Let's all click our heels together and collectively say: "The adults are in the room", "The adults are in the room", "The adults are in the room".

I get the feeling that my personal concept of what constitutes behaving like an "adult" are dramatically different than yours.  

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It’s stories like these, that set the unnecessary frenzy in motion. Just like the bank issue a few months back, everyone got all sorts of wrong information and started panicking about nothing. Every deal and situation is different, and without knowing the TRUE FACTS of the matter, it’s best not to speculate on what might not be happening. It could be just a in house problem that goes no further than that. Stop trying to make everything look worse than it is, and spreading the doomsday narrative. 

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14 minutes ago, Luvemtall said:

It’s stories like these, that set the unnecessary frenzy in motion. Just like the bank issue a few months back, everyone got all sorts of wrong information and started panicking about nothing. Every deal and situation is different, and without knowing the TRUE FACTS of the matter, it’s best not to speculate on what might not be happening. It could be just a in house problem that goes no further than that. Stop trying to make everything look worse than it is, and spreading the doomsday narrative. 

I'm not trying to spread any doomsday narrative - if my post came off that way, it wasn't my intention. You're absolutely right that every situation is different. The article says that it may be market conditions in San Francisco, the hotel's occupancy rate, rising property crime, or a number of other things. But I do think properties were overvalued when debt was cheap for the last few years. And as a result of that along with rising rates, some owners/investors will have to pivot their strategy. Once again nothing doomsday level, but I'm interested to see how the market shifts. Personally I hope we see more movement towards centrally located multifamily housing developments instead of offices.

For my own personal speculation: I really do believe Nashville would fare better than most cities if the market shifts. I think our hotel and multifamily housing demand is still looking great, if anything maybe we'll shift from "overheated" to "normal" demand.

Edited by colemangaines
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Sorry bout that Colemangaines, wasn’t directing my post at you . It was more a in general kinda thing, and I didn’t realize that it would come over as it might have. I also believe that right now , things in Nashville are going a bit different ( better maybe ) than elsewhere. Let’s hope for the best, there’s a lot of great things in Nashville’s future.

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