Zombie Tower Office Buildings

By Dan Harkey

One of the significant unintended consequences of the COVID-19 lockdown, which some consider to have been implemented under questionable false circumstances, was the need for clearer communication and the suddenness of the measures. These consequences came back to haunt some of the most prominent perpetrators in the U.S. They are the mega-giant investment firms considered systemically too essential and, therefore, exempt from many devastating consequences.

Amidst the economic challenges that forced many to work from home, a remarkable adaptability was demonstrated. Individuals found ways to work remotely, bypassing the need for a physical office. This shift to remote work, now the norm for tens of millions, including myself, has shown that we can be more efficient and productive than in a traditional office setting.

The benefits of remote work are numerous and significant. They include reduced traffic, the flexibility to work at the most productive hours, increased productivity, freedom from company politics and ideologies, and self-reliance. This shift has allowed many, including myself, to work in a way that suits our natural rhythms, such as being a morning rather than a night person. I am usually up by 4 am.

The economic implications of this shift are profound. Once bustling with activity, tower office buildings now stand empty and obsolete. The lack of demand for office space and a higher interest rate environment have intensified the strain on owners. Thousands of buildings need help to stay afloat, with some losing 50% or more of their value.

Despite the challenges posed by the remote work trend, major owners like Brookfield, Blackstone, and Starwood Capital Group are showing remarkable resilience. Many have chosen to adapt by abandoning older towers in downtown areas. This resilience is a testament to the potential for change in the real estate market.

Renovations or repositioning of the building need to be revised. How about a 345,000-square-foot office building in Baltimore selling for 4M dollars or $12 per square foot? Some argue that progressive-leaning governments exaggerate the crashing prices, overlooking crime-ridden metro areas like Baltimore, Los Angeles, San Francisco, Oakland, and Seattle. However, it's essential to consider the complex factors in these cities' economic situations. There is no end in sight, and we will only be if the current leadership, which some consider to be making irrational decisions, is replaced and the rule of law (law and order) is reestablished.

Leaving urban blight and moving into suburbs is the “Shifting Landscape.” This shift presents an opportunity for positive change in urban development. Nothing will change without eliminating metropolitan cities' crazy leadership, which has adopted the ideology that no (almost) criminal act will be punished. ?

Thank you

Dan Harkey

Educator & Private Money Lending Consultant

949 533 8315 [email protected]

Visit www.danharkey.com

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