Working From Home is Good, Actually, Pt. 2

There's another element to the argument against remote work -- corporate rentiership

One of the biggest problems facing the economy today is that many of the office towers that were bought up before the pandemic remain empty. This means that billions of dollars — almost a trillion, in fact — are tied up in a corporate rentiership scheme that threatens almost every business in the American economic landscape. Some people might think it’s limited to office towers and massive buildings, but it’s not: every corporate landlord who rents out a restaurant or an office space in your local downtown is charging a premium on rent right now because the entire market is inflated. Just look at San Francisco — with businesses like the beloved Curbside Cafe shutting down after multiple decades of service — it’s not because their profit margins were too thin or because they were bad at business, but because their corporate landlords were charging too much to rent in the city. This is happening to everything, everywhere, all at once, and it’s creating a nightmare for small businesses trying to get by.

Try looking around your local neighborhoods and see how many of the office buildings are lying dormant. According to official estimates, some cities like San Francisco are seeing vacancy rates as high as 25% while the official vacancy average sits anywhere between 12% and 20%. It’s not sustainable in the long term to have all these office buildings sit empty, and it’s not going to change any time soon with the rise of remote work. But rather than charge a vacancy tax or attempt to wrestle control of these offices back from the clutches of the typical corporate landlord, city councils are sitting on their hands waiting for something to spark. It’s leaving the typical small business owner feeling uneasy, especially in the pit of their wallet.

This issue affects everyone, from remote workers to pensioners to small businesses. Even the banks are feeling the burn — as many of the corporations looking to become high profile landlords took out massive loans to pay for their business startups — leaving them holding the bag when the payees go belly up. Not only are small businesses directly affected by how much the market is charging for rent, but people with pensions often have their portfolios diversified into assets like office buildings, as noted in an article at the Atlantic.

The thing that the New York Times misses in their article about the looming office building disaster is that the craftsmen and trades and department stores didn’t just leave the inner city by choice, they were forced out by corporate rent seeking, as the only people who could afford to stay in the inner city downtowns were the big corporations with the money to rent office space. That’s why so many skyscrapers are just offices in the big city, not because of some magical desire to leave. These places could be thriving, bustling centers of commerce and people, but instead end up being — as described in the article — a brutalist monoculture where the zombified nine to five workforce is forced to tread. There are plenty of ways to tackle this issue, but without the standing of the local city council and the state government, these office buildings will remain empty for the better part of the next half decade, waiting for some incredibly expensive businesses to snatch up their rent only once the market for office buildings collapses.

There’s a simple solution — convert as many of the offices into apartment buildings as we can — but not every office space can be easily converted, and very few councilpeople sitting on the councils of major cities are interested in seeing these turn into multi-year development projects, despite the fact that it would solve everyone’s problem. It would create a large population of people in the city in need of services, so the department stores could come back and the tax brackets in the city would be elevated to an even greater level than what they were before. As noted in the Atlantic, corporate office buildings in New York make up nearly 40% of the municipal government’s tax revenue, or 16% of its total. That’s a staggering number to lose out on so suddenly, and it’s creating a real problem for city councils with a myriad number of solutions that won’t be taken up any time soon. At least not before the banks start foreclosing on assets.

This would also fix the retiree problem: rather than force the average pensioner to divest from office buildings and commercial real estate altogether, they can instead invest in making commercial real estate into affordable housing, which will in turn generate massive amounts of revenue where there was little previously. The same article in the Atlantic says as many as 30% of them could be converted, unfortunately leaving the other 70% in the hands of corporate landlords — either to be demolished or retrofitted for other purposes. At least it’s better than the alternative of leaving them permanently empty. With a vacancy rate of 20% and climbing, America’s cities don’t really have an option when it comes to finding a solution. Either they start turning office parks into mixed use suburbs, or they’re going to quickly learn about their revenue gaps the hard way.

In addition, it would solve the problem that’s facing most downtowns: revitalization. Both the Atlantic and the NYT note that ridership numbers are down for major transportation services like the ones in New York and San Francisco, and that tax revenue from small businesses took a major hit during the pandemic. Creating new storefronts and services for people moving into new affordable housing solves every problem all at the same time. It even creates walkable cities — that fifteen minute city that every conservative was crying about just last week — allowing for all the goods and services that a person needs to be within fifteen minutes of their front door.

If all of this is a slam dunk, why aren’t city councils doing it? Well, most city councils are run by NIMBYs and conservatives who believe that revitalizing the downtown area is something that either shouldn’t be done or outright can’t be. They’re too busy approving new cop budgets and pouring money into police departments who are worried about property crime, despite the fact that little to no property crime occurs. If all the city revenue in New York is eaten up by the NYPD, even if they start levying massive amounts of (mostly fraudulent) tickets, it won’t make up for the budget pitfalls they themselves have created. The only way to do that is by divesting from massive, bloated police budgets and investing in public infrastructure.

Put simply, remote work is good, actually, and what it’s doing to the corporate office culture isn’t just going to hurt the bottom line of corporations who don’t play ball. It’s going to help end a subset of corporate landlordship that should never have existed to begin with. Creating walkable cities is only the beginning.