Corona Killed the Office


Here I was in my kitchen on my laptop, shorts and a t-shirt listening to the PM of St. Lucia talk from his deck in his t-shirt and shorts on a zoom meeting. At that moment, I realized the office is dead.

All hail the new efficiency

All hail vastly reduced corporate G&A

All hail shorts and old t-shirts

Death to business travel, ironing suits with hotel irons for 7am breakfast meetings

Spiral interfloor staircases

Paid parking spots and hour plus commutes

Crappy office cappuccino makers and florescent lighting

Being too hot or too cold

Shoes that hurt

And all that goddamn wasted time chatting

From our  socially distanced masked faces and permanent Plexiglas barriers, we will remake the world with floor arrows guiding us to a new age, the age of efficiency.

Arrows on the floor, what did we ever do without them?

When the fog from wearing our masks too long starts to lift, CEOs and their CFOs will be left scratching their heads surprised they hit the Q2 numbers and their eyes will focus on one thing. Office overhead. Open offices were foisted upon workers as an idea to increase productivity and accountability in the office. The response was actually due to rising per square foot office costs and the associated common area maintenance fees.

And when these CFOs and activist shareholders start to see how much corporate offices actually cost, corporations will abandon them in droves, leaving the entire commercial building sector in shambles.

Cost items in a typical office:

  • Office lease
  • Common area maintenance (CAM) fees (which are generally about the same as the price per square as the lease)
  • Lighting and heating costs
  • Commercial grade internet
  • Office furniture (desks partitions, chairs keyboards, monitors, PCs, printers, fridges, coffee, coffee machines, paper, pens, stationary, janitorial costs, reserved parking, client meeting expenditures, mileage, security, IT support, etc.)

Adding to millions of dollars in wasted overhead.

A remote employee can work from anywhere on a sub $1000 laptop supplied by the company or in some cases BYOD (bring your own device). The Q4 question is what justifies CEOs keeping the company downtown office?


With some of the major tech companies like Twitter, Amazon, and Facebook announcing a permanent working from home state- it should concern REIT office investors. The niche that these companies occupy are small vs the overall office segment but think about what kinds of work is done in offices- professional services and management firms, finance and insurance tenants, government and government agencies. All of these were being run from home with no office space required.

The effects of mass numbers moving to virtual offices, won’t happen immediately, a typical office lease is 5 to 10 years. That continuing revenue flow, secures at least a majority of the cash needed to meet the REIT distributions. The first sign that office owners are in trouble is chronic vacancy rates, not on office tenants but those collateral retail and restaurant businesses in those buildings. Any downtown businesses with revenue dependent mainly on office workers is in risk of closing or default. If office distancing was implemented at any scale, it would be ridiculously expensive to maintain and operate that space. I am not working in a plastic safety bubble.


If offices are dead, downtown is truly dead. But there is some light and a couple of investment plays investors could anticipate. Affordable housing has been a cause long championed by major cities in the US and Canada. What the bureaucrats don’t get is that affordable housing needs scale for the developers numbers to work and density to have any impact on affordability percentages. The city of Miami is finding this out that the hard way, with an affordable housing program based on duplex’s. A duplex here or there will not solve or stem the problem. But there could be a better way, to solve several of these problems. The effort has to be high density and has to be numerous to make a meaningful impact. But building a multifamily building in a major metro is expensive and time consuming. For the numbers to work, the resulting buildings would have to be built in commuter towns and far off communities. Increasing the need to connect transit to these places or increase transit throughput would be very expensive for cities with little incentive to do so.

Rather than let these vacant office buildings fall into disrepair, municipalities could offset the developers buying the buildings with land transfer tax discounts. For office buildings owners, offset their losses with a mix of tax incentives. Then have to fed buy those leases from building owners at a discount for a limited time. Then credit rate those cash flows, SPV them and sell them in the market. Basically a CMO for rents. A simple program like this would solve the orderly windup of many Office REITs and office owners, solve affordability issues in major cities and give new life to downtown’s across north America. The market would not have to worry about cannibalization of the single family or multifamily sectors because those families wouldn’t qualify to live there.