Work from Work businesses are panicking: the companies that rely on company offices
Can hear a pen drop in the office lobby... Yesterday, we talked about Twitter's decision to let its employees work from home forever (AKA, permanent optional WFH). Today, we're looking at the companies that could lose out most if enough employees don't return to offices. Let's start with a bankable example:
- Before corona-crisis: JP Morgan, Morgan Stanley and Barclays were some of NYC's largest commercial tenants, shelling out major moolah on rent for employees in glassy 50-story skyscrapers.
- Now: Everyone's WFH, and all 3 banks say that it's very unlikely all employees will return to offices, even post corona-crisis. Research firm Nielsen expressed a similar view, per NYT reporting.
Some companies/employees are getting comfortable with WFH... (noticing more pajamas on Zoom calls?). And if too many start permanently allowing WFH, we'll see some corporate offices empty out. That directly hurts "Work from Work" companies relying on you going into the office:
- Real Estate: Commercial real estate investment companies that rent office space will lose. Vornado Realty Trust and CBRE stock are both down around 12% for the week.
- Supplies/Food: Office Depot stock is down 7% for the week because offices aren't restocking Post-its. Meanwhile, corporate catering companies aren't catering, and local restaurants lose out on big lunch orders.
- Cities/States: They'll miss real estate taxes and public transit work commutes. Real estate taxes make up over 30% of NYC's revenue.
Work from Work companies may have to WFH... If widespread WFH actually takes hold (still questionable, despite hype) then Work from Work companies will have to shift business models, or risk going under. Catering and office supplies companies could start offering company-sponsored at-home subscription packages — but shifting will be much harder for commercial real estate businesses and cities, which rely on office revenue.