Hacker News Reader

Comment by Workaccount2 | Hacker News Reader

This take is so common and so bizarre to me. Executives at companies do not give a fuck about the landlords of their buildings. It's an annoying expense that they complain about. They idea that they are working together to make sure the real estate firm has a tenant is so hilariously detached.

It's akin to saying that apartment renters care immensely about their landlords to the point of going out of their way to keep paying them rent. Its a total and complete fiction.

View on HN

No, it's akin to saying landlords care about the occupancy of their buildings and their tenants paying rent. Of course they do, and of course they're prepared to use media influence to try and make that happen.

Of course they care. But no tenant really cares that they care.

Execs will look at the numbers. Renting is very expensive and eats up a large chunk revenue. So if you are going to keep paying rent and maintaining an office, you better have a good explanation for investors other than "Our landlord will be upset".

I'm sure plenty of CEOs are falling over themselves to mislead the board on rental costs so that they can protect their 2% portfolio stake in some random commercial REIT. Totally logical here.... /s

> This take is so common and so bizarre to me. Executives at companies do not give a fuck about the landlords of their buildings.

I don't think you have the right framing. Investors diversify, and so the set of investors and board members in your company that are invested in commercial real estate is non-zero, and arguably non-negligible.

The set of investors and board members that have some stake in work from home is considerably smaller, possibly zero. This is a clear bias that acts as a non-negligible incentive on CEOs to push a return to office. Everyone in this scenario is working in their own self-interest.

Well, if you run on the assumption that consumers are the ones with lots of ad spend for things, you would be confused, yes. Why would consumers run ads for things indeed?

Obviously it is the producers of the good who have the ad spend money for submarine PR, just as it is everywhere else.

Executives at companies do not give a fuck about the landlords of their buildings. It's an annoying expense that they complain about.

you spend $2B on a brand new office campus. you work directly with the architects and talk about how this new campus will create a great place for your employees to work. and then you have the humility and wisdom to throw all that away? even though everybody at the company knows that this is the big project you spent billions of dollars on?

the money that companies spend on their offices is a commitment that an executive makes. keeping their commitments and persuading other people to buy in to those commitments is one of the biggest parts of the job if you're an executive.

another very big piece is making sure that the assets on your balance sheet don't turn into liabilities.

This take is so common and so bizarre to me.

so take the time to think it through and understand it. commercial leases are 10-year leases. when an executive makes a 10-year commitment, they have spent energy to convince others to make the same commitment, and they are committed to spending more energy on it as well.

That is not your typical company though. The typical company is leasing pretty cookie cutter office space in an office park or downtown. And many of those companies are not renewing many of their leases as they come up.

I think you missed the point. It isn't the CEO who cares about the specific building they're in. It's people like the Blackrock CEO on who massive amounts of investors (and by extension your retirement portfolio) depend on. Or the people who own the newspapers depending on a healthy economy, of which a huge percentage is commercial real estate. Or, as GP said, these basically-oligarchs that sit on a few boards and can steer CEOs to make nonsensical return-to-office plans to advance their investment strategies and view of how the world should work. It's a lot bigger than a single tenant in a single office.

Some companies own the buildings they operate out of rather than lease them, but I think that's less common. So your point largely stands.

‎

We are just increasing to detachment to think that executives carry large (if any at all) stakes in their landlord's company (or even commercial reit in general.) So much so that spending $100,000/mo from their own company (which they likely have a lot of equity) makes more sense than not renewing the lease.

Guys. Please. There are many reasons why a company would want to RTO. Being in cahoots with the real estate industry is not it.

No, but they care about their company and their stock price. And the collapse of commercial real estate, especially in large cities, is an economic tsunami so big that it's terrifying. Go to downtown SF and walk around. It's a ghost town. When is it coming back? What if the answer is not for a very long time. And it's not just the big cities, even in smaller towns, law offices, etc. are still sitting empty since the pandemic. It's a huge, huge problem.

And when that impact hits, it will affect every business.

Those executives and many others know that. They're standing on the beach with the water out, knowing what's coming but helpless to stop it. But they're trying. Of course they're trying.

If execs cared about the macro economy they would simply pay their workers more. But they don't, they care about their company. They are hired, paid, and legally obligated to act in the best interest of the company. Not the country.

Reply on news.ycombinator.com