Why Not to Invest in Office Buildings?

There is so much competition from home offices, garage offices (like mine), Hoffice (shared home co-working places), mini offices, hoteling workers (where you do not have a defined workstation, which means that, since about 25% of all workers are on course, on holiday, visiting clients, sick, AWOL, working from home or just out of the office for some other reason, you need much less space), time shifting work, coffee shops, hamburger joints… that even if your rich uncle Buck gave you a nice Manhattan office tower for free, you would soon regret that gift.

After a few years, the cost of operating, maintaining, heating and air conditioning that (nearly vacant) sucker would bankrupt you. Thanks Buck.

Here are the Bloomberg numbers for NYC from 2000 to 2015:

This means that even though in 15 years jobs there went up by 4.7%, the space needed to house each worker went down by 8.2%.

If you are a real estate investor, the handwriting is on the wall–the only people who can play in this sector are pen funds, REITS, banks, insurance companies whose cost of capital less than 1%. 

For everyone else–

@ profbruce