CRE in DC

[Anonymous]

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

What do you want the city to do to "incentivize" private companies like Fannie Mae to stay? I'm not sure sure I'd want my tax dollars being given to private companies to offset their lease obligations.

And your premise is incorrect--these places aren't leaving because its employees no longer live here. It's because of money. Companies don't need to spend as much on big fancy offices if most of their workforce isn't physically in an office. It's cheaper to lease space outside of the city.

The FBI is a different situation that's controlled by the GSA. Few FBI agents were even living in DC to begin with, and all of the reports cited space constraints as the reason they were looking outside of the city.

I do agree that DC should've done a better job trying to keep the sports teams here. They are leaving because VA offered Ted a better financial package and a huge plot of land. I don't think it has anything do with where its workforce lives.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

What do you want the city to do to "incentivize" private companies like Fannie Mae to stay? I'm not sure sure I'd want my tax dollars being given to private companies to offset their lease obligations.

And your premise is incorrect--these places aren't leaving because its employees no longer live here. It's because of money. Companies don't need to spend as much on big fancy offices if most of their workforce isn't physically in an office. It's cheaper to lease space outside of the city.

The FBI is a different situation that's controlled by the GSA. Few FBI agents were even living in DC to begin with, and all of the reports cited space constraints as the reason they were looking outside of the city.

I do agree that DC should've done a better job trying to keep the sports teams here. They are leaving because VA offered Ted a better financial package and a huge plot of land. I don't think it has anything do with where its workforce lives.

Agreed on all these points.

Fannie Mae is leaving because they are one of the most remote-friendly large employers in the country. They are not really enforcing any RTO mandates. They are actively recruiting from all over the country, including for (remote) management positions. The US government is Fannie's largest shareholder and has to show that its being responsible with costs. Remote and hybrid work allows Fannie to slash real estate costs, increase retention, all while keeping wages relatively flat.

Fannie is actually the canary in the coal mine. A lot more companies - particularly in tech - will relax RTO once they've cut enough head count. They can then look to cut RE costs and consolidate their physical footprint.

This is just the free market at work, all enabled by recent technological advancements to enable work-from-anywhere.

[Anonymous]

Anonymous wrote:Fannie Mae is still in the building for another 5 years. But I can’t imagine many current employees will be looking to buy in DC after this announcement. Those who already own in DC will probably seek other jobs.

They have limited in office time, could easily commute from DC to VA a minimal amount.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

What do you want the city to do to "incentivize" private companies like Fannie Mae to stay? I'm not sure sure I'd want my tax dollars being given to private companies to offset their lease obligations.

And your premise is incorrect--these places aren't leaving because its employees no longer live here. It's because of money. Companies don't need to spend as much on big fancy offices if most of their workforce isn't physically in an office. It's cheaper to lease space outside of the city.

The FBI is a different situation that's controlled by the GSA. Few FBI agents were even living in DC to begin with, and all of the reports cited space constraints as the reason they were looking outside of the city.

I do agree that DC should've done a better job trying to keep the sports teams here. They are leaving because VA offered Ted a better financial package and a huge plot of land. I don't think it has anything do with where its workforce lives.

Agreed on all these points.

Fannie Mae is leaving because they are one of the most remote-friendly large employers in the country. They are not really enforcing any RTO mandates. They are actively recruiting from all over the country, including for (remote) management positions. The US government is Fannie's largest shareholder and has to show that its being responsible with costs. Remote and hybrid work allows Fannie to slash real estate costs, increase retention, all while keeping wages relatively flat.

Fannie is actually the canary in the coal mine. A lot more companies - particularly in tech - will relax RTO once they've cut enough head count. They can then look to cut RE costs and consolidate their physical footprint.

This is just the free market at work, all enabled by recent technological advancements to enable work-from-anywhere.

This CRE shrink/consolidation has been pending for a while, now seems to be here. As will the revenue consequences.

[Anonymous]

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

What do you want the city to do to "incentivize" private companies like Fannie Mae to stay? I'm not sure sure I'd want my tax dollars being given to private companies to offset their lease obligations.

And your premise is incorrect--these places aren't leaving because its employees no longer live here. It's because of money. Companies don't need to spend as much on big fancy offices if most of their workforce isn't physically in an office. It's cheaper to lease space outside of the city.

The FBI is a different situation that's controlled by the GSA. Few FBI agents were even living in DC to begin with, and all of the reports cited space constraints as the reason they were looking outside of the city.

I do agree that DC should've done a better job trying to keep the sports teams here. They are leaving because VA offered Ted a better financial package and a huge plot of land. I don't think it has anything do with where its workforce lives.

Agreed on all these points.

Fannie Mae is leaving because they are one of the most remote-friendly large employers in the country. They are not really enforcing any RTO mandates. They are actively recruiting from all over the country, including for (remote) management positions. The US government is Fannie's largest shareholder and has to show that its being responsible with costs. Remote and hybrid work allows Fannie to slash real estate costs, increase retention, all while keeping wages relatively flat.

Fannie is actually the canary in the coal mine. A lot more companies - particularly in tech - will relax RTO once they've cut enough head count. They can then look to cut RE costs and consolidate their physical footprint.

This is just the free market at work, all enabled by recent technological advancements to enable work-from-anywhere.

This CRE shrink/consolidation has been pending for a while, now seems to be here. As will the revenue consequences.

Lots of pre-COVID leases are still in place. Companies and organizations have to abide by terms of the lease, lest they get sued into oblivion by the landlord for non-performance. It's the equivalent of defaulting on a loan, which has cascading effect of other creditors being able to call their outstanding loans. So companies have just been paying according to the terms of the lease.

Any org leasing office space is exercising their first available option to terminate early. There are so many deals to be had, that it makes sense to just move elsewhere (even if that requires a new build-out). Even better if your organization - like Fannie - already owns existing CRE and can consolidate your footprint to that space.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

The tax on CRE is double that of residential real estate. This is actually a huge problem.

It is a huge tax revenue problem. Tax revenue pays for the bike lanes, pickleball, etc. that young people enjoy.

[Anonymous]

Cities need a robust business community to have the revenue to pay for amenities that appeal. In DC, tourism has also been an important stream.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

Taxes on CRE are the rock on which everything rests.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

The tax on CRE is double that of residential real estate. This is actually a huge problem.

It is a huge tax revenue problem. Tax revenue pays for the bike lanes, pickleball, etc. that young people enjoy.

Its like how the Feds always make sure the National Parks take it in the backside first if there is ever any budget shortfall or shutdown. Have to make the people that actually pay taxes feel the pain. Just don't look too closely at the billions the city spends every year incentivizing poverty, that's off-limits.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

The tax on CRE is double that of residential real estate. This is actually a huge problem.

It is a huge tax revenue problem. Tax revenue pays for the bike lanes, pickleball, etc. that young people enjoy.

Its like how the Feds always make sure the National Parks take it in the backside first if there is ever any budget shortfall or shutdown. Have to make the people that actually pay taxes feel the pain. Just don't look too closely at the billions the city spends every year incentivizing poverty, that's off-limits.

Huge industry, in fact. May find things a bit leaner in the future. Will the city be able to afford so many over market rate vouchers? What will happen to people who never got treatment, rehab or job training?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

Taxes on CRE are the rock on which everything rests.

So many young people don't seem to grasp the economics. They think, great, more low income housing! Maybe they didn't play SIMS enough?

[Anonymous]

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

Federal law enforcement for 20 plus years. I know like two FBI agents who worked downtown that actually ever lived in DC. 99.9 percent hsve always lived in Virginia.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

Taxes on CRE are the rock on which everything rests.

This is really the case everywhere. CRE consumes little in terms of services but generates massive property tax revenue.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

Taxes on CRE are the rock on which everything rests.

This is really the case everywhere. CRE consumes little in terms of services but generates massive property tax revenue.

And right there’s DC’s death spiral.