One of the reasons I am short Real Estate (via $DRV) is because many CRE REITs can’t meet their dividends of old because of so many empty buildings. This article shows just how bad it has gotten when developers are now colluding with employers to up the looks of their buildings to hopefully attract humans to give up WFH and come back to the office. And to fill the buildings, developers have now got to think “multi-use” and not just office workers:
Bloomberg headline: The Office Tower Has a New Job to Do
As workers opt to stay home, developers are packing commercial buildings with amenities that mix private and public spaces.
ByZach Mortice
June 29, 2022 at 8:00 AM EDT
https://www.bloomberg.com/news/features/2022-06-29/with-a-ma…
In 2015, private equity giant Blackstone Inc. purchased the Willis (née Sears) Tower and began a half-billion-dollar renovation that would radically change the role the former tallest building in the world would play in downtown Chicago.
Today, anyone — not just workers in the 108-story office tower — can sample from a wide range of new public amenities inside the building. At a new multi-level food hall, you can grab breakfast at Do-Rite Donuts and Chicken or spend $19 on a bluefin tuna roll at Sushi San. The Color Factory, an interactive (as in: Instragrammable) art museum, opened up in June, beckoning tourists and locals with chromatic thirst traps. A 75,000-squre-foot conference center hosts group meetings, and weddings are in the works. On the tower’s podium, yoga classes and concerts can be held on a new 30,000-square-foot landscaped roof garden. Office workers in need of an early happy hour can find one in a new bar on the 33rd floor that opens at 3 pm.
----------------------------------------------------------------------------------------------------------------------------------->
In Chicago, the return-to-office process has stalled out: Backlogs of empty office space have been growing in the city over the last several months, with a record 21% vacancy rate at the end of March. Locally, only 41% percent of office workers showed up in person in mid-June, according to Kastle Systems, which tracks building access card swipes. That’s a bit worse than the US average, at 44%.