Downtown office vacancy

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
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Re: Downtown office vacancy

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KCPowercat wrote: Wed Jul 20, 2022 7:04 am
earthling wrote: Wed Jul 20, 2022 6:32 am Fitch is curiously specific about it being remote related and it's probably not hard to measure reason for change in tax base. But they could be wrong. Any single source needs to be taken with grain of salt but I'm not aware of multiple that track KC's remote impact.
I'm not saying they are wrong I'm saying remote work is impacting all cities and the specific credit risk is because that remote work could impact KCMO more because of it reliance on the 1%.
Ah yeah got it. Many cities have local income tax so still interesting they high-lite KCMO along with a few others.

Some city propers benefit from remote worker change, it would appear that KCMO is not one of them.
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Re: Downtown office vacancy

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Which are benefiting and by what measure?
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Re: Downtown office vacancy

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KCPowercat wrote: Wed Jul 20, 2022 12:17 pm Which are benefiting and by what measure?
If you go by the top 30 or the top 40 metros, KC is in the top half for population gains. They're in the green and beating the average and median so far amongst the top 30 or 40.
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Re: Downtown office vacancy

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KCPowercat wrote: Wed Jul 20, 2022 12:17 pm Which are benefiting and by what measure?
Lawrence for one supposedly. Several cities are grabbing tech workers, by jump in workers moving there working remotely, not due to tech job growth within local companies.
https://www.axios.com/2022/03/08/tech-j ... rk-orlando
"This does likely owe to remote work," said Brookings' Mark Muro, a co-author of the report. "We don’t see a wholesale end of the superstar period of tech centers, but we see a significant uptick in places that are actually growing faster."
I suspect the Lawrence growth is coming from KC area. That is their job is still based in KC but not working within area as part of tax base. Cerner's remote strategy isn't helping.

There are clearly losers due to remote work (NYC, San Fran) but probably harder to strictly measure who is gaining. The Feds aren't officially tracking remote work migration but probably should at this point.
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Re: Downtown office vacancy

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Guess is wasn't thinking of towns like Lawrence being applicable to this topic
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Re: Downtown office vacancy

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The article indicates Miami, San Diego, Jacksonville, San Antonio also benefiting from remote in-migration. We've discussed in other threads a while back if KC could be net benefiting. But according to Fitch apparently not KCMO, other city propers within KC area may be.
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Re: Downtown office vacancy

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earthling wrote: Wed Jul 20, 2022 1:46 pm The article indicates Miami, San Diego, Jacksonville, San Antonio also benefiting from remote in-migration. We've discussed in other threads a while back if KC could be net benefiting. But according to Fitch apparently not KCMO, other city propers within KC area may be.
But yet, the census projections for last year say San Diego & Miami we’re some of the biggest losers of population
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Re: Downtown office vacancy

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Lot's of other driving factors than just remote workers, many moved to work based elsewhere. And the above is about tech worker moves, not overall.

Now that remote/hybrid is a real thing, time for Feds to start tracking so that the distinctions can be more easily understood.
Last edited by earthling on Wed Jul 20, 2022 2:08 pm, edited 1 time in total.
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Re: Downtown office vacancy

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earthling wrote: Wed Jul 20, 2022 2:03 pm Lot's of other driving factors than just remote workers, many moved to work based elsewhere. And the above is about tech worker moves, not overall.
Gotcha. I still don’t see how KC wouldn’t benefit from remote work. Especially since everyone makes a big fucking deal about how “few” companies we have, so now that people don’t have to move for them you’d think we’d gain. Not to mention basically every peer that I know of works coastal but lives here now.
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Re: Downtown office vacancy

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^KCMO may be gaining some from everywhere but according to Fitch the net difference appears to be a loss for KCMO. Cerner isn't helping.

We need better consistent national tracking now that remote/hybrid is 'a thing', more established than maybe many expected anyway.
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Re: Downtown office vacancy

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Newmark Q2 national report agrees with JLL/Cushman that overall absorption is declining again, though a few markets saw positive absorption (not KC). The rising asking rates might work for those chasing 'flight to quality' but may backfire for the rest. Newmark forecasts US avg vacancy rates will continue to rise for at least 2 more years.

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Re: Downtown office vacancy

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Newmark's KC Q2 report. They include Class C space. Agrees with the others that S JoCo taking biggest hit with negative absorption. Downtown relatively smaller hit but still not so great with Class A at 23% vacancy. Says that N JoCo Class A at nearly 36% vacancy.

https://www.nmrk.com/storage-nmrk/uploa ... Office.pdf

KC metro Q2. They show negative absorption generally less worse this Q for KC while national is worse in Q2 than Q1. When the dust settles, could to take a while to reabsorb all of that negative absorption.
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Re: Downtown office vacancy

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Southwest Airlines is moving all customer service agents to 100% remote. A little surprising as would think they''d have some office presence for new hires/training and those who want to be in office occasionally.

KC has its share of call center jobs, could also maintain long term remote or high % hybrid. Claims processors for insurance companies are also very remote/hybrid friendly jobs, which KC has a decent share of.

JLL says that nationally there is a record number of office lease renewals coming up next 2 quarters, will be interesting to see which way absorption swings.
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Re: Downtown office vacancy

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The Kastle back to work barometer is still flat with last several months. Other reports say that smaller markets have higher return, reading between lines seems mid-sized markets could be more like 60-70% returned and higher in smallest markets. Would think KC is closer to Austin, maybe a tad better.

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Re: Downtown office vacancy

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WaPo reports on a fairly comprehensive study that shows to what degree remote/hybrid work is becoming established. Would think longer term it settles down to 10% to maybe 20% remote/hybrid (80%+ in office daily) but no signs on when as this study agrees with Kastle that the return is flattening out...

https://www.washingtonpost.com/business ... evolution/
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Re: Downtown office vacancy

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I still have this feeling there is another shift coming. Pendulum swinging back around next year. We aren't at our final form where I work and that's the feeling I get form my peers. So not sure I agree with their assumption this is the settling in period of the data. Maybe.
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Re: Downtown office vacancy

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Yeah I suspect another return surge coming too by next year at least with companies that don't think hybrid is working out, though this has been going on longer and with lower % return than maybe many expected and the longer it continues, the more accustomed more become and more (not necessarily most) companies figure out how to make it work. Some companies specifically prefer a hybrid direction to reduce office costs (even before pandemic), so the big question is what % is the real settling down point and when. So far the return appears to be flattening out according to two studies. Frankly the 10%-20% hybrid after dust settles many of us hope might be too optimistic, we shall see.

In your anecdotal experience, might be higher % of roles not ideal for hybrid. Before pandemic, I worked for many years in hybrid mode (digital nomad) as well as peers on team. I figured at the time that would grow but didn't expect well beyond 10% of office workers. The pandemic now forced so many into it, more will find it works for them than maybe expected. Not that I'm in favor.

With record number of office lease renewals coming up next 2 quarters (according to JLL), the direction lease renewals/absorption swings may give us an idea how confident businesses are (or aren't) for office returns through the next year.
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Re: Downtown office vacancy

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Another fairly large remote work study with over 100K sample. They appear to survey some full time workers that may not have an office job, hard to tell. If the case that would show the remote/hybrid workers as a lower % than Kastle study, of which scope is purely those with an office job.

More charts here. Including one that shows that the higher the education, the higher % remote/hybrid worker...
https://wfhresearch.com/wp-content/uplo ... st2022.pdf


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Re: Downtown office vacancy

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Some of the office agencies are expecting a bump in return to office after Labor Day, Kastle mentioned it too. Some companies are requiring more office return after Labor Day. Many tried that this Spring w/out much success as workers still have the leverage. Will be interesting to see how it plays out.

Any KC companies pushing for a relatively higher office return after Labor Day?
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Re: Downtown office vacancy

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Brian Platt: "We’ve spoken with a major employer in San Francisco, who told us that they are no longer even looking to hire people in that market, just because the cost of living is so high that they have to pay their employees a prohibitively high amount for them to live there comfortably. ... We are going to be on the short list of lots of companies very soon who are thinking along those lines. They want to find cheaper office space where they can improve quality of life for their employees and not have to sacrifice anything else."

https://www.bizjournals.com/kansascity/ ... tives.html
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