Has less to do with companies who rent and more to do with ones whom finance the construction of the building in the first place. It was a lot more common back in the day for companies like sears to build sky scrapers as a vanity project that they could park money into. Trump wasn’t the only person in the real estate market advantageously overvaluing his properties.

Pretty much every sky scraper devoted to office space is a huge waste of money, and are rarely ever utilized anywhere near their capacity. It why so many NYC government agencies were located in the world trade center. The local government was basically helping achieve some of the capacity they approved for the project, helping make the wtc look more utilized that what it was.

There used to be a pseudo economic model that was surprisingly consistent. That anytime the newest tallest building in the world was announced, there would be some sort of recession within a couple years. It was seen as a sign that corporations were running out of productive places to stick their earnings.

Why would a company care about a rented property losing value?

You asked a salient question and it’s truly unfortunate that no one is answering it. The first thing to know is that nearly all of the Companies pushing RTO either own Commercial Real Estate (CRE) directly or are otherwise tied to it by investment or peer group.

Companies like Amazon, FedEx, Twitter, Facebook, Goldman Sachs, Google, JPMorgan, SalesForce, Zoom and hundreds more all know that the United States is about to experience a CRE collapse larger than the 2008 Financial Crisis and they have a strong financial incentive to stop it or at least soften it. Here’s a look at the problem.

During the pandemic many buildings were empty of workers either due to RTW or companies going under. Either way tenants weren’t paying which meant that the Commercial Property Companies(CPC) were struggling with the mortgage payments. The lenders (banks) not knowing what else to do followed a policy of “Extend and Pretend”, where they extended the loan terms and pretended that everything would get back to normal when the pandemic ended.

It didn’t go back to normal though and the CPCs are starting to go bankrupt because the banks won’t re-finance their loans, or if they will the payments will be much higher due to higher interest rates. These CPCs increasingly can’t afford the modest terms they have now so higher mortgage payments simply aren’t possible.

So as the CPCs go bankrupt and their mortgages go into the default the banks are left holding more and more CRE that isn’t worth anything NEAR what it was five years ago due to lack of demand. I’ve seen estimates of CRE dropping in value by 40%!

If this was only a few buildings in a few cities it wouldn’t be a problem but we’re talking about tens of thousands of buildings all across the United States. For example New York City has over 90 Million Square Feet of empty office space, Los Angeles has 54 Million Square Feet, and Chicago has more than 60 Million! You could bang in with any large city but here’s a good report on Seattle.

With nearly 900 BILLION dollars of CRE Mortgages coming due in 2024 alone a 5 % default rate has the banks taking losses of 45 Billion. By contrast at the height of the 2008 crisis the rate hit nearly 9%, which would put 2024 losses at over 80 Billion dollars. Then it happens all over again in 2025 when another 20% or so of CRE Mortgages come due!

In short the proverbial shit is about to get real deep and with no life jackets available the Companies pushing RTO are trying to save themselves and their buddies from drowning.

As an aside the Cities also have a strong financial incentive for RTO. They’re already losing staggering amounts of tax revenue and if CRE takes a 40% pricing plunge they’ll be even further underwater. Like turning off the lights in City Hall during the day to save money kinds of under water.

I work in IT, there the situation for corpos who want to force RTO is just a nightmare.

There are a bunch of companies waiting with open arms and better contracts to gather these disgruntled workes with knowledge in the industry. So not only do you loose a lot, your competition grows stronger at the same time.

On top of that, if you dont need to rent a huge building at high price, massively cutting costs on overhead an maintenance.

And once the bleeding starts its hard to stop: Others need to pick up more work, get pissed and then also leave for greener pastures.

All because you are stuck in the past.

“Loosing” value

Wouldn’t you just take the depreciation now and write it off on your taxes if you own the building?

These people don’t “own” the buildings though. Most of them have mortgages and if there’s not enough, or no, tenants then they can’t make their mortgage payments, they go into default, and then the Bank is left holding a property that’s worth a lot less than what it was in 2019. This wouldn’t be a problem if it was a few buildings in a few cities but when it’s tens of thousands of properties in every city in the United States…well…we could watch a replay of the 2008 Crisis and it could be even worse.

If you are the lessor, why wouldn’t you keep pushing WFH so you can get a lower rate if you decide to renew the lease at expiration?

A lot of lessors are also owners or they have investment in CRE. Meta for instance may not own one building it’s in but it could easily own another one in that city and they DEFINITELY own large expensive buildings in other cities! They have a strong financial interest in not allowing a CRE price collapse, it’d cost them way more money than they’d ever save negotiating down a lease rate on a rental property.

Loosen up a little