Real Estate

Pullback in Tech Industry

Lily Freilich, '25

The modern world revolves around technology and it’s constant strive to improve and innovate While the technology industry is foundational and almost crucial to many other industries, the volatile economic environment is driving even the most successful tech giants to retract their real estate footprint and expenses

During the pandemic, powerful companies including Amazon and Google hired an enormous number of employees and spent billions of dollars on workspaces This was mostly because Covid-19 drove many companies to conduct business in new ways, driving a demand for digital talent and innovation. Additionally, many workers were laid off during the peak of the pandemic. Experts say companies over-hired and overexaggerated the demand, especially in light of the unexpected economic downturn such as the global epidemic.

The recent economic slump has acted as a catalyst for these big companies to cut back costs Along with firing many employees, tech companies have been pulling back on their office leases because they plan to employ less people, and many of those employees continue to work from home or other locations, either part-time, known as ‘hybrid’, or all of the time, known as ‘remote’ The industry’s square-footage and activity of leases signed has decreased from 21% of the US’s office leases, to 17% In the past, technology had the largest share of office real estate, especially during COVID-19. Due to the pullback, the tech industry lost its number 1 rank as the greatest holder of commercial space and it has been taken by Financial companies.

The industry’s shift to remote work has not been seamless. Local business owners and communities have been affected tremendously Locations that had once been centers for businesses, have been left with vacant retail spaces San Francisco and New York City, who have two of the largest office work dependent economies, have been hit extremely hard, as they are, and always have been, cores for business and technology. San Francisco’s office vacancy rates have gone from the pre-pandemic rate of 3.7% to a record high 27.6%.

While the pullback has had negative impacts, depending on the perspective, there have been positive impacts too Commercial buildings are sitting empty with desperate landlords looking for renters, leading to affordable prime real estate This sudden shift in cost provides opportunities for startups and new entrepreneurs who may not have had the budget to afford those spaces within average circumstances Many of the workers who were laid off from large tech companies have transformed themselves into these ‘new entrepreneurs ’ In essence, a world that undergoes a pandemic never returns to its normal state, although every cause can have both a positive and negative effect.

LA Passes New Eviction Laws

Alex Ottensoser, '24

On January 31 2023 the covid relief measures that were put in place for Los Angeles rental tenants were set to expire Tenant protections such as, delayed rent, relocation subsidies and eviction delays were very helpful for tenants struggling with rent obligations due to the pandemic. Los Angeles county passed new laws extending many of these protections. This was the biggest expansion of tenant protections in Los Angeles since the Rent Stabilization Ordinance was passed in 1979.

While this was welcomed by the tenants of the 84,000 rental units that this affected, landlords are concerned In particular mom and pop landlords - as opposed to corporate landlords - believe that they will not be able to absorb the additional costs required of landlords from the new laws The only remedy that a landlord has for non compliant tenants is eviction These new laws severely restrict landlords' ability to evict tenants

Finding the right balance between tenant and landlords is critical If rents are too high, then tenants will be forced into homelessness, exacerbating an already existing housing crisis If landlords are unable to remedy delinquent payers or increase rents to fair market levels, they will be forced into financial crisis or sales of their property. Ultimately resulting in fewer residential units.

Many large cities across the United States of America are facing an affordable housing crisis. In New York similar laws are being proposed to enhance the protection of tenant rights Four million people (1 5 million households) would be protected under these new rights These rights are not intended to punish landlords, rather they are a way to protect tenants who pay rent