this post was submitted on 18 Oct 2024
560 points (98.1% liked)
Technology
58777 readers
3146 users here now
This is a most excellent place for technology news and articles.
Our Rules
- Follow the lemmy.world rules.
- Only tech related content.
- Be excellent to each another!
- Mod approved content bots can post up to 10 articles per day.
- Threads asking for personal tech support may be deleted.
- Politics threads may be removed.
- No memes allowed as posts, OK to post as comments.
- Only approved bots from the list below, to ask if your bot can be added please contact us.
- Check for duplicates before posting, duplicates may be removed
Approved Bots
founded 1 year ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
But that's something I don't actually understand, since real estate would fall under the sunk cost fallacy. Ie, if you've invested in real estate, the cost is spent already, right? Whether someone comes in that building is irrelevant. The costs spent to maintain, heat, clean, power the buildings, on the other hand... It's just not really obvious to me. Seems like fewer people would cost cheaper, no?
The deals they had with various governments to get tax breaks if they built the office in their city are still a consideration. Amazon put governments of municipalities into a bidding war so they could have highly paid software engineers working in their city. They probably aren't going to get those tax breaks any more if most of those offices are empty.
If you're using that real estate as collateral for loans, it needs to maintain its value, or you'll have to put up more collateral
The cost is spent, but the offices are still assets on the balance sheet.
If demand for offices is lower then all companies that own offices will have to revalue theirs downwards. These impairments have a direct impact on the P&L of the company accounts. Better to force employees to use these assets (and pay their own costs to do so) than show a (greater) accounting loss.
If a company has a lot of money in assets and those assets are worth less than before, the valuation of the company drops. This should mean lower share prices, which is basically the only thing a company cares about.