The Post-Pandemic Real Estate Crunch

Originally published at: The Post-Pandemic Real Estate Crunch – Peak Prosperity

In our latest episode, we dive deep into the cascading crisis in the commercial real estate sector, a market upheaval that’s been quietly brewing beneath the surface of our economy.

Join me as I sit down with renowned real estate expert Ken McElroy to unravel the complex web of issues now plaguing office spaces nationwide. From towering high-rises standing ghostly and vacant, to the dramatic shifts in work culture post-pandemic, we explore the stark realities and the future possibilities for these once bustling centers of business.

Ken reveals the stark and often startling insights into why these buildings are emptying and what it means for investors, businesses, and the average person whose pension might be unknowingly tied up in these faltering assets. We discuss the tough questions and tough realities—like whether these spaces can be repurposed for residential use, or if they’re doomed to be demolished. The discussion spans the implications of long leases, the shifting desires of the workforce, and the broader economic impacts of these empty spaces on our cities.

This isn’t just a conversation about real estate; it’s about understanding the underlying forces reshaping our urban landscapes and financial futures. Tune in to gain a comprehensive outlook on where we stand and what could come next in this complex scenario that affects us all, directly or indirectly. This episode is a must-watch for anyone interested in the future of work, investment, and how we live in our increasingly urbanized world. Join us as we peel back the layers of this unfolding crisis to discover what the future may hold.


I’m glad my CRE interests are in small warehouses. Just wish they weren’t in Oakland… :face_with_diagonal_mouth:


Yes, when we invested in CRE, I insisted on office/warehouse space since when there’s a recession and lots of layoffs, many people start small businesses to survive, operate out of their garage, then outgrow that space. If you do this, try to build/buy buildings in industrial/manufacturing zoning and add 3 phase power. Your tenants will be the folks that actually build stuff people need.

How did I know about what people do after layoffs? 3 rounds of layoffs at Intel–the 1st one, I was a manager who had to lay-off people, the 2nd one I was in HR and planned it, the 3rd one I volunteered for it :wink:


Warning: two New Hampshire anecdotes related to this discussion.

  1. Friends of mine just sold their house two days ago. They listed it on Saturday and had it open Saturday, Sunday and Monday. They were asking $630,000 and sold it for $707,000 on the Monday, the third day. Residential real estate is very hot in Concord and almost all of New Hampshire regardless of what is happening in other markets. It has been like this since 2021 when people really started trying to escape from other nearby states. Professional people are offered jobs but eventually turn them down because they can’t find anywhere to live. Some people buy and live in a nice RV for two years while they shop for land, a builder and wait for the house to be built (or renovated). It’s been crazy.

  2. Taxes and politics: I’ve been here for two gubernatorial elections. Our Governor is John Sununu, a country club Republican and “Never Trumper” who is vulnerable from the right. But he keeps getting re-elected because the Democrats insist on proudly running candidates who promise to institute an income tax (NH doesn’t have an income tax). Go figure!


Chris, Is the white balance color off on your camera or is it just me? Your guest looked fine but your camera looks off.

So, I am on the Space Planning Committee for my 1,000+ person firm, 11 major offices, 7 minor offices. I am based out of our Minneapolis HQ of ~450 ppl. Currently we have on average 95 ppl/day in the office. The only other office with that low of an “attendance” rate is our Denver office in downtown Denver. Last year we went through a review process to consolidate our space by 50% to save ~$1.2M/yr. We ultimately decided to table the space reduction, because our lease is up at the end of 2025 anyway, so instead next year we are going bargain hunting and may be relocating to a smaller building. We are the Prime tenant of our building. Our building’s management company is going to be eating it and will likely have a hard time filling the 65% of the building we most likely will be vacating.

There’s no way we aren’t the only company like this. I imagine most 500+ person companies are at 50% capacity at best. I mean we are at 20%.

Whenever I hear about “return to office mandates” I know it’s intended to do 3 things: 1) create a soft push to have a head count reduction via quits, 2) to assess exactly how much space they really need in the future, and 3) [when a building is occupant owned] justify the continued holding of the sunk cost property.


Let me play devil’s advocate here.

I hear a lot of pushback from office / white collar workers that things are fine if they continue working from home. Is that true? Is there really no benefit to having office work done in a physical office?

Full disclosure: I think it’s a mixed bag but there are real benefits to working with others in a shared environment. Several pros and cons but I think it is a positive on balance.

This ultimately matters for office real estate markets going forward. If COVID provided an “a ha” moment for businesses to be better off with so many people remote, that really changes the office real estate market.

Other CRE submarkets are a different story… retail, multifamily, storage have different issues.


I was going to post the same, i.e. while CRE is crashing, paradoxically the housing market where I am, in very nice suburb of Vancouver, WA (and, by extension, of sister city Portland, OR) is still very strong, with multiple offers often in play. This even with high interest rates. People still perceive houses to be good investments that will hedge inflation.

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Did this several decades ago. It worked!

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