“Parking Lot Index” says workers are coming back to the office
April 13, 2022 | Erik Hayden | Urban Catalyst
It’s more than a little ironic: with all the debate over returning to the office, we at Urban Catalyst have lately found it more difficult to find a parking place at our San Jose office as the local Zoom employees head back to in-person work. (We share a parking lot.)
Of course this “Parking Lot Index” is purely anecdotal but it does seem consistent with broader trends. Google, for one, started requiring employees to work in the office at least three days a week on April 4. Apple employees started to come back to the office on April 11. In the Bay Area, 71% of managers want employees back full time according to a survey from the consulting firm Robert Half.
Let’s look at some stats:
• The National Association of Realtors recently reported that office occupancy rose in 84% of the 390 U.S. metro areas tracked by Costar over the past 12 months.
• Office asking rents were up in 98% of those markets.
• Occupancy is increasing in “major tech” metros. San Jose led in net absorption with 3.5 million square feet, followed by San Diego and San Francisco. (All from a report dated February 25, 2022.)
The reality is that many tech companies experienced significant head count growth during the pandemic. A story in the Denver Business Journal indicated that the number of employees in Zoom’s Denver office doubled during the pandemic.
So even if not everyone is back in the office every day, demand for space is heading up, as the NAR survey concludes. The “Great Return” as it is being called appears to be gaining momentum. A recent Microsoft survey found that about 50% of leaders say their company already requires or is planning to require employees to return to in-person work full time in the next year, as reported by CNBC. Big banks like J.P. Morgan and Goldman Sachs are also bringing people back.
This is all good news for the office market. Meanwhile, here in San Jose, the Parking Lot Index is looking up.
To find out more about investing with us in a Qualified Opportunity Zone fund, contact us today.
About Urban Catalyst
Urban Catalyst Opportunity Fund LLC (“Urban Catalyst”) is a real estate development Fund focused on properties located in the downtown San Jose Opportunity Zone, in the heart of Silicon Valley.
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Opportunity Zone Disclosures
– Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings.
– Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments.
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– Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available.
– Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund.
– Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments.
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