Morgan Stanley on firm’s future: “Much less real estate”
EDITOR'S NOTE: as we get farther along on the recovery, watch for more and more businesses to go virtual - they will re-open, but they will not be re-opening physical locations. Watch for stalwarts in the retail space to go ecommerce only from here on out. One thing this pandemic has proven - we do actually have the ability to conduct business in a virtual environment. But this will have ramifications at the local level and especially in the commercial real estate level.
“We’ve proven we can operate with no footprint,” CEO says
In a terrible economy, Morgan Stanley CEO James Gorman appears to have found a silver lining.
“We’ve proven we can operate with effectively no footprint,” Gorman told Bloomberg Television in an interview Thursday.
The $60 billion investment bank has moved about 90 percent of its 80,000 employees to a work-from-home model, a process Gorman said had been surprisingly smooth.
“That tells you an enormous amount about where people need to be physically,” he said.
After life returns to normal, he said, he would like to see most staff return to the office, but added that it was clear the firm could operate with “much less real estate.”
“Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely,” he said.
While it may be good news for Morgan Stanley, it is a worrisome sign for New York’s office building owners. They have seen occupancy rates almost zero out in the last month and face another month of the same after Gov. Andrew Cuomo extended his workplace ban through May 15. While they are still collecting rent, their tenants are adjusting to working remotely.
Gorman’s comments also nod to a larger conversation playing out across corporate America about the future of working life and high-priced, densely packed office space in a post-Covid world.
Occupancy rates for commercial office space in the city plummeted in March, dropping from about 90 percent on March 9 to under 3 percent on March 23, following Cuomo’s executive order, according to the Real Estate Board of New York. [Bloomberg] — Sylvia Varnham O’Regan
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