Impact of Remote Work on Real Estate with Jonathan Miller, President & CEO, Miller Samuel Inc

We speak to Jonathan Miller of Miller Samuel Inc. on the impact of work from home on real estate and more. Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. Miller Samuel provides appraisal and consulting services on as much as $5 billion worth of property per year in the New York City metropolitan area. Jonathan is a real estate analyst and a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts across the U.S. He holds the Counselors of Real Estate (CRE) and Certified Relocation Professional (CRP) designations. He is an Appraiser "A" Member of the Real Estate Board of New York and a former two-term President of RAC, a national organization of appraisers who specialize in providing valuation solutions for complex residential properties


Dana Williams
Real Estate Salesperson, Sotheby's International Realty
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Highlights from this article

I'd look at remote now, as before the pandemic, it was about 5% of corporate America was a hundred percent remote. And now we're talking about it doubling or tripling, which is 10 or 15%. However, the next cohort, the next 50% are not going to be going in five days a week. They're going to be going in some variation of that. Four days a week, three days a week, two days a week. And then the other time there'll be working remotely, I think that's going to be embedded into the commercial real estate world.

The one thing though that you're going to see right now is that many cities have an optics problem where, the cable news, TV pans across time square, and they see all the boarded up retail. Well that's because 80% of the office towers are empty. And will not be empty in the next six months. And that will breathe life back in, but it's going to be at lower rates and a different type of tenant that will be coming in

I think there was a quick reset in pricing in both retail and commercial and residential as a result of COVID. And it's not clear, we're still over the next few years going to figure out, how human behavior is ultimately going to respond. I mean, right now we're at peak Zoom, it's a hundred percent, is that we're not a hundred percent, but we're dominating, people working remotely dialing in, et cetera. That is not going to be the norm nor will the way it was pre COVID be the norm. It's somewhere in between. And I think, human beings have to figure it out. And I think that's going to take the next couple of years.

I think collaboration doesn't work on zoom. I, and maybe it will, maybe there's a way to do that, but at least as a stance right now, just this isn't a scientific fact, but my own experiences when I hire new staff, It is almost impossible to really train them because they're not immersed.

It's less about COVID and it's more about the plunge in mortgage rates nationwide or worldwide, but nationwide that has caused this massive demand for housing, but at the same time, lenders are not morally flexible as we would think of them during the housing bubble where credit conditions are actually about 20% tighter than longterm norms. So as we go through this housing boom we're not looking at a banking crisis at the end of it.

And so there is a really good fed study, a few about a year or less than a year ago, the Cleveland fed that talked about. This urban outbound activity and and found that the decline in our, the increase in migration numbers wasn't. Wasn't solely big from people leaving. It really was people not coming into the city because of fear of our safety, for health reasons that there was a sort of label attached to urban markets that high density means high chance of infection and, in New York one thing I've been saying since the early days of a lockdown was, the infection rates in New York Manhattan saw the highest outbound migration, the sort of narrative in air quotes, fleeing the city . But what's missing has been inbound migration because of the fear of safety. And, this is what I'm calling a V-shape recovery, which is B for vaccine. The increase in the vaccine is expanding the inbound migration at the city, which makes net bound, net migration, less negative. And that's been the half of the equation that's been missing across the country.

The inbound that's coming into the suburbs and the city, is it's coming from other parts of the country, other parts of the world, and just remember cities right now there's, the travel bans or advisories with COVID, that is still a thing. And also know just immigration policies, all those things have been restrained which leaves a lot more upside for urban markets going forward.

If you look at If you look at the change in commuting with remote like I'd said earlier, where you have somebody that was going in five days a week now maybe only has to go in two or three. They could very well have a commute that was much, much longer. But they're commuting less. And so as a result, the, during the housing bubble that was called the exurbs, the regions beyond the suburbs, but really getting into rural areas like in New York, Metro, that would be upstate Connecticut, the Hudson valley the Hamptons. All these markets are benefiting from people having more options about where they want to live.

Out of the 400 industries that are tracked by the bureau labor statistics my industry is the least diverse. We're less diverse than ranchers and farmers. And a big part of the reason is our leadership is not diverse at all. And has not addressed, or is not even aware or wasn't aware until people like myself and a handful of others, or more than a handful have really brought this message out. So I think the biggest thing is being very public about it and bringing a focus on diversity and leadership otherwise, there's no hope for a solution.

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