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 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.
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?
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.