Learning by Proxy

Dying Cities

If you study history it is almost impossible to tell when a civilisation or a city began to die. If you quiz 5 historians you will get 5 different answers.

When did the British Empire end in India?

India gained independence from the British on the 15th August 1947. But…

Truth be told, that was the day the actual handover took place. The discussions on the same had started way back in 1945. The reason those discussions even got tabled was because England had won a pyrrhic victory against the Germans in the Second World War. They were neck-deep in debt to the Americans and had to concede to all American demands after the war. Many American thinkers thought Britain should free India. But… 

Some historians say that the First World War had already hollowed out British wealth. Woodrow Wilson already had his hands on the British jugular because of the loans the American public had extended to the British. The Jallianwala Bagh Massacre in 1919 cemented the demise of the Empire in India. The only reason Gandhi was able to pursue non-violence as a path to independence was because the British had already given up.

I am sorry for that heavy digression. The point is… I am going to make a point. 

When the Pandemic started, every white-collar worker continued to work like nothing was even going on. They went about life as usual. Products were launched, sales targets were met, growth was registered, and it was as if the office was totally unnecessary.

white corner desk
Photo by Adolfo Félix on Unsplash

The death knell for commercial real estate was sounded.

Now, in New York, for instance, 24% of the real estate is commercial. Mostly offices, these spur other commercial real estate like retail, restaurants, etc. In fact, it is this clustering that gives us the Commercial Business District (CBD) or the beating heart of most modern cities.

If people do not work in these offices, the retail space loses value. If there is no retail or office functioning, who would even go to the CBD?

The pandemic ended, insofar as all of us were not masked up all the time. Most of those workers never returned to the office. Businesses continued to pay the lease, hoping to go back to normal. At some point between 2021 and 2022, offices started shutting down. Leases that came up for renewal were not renewed.

At this point in 2023, it would be safe to say that almost ALL white-collar workers are in some kind of hybrid work mode. Many are still in FULL work-from-home mode and even the slightest suggestion of using the office again results in revolt.

Amazon employees staged a protest this week over the company’s return-to-office mandate. The tech giant doesn’t seem too bothered by it.

“We’re always listening and will continue to do so, but we’re happy with how the first month of having more people back in the office has been,” Amazon spokesperson Brad Glasser told Fortune.

In February, CEO Andy Jassy sent a memo saying remote workers should return to the office on May 1. “We should go back to being in the office together the majority of the time (at least three days per week),” he wrote.

Source: Yahoo!

Google recently implemented changes to its hybrid office policy, introducing badge tracking and emphasising the inclusion of attendance in performance reviews. Furthermore, employees who were previously granted approval for remote work may now face a re-evaluation of their remote status.

According to discussions with employees and internal posts on a site called Memegen, Google is experiencing a rising level of apprehension among its staff regarding the extent of management’s control over physical attendance, reported CNBC.

Employees express feeling like they are being treated akin to schoolchildren. Additionally, there is mounting uncertainty among those who relocated to different cities and states after receiving permission to work remotely, as they ponder what the future holds for them.

Source: People Matters

In almost all of the cases, the companies are demanding a partial return to office ranging from 2 to 4 days a week depending on the organisation. 

Safe to say 5 days a week at the office has been bid farewell.

Hybrid work is here to stay

The Work from Home to Work from Office spectrum is born. Everyone seems to only be debating how much time at the office is fair.

Some of this conversation is coming back to how strong the home roots are for many people. A person, originally from Philadelphia may have been working in New York but if their roots back home were strong, the Pandemic would have caused them to return back. This is true for many tech workers. If for 3 years it did not matter that he/she was not in New York, why return?

The cities with the most number of non-natives are beginning to take a hit. None more so than New York.

Today, three years after the pandemic emptied office buildings nationwide, Rechler has been forced to reckon with the possibility that the buildings that were worth so much not so long ago may now not even be worth keeping. Corporate tenants are typically locked into multiyear leases, which guarantee stability in the commercial real-estate market for a time. But every month, more leases expire, giving tenants an opportunity to rethink their space, and every day, employers are staring at empty desks. Many companies, which had been trying to squeeze more workers into less space for years, are not renewing. That leaves an office landlord facing hard choices. What should Rechler do, for instance, with 5 Times Square, a million-square-foot building that 20 years ago was a gleaming centerpiece of 42nd Street’s revival? After the departure of its longtime anchor tenant and major renovations, it’s currently close to empty.

Not long ago, real-estate industry leaders were urging the city’s workers to return to their office buildings. Rechler told me in 2020 that it was a “civic responsibility.” They’ve since surrendered to the changed reality. Sometimes tenants are downsizing and upgrading to more expensive spaces; sometimes they are economizing under the guise of offering flexibility. From the landlord’s perspective, motive hardly matters — space is space, and it’s got to be rented. Add in sharp hikes in interest rates, which make refinancing a huge commercial mortgage a potentially ruinous proposition, and you have a crisis that threatens not just the solvency of office buildings but the loans that are attached to them and the banks that hold them and, by extension, the whole economy.


According to Cushman & Wakefield, Manhattan’s office-vacancy rate is around 22 percent, the highest recorded since market tracking began in 1984. When you include sublet space, more than 128 buildings in Manhattan currently list more than 200,000 square feet of space as available for lease, according to data from the firm CoStar. The available space in these buildings alone amounts to more than 52 million square feet: the equivalent of more than 40 skyscrapers the size of the Chrysler Building. Certain areas and building types are particularly endangered — the Garment District lofts once favored by tech start-ups, the generic glass gulch of Third Avenue in the 40s and 50s — but the pain is widely distributed. Many large property owners are now performing triage, trying to determine which buildings are still worth anything like what they paid for them. In Rechler’s case, this reassessment has taken the form of a process he calls “Project Kodak,” after the once mighty film-and-camera company. He classifies buildings that are worth saving as “digital.” The duds he deems “film.”
Source: Curbed

And it is not just New York which is in trouble there are also other cities that are in trouble in terms of commercial real estate.

Screenshot 2023-08-29 at 4.29.29 PM.png

Now the report puts a number to residential losses overall: From mid-2020 to mid-2022, New York City lost 5% of its urban core population, and San Francisco lost 6%.

Although employers are attempting to call remaining workers back into the office, remote and hybrid work has staying power. Today, urban office attendance is still down by 30% from pre-pandemic levels, although numbers vary by city, industry, and neighborhood. For example, workers come into the office about 3.1 days in London per week, while it’s about 3.9 days in Beijing.

Source: Quartz

But you see it does not end with this. There are restaurants, pubs, and all kinds of retail businesses that depend on the number of people working in a region. If 20% of the people who used to frequent an area disappear consequently a lot of these businesses are forced to shut down. Then people who supply these businesses start to go. So there are several second-order, third-order and even fourth-order effects. Think about the number of cabs that were required in the region earlier and now.

The above graphic also makes me think, the more expats in a city, the harder it has been hit.

So what can they do?

McKinsey predicts a 26% drop in office property values from 2019 to 2030, which is in the ballpark of $800 billion when adjusted for inflation. Again, that’s just a moderate read: In a severe scenario, the consulting company says the plunge could actually be as steep as 42%.

Source: Quartz

The financial value is one facet of the issue. To be honest, most of the people who will take this hit will be capable of absorbing it. In most cases, it seems like Banks will be left with lots of these properties that have been collateralised. Many of the owners would rather let the banks repossess the property than pay off the loans. So after the sub-prime lending crisis, we might be introduced to the super-prime lending crisis. These would have been considered extremely secure loans!

Cities are trying to redo their buildings to put them to other types of use.

New York City officials announced plans on Thursday to ease the conversion of office buildings to housing and to open manufacturing areas south of Times Square to new residential development, as part of a broader push to reinvent the struggling business district in Midtown Manhattan and address the city’s housing crisis.

The plans, outlined by Mayor Eric Adams at a news conference in a vacant office building, would allow for more housing to be built by rezoning manufacturing areas between 23rd Street and 40th Street from Fifth Avenue to Eighth Avenue. A separate plan focusing on conversions of office buildings into residential could allow for 20,000 new homes, the city estimates.

Source: NYT

grayscale photo of a building
Photo by Hennie Stander on Unsplash

The problem is architectural. Office buildings are developed with large floor plates spanning thousands of square feet. Turning them into homes means giving each room ventilation, light, water supply, etc Office buildings are essentially floors sheathed in glass on all sides. The only openings are meant for elevators. This is going to be difficult to pull off.

The Death of a City

I am not saying New York is dead. But maybe it is beginning to die. Also, this piece has focused a lot on New York because there is a lot of focus and data about the city. This may be the case for some of the largest cities in the world.

  • The nature of work is changing and many of the knowledge workers will never ever return to working in the office 5 days a week.
  • This has caused a significant shift in the demand for office spaces 
  • For many, just being able to avoid the traffic of large cities is reason enough to choose to work from home.
  • People are also beginning to shift away from large cities.

The ONE thing that the pandemic showed us was that cities are excellent vectors for the transmission of diseases. Cramming 10 million people into 300 square kilometres, like New York does, is how you ensure that diseases spread as fast as possible.

Large cities are falling out of vogue.

What might be the fate of such cities?

Going back to where I started this piece, in hindsight you might find different points or events that served as the beginning of the end. Maybe 2020 is the beginning of the end, maybe it is not. Maybe after all this, it may still bounce back! Perhaps another black swan event might push these cities over the edge.

It is hard to be certain, but it would take a die-hard optimist to imagine a future where these cities grow even larger than the high water mark set in 2020.

Learning by Proxy

Tax – Real Estate – Water | Learning by Proxy

Every Saturday, I publish this series called ‘Learning by Proxy’. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.

Follow Up

Indian and China have been having a lot of heated exchanges in Ladakh. This week it escalated and resulted in India losing 20 soldiers including a Commanding Officer.

Defence Minister Rajnath Singh Tuesday reviewed the current operational situation in Eastern Ladakh, following Monday’s violent faceoff on the LAC, along with the Chief of Defence Staff and the three Service Chiefs. External Affairs Minister S Jaishankar was also present during the meeting.

Source: Indian Express

One name is conspicuously missing, don’t you think? Modi has been AWOL.


The Indian army said that both sides suffered casualties, but there has been no word on numbers from China yet.

Tuesday’s battle was reportedly fought with rocks and clubs. However, no shots were fired.

The Indian army said a number of its troops “were critically injured in the line of duty”.

Source: BBC

Rocks and Wooden Clubs? No Shots fired? What the hell is going on?

China has taken the Galwan Valley and now their Foreign minister is like – Go on. Nothing to see here. Everything is resolved.



Law is always very political and the appointment of supreme court justices is the greatest power wielded by politics over law. Trump got to appoint two Supreme Court justices and that was expected to swing the Supreme Court towards the far right. Imagine the surprise then, when the court declared that employment could not be taken away if a person was LGBTQ. The final vote came down the interpretation of the term ‘sex’ in a 1964 act. Whether it meant only man and woman or all sexual orientations. Neil Gorsuch who was the first appointments by Trump wrote out the order.

The Supreme Court’s decision on Monday outlawing anti-LGBTQ employment discrimination is a triumph for both the country and the court. It is a victory for the country because, in one fell swoop, the court granted vital protections to LGBTQ people in every state, making the United States a fairer, freer place.

Source: Quartz

Shooting yourself in the foot

The so-called stimulus package is an attempt by the Modi government to roll out the red carpet to investors to choose India. At the same time, the abysmal state of the government is forcing the tax officials to look at any vestige from which revenue can materialise. The Central GST collection during the lockdown fell from Rs. 47,000 Crores same period last year to a shade below Rs. 6000 Crores this year. An 87% per cent drop. The IT Department slapped Tiger Global with a tax bill of Rs. 14,500 Crores. Flipkart would not be Flipkart without Tiger Global. Antagonising them despite a Double Tax treaty with Mauritius is not a great move.

Earlier this week, news reports said Tiger Global may take India’s quasi-judicial body, Authority of Advance Ruling (AAR), to court over its claim that the investor has outstanding tax dues on its sale of shares in e-commerce major Flipkart in 2018.

Prima facie, experts, believe Tiger Global is protected against the payment under the India-Mauritius Double Tax Avoidance Agreement (DTAA), which prevents investors from being taxed twice on the same income in both countries.

Source: Quartz


Tipping Energy

Coal has been on its way down for a few years. In the US, gas-powered power plants have proved to be a much more viable source of energy than coal. This combined with the falling costs of renewable energy has made it harder for coal mines to continue to operate. Trump had said he will bring these coal jobs back. No one can stop the steady march of better economics, especially in a capitalistic system. This is not about the environment, it’s about profits.

The Texas-based utility that owns the Maryland plant just announced it will shut down Dickerson’s three power units after 60 years of operation, citing the high cost of operation. Like dozens of other coal plants across the country, Dickerson is a casualty of coal’s fast-moving demise. The industry has been squeezed between cheaper natural gas and expanding use of renewable energy for several years, but now the Covid-19-driven recession has jammed a stake through its economic heart.

Source: Wired

Stimulus – Togo Style

All of the big nations have been busy announcing large stimulus programs to get their economies back on their feet. To date, Germany has been one of the few that has put its money right in the hands of the workers who have lost their jobs or stand to lose their jobs. Togo is going a step further and putting money in the Novissi (digital wallet) accounts of informal workers!

For its part, Togo has looked to solve that problem with Novissi, a digital cash transfer program that sends funds to citizens through mobile money. Togo’s President Faure Gnassingbé has said the scheme targets informal workers whose incomes were “disrupted” by lockdowns. As of mid-April, over 1.1 million Togolese citizens—13% of the population—had registered for Novissi with around 450,000 people (65% of which were women) proving eligible beneficiaries and receiving up to 35% of the minimum wage.

Source: Quartz


Flying Low

The airline industry has always been out with a begging bowl. In good times and in bad. As Richard Branson famously put it – If you want to be a Millionaire make a Billion dollars and start an airline. Almost every major western airline has been bailed out by the government and in some of them, the governments hold massive stakes. Interestingly, low-cost budget airlines in Europe seem to be in better stead despite not having needed a bail-out.

Ryanair and Wizz stocks are better bets right now than Air France-KLM and Lufthansa, according to Morgan Stanley. That’s because the flag carriers rely more heavily on business travel and long-haul routes that will likely to be slower to bounce back. They will also have a lot of work to do to repay the money they’ve borrowed from taxpayers. (Norwegian Air, a discount carrier for long-haul flights that got a $271 million loan from the Norwegian government, has fallen more than 90% in the stock market this year.)

Source: Quartz

Real Estate

I had written about the reckoning that real estate will soon be faced with. The increasing move towards ‘work from home’ and the closure of malls causing an upsurge in OTT was bound to hit commercial real estate. Malls thrive because of the footfalls multiplexes drive to the malls. Multiplexes have been closed and have no clear opening date. Retailers refused to open their stores unless malls waived rent. An open mall with stores closed does not make for good business. DLF blinked.

Under the new proposal, DLF Shopping Malls is offering rental partners a 100% waiver on MG rent for the entire lockdown period till June 15. Post this, a 75% off on MG rent is offered till June 30, sources said. DLF has also proposed a 50%, 24% and 10% waiver on MG rent for July-September 2020, October-December 2020 and January-March 2021, respectively, they added.

Source: Financial Express

To add insult to injury, CavinKare one of the large FMCG companies based in the south known for brands such as Chic and Nyle decided to pull the shutters on its HQ. Everyone except factory employees can work from home!

“We have shut down our corporate office and closed all four branches. We see no need for it. We have called for bids from tenants for the 40,000sqft office,” Ranganathan said. Additionally, the four branches have also been shut. “Only factories and R&D centres will have employees come in and work,” he said. Nearly 300 people worked out of the corporate office, while the company has a staff strength of 1,900. 

While most companies have announced aggressive WFH models in a bid to save on costs and stop the spread of the Covid pandemic, Cavinkare’s Ranganathan said he has chosen it for productivity reasons. “It is more from a productivity standpoint. We have seen a 30% increase in productivity in the nearly 100 days of lockdown,” he said.

Source: Times Of India

Technology / Science

The Price of Water

In space water is an especially valuable resource, but not for the reasons that you think. Yes, water is important for humans to survive. Also, in space, the only way to create thrust is by losing mass. Water = Mass. When you use fuel in space to propel, you are essentially ejecting mass to create force (thrust) towards the opposite direction. It costs about USD 18,500 to put one Kg in space. Not the most economical way to put fuel in space. Alternatively, you can mine the water on the Moon and use it as fuel. Now, NASA is going to determine the price for it.

That’s why Bridenstine’s statement is so important: If NASA follows through by saying we’ll pay $X for propellant delivered to location Y, that could give hypothetical lunar mining entrepreneurs the market they need to get off the ground and encourage private propellant buyers to make their own plans to use these resources. (One technological wrinkle will be designing spacecraft for regular refuelling.)

Source: Quartz

Retweet no more

Recently Twitter has grown a spine. This has meant that the company is beginning to cut back on all kinds of misinformation. How many times have you retweeted an article just after looking at its headline without even bothering to read it? They have started tracking that!

Twitter seemingly expanded the amount of data it collects from users to include the links in tweets that were opened, the tweet that included the links, and when it was opened. Zucker-Scharff noted that the link-tracking appears to have begun last month; he said the file containing the history of links on which he had clicked did not appear the last time he examined Twitter’s code in 2018.

Put together, this does much more than flag if a user is sharing something they haven’t read. It could also identify them. For example, if law enforcement has anonymized browser data on several users, officials could use timestamps to identify the person, matching the anonymous data with the Twitter timestamps.

Source: Wired

Spying with Lightbulbs

Researchers have found a way to listen to conversations taking place by watching the vibrations on a lightbulb! So stop using bulbs. LED all the way.

Researchers from Israeli’s Ben-Gurion University of the Negev and the Weizmann Institute of Science today revealed a new technique for long-distance eavesdropping they call “lamphone.” They say it allows anyone with a laptop and less than a thousand dollars of equipment—just a telescope and a $400 electro-optical sensor—to listen in on any sounds in a room that’s hundreds of feet away in real-time, simply by observing the minuscule vibrations those sounds create on the glass surface of a light bulb inside. By measuring the tiny changes in light output from the bulb that those vibrations cause, the researchers show that a spy can pick up sound clearly enough to discern the contents of conversations or even recognize a piece of music.

Source: Wired


Have you ever watched a Chess match? I am guessing not.

Hence it would come as a great surprise that Twitch, a service that streams video games is getting hooked to Chess. All thanks to Grandmaster Hikaru Nakamura. I was watching a short video included in the news piece and its amazing.

Signing off…

General Thinking

Disruption of Real Estate

Real Estate will perhaps be the worst-hit industry in the aftermath of this pandemic. Several industries are changing and one does not know what the future looks like. None is going to be as badly disrupted as Real Estate. 


Real Estate is often classified into two categories – Commercial and Residential.

Demand for commercial real estate arises out of activities such as Retail and Office Spaces. In addition to this, there is what is referred to as value-added real estate which includes Hospitality (Hotels and Restaurants), Hospitals, Sports Complexes, Schools, etc which many people use. There are also factories and warehouses, which often low Residential real estate is pretty self-explanatory. 

While Residential real estate is mostly developed and sold to the end-user or investor as might the case might be; a lot of commercial real estate is owned and operated by real estate companies. The operators can be a third party such as Marriott or Hilton in the case of hotels; malls operators such as Writers manage the tenants and help monetise the malls. In other cases, the real estate companies themselves decide to run that side of the business as well.

Commercial real estate is going to see their businesses get decimated in the coming months and years.

Trouble with Real Estate

Several IT companies who are also amongst the largest users of commercial real estate – tech parks et al – are not considering work from home as a norm. TCS went to the extent of announcing that it would probably let 75% of its workforce ‘work from home’. A company that has 4.5 Lac employees saying that should send shivers up the spines of many real estate developers. Amazon in the US has extended its work from home policy till 2nd October. 

Silicon Valley startups that have put foosball tables, spas and what not, to keep employees happy and productive are finding – avoiding the 3-hour commute makes their employees plenty happy and also more productive. Many in the Valley are considering revising it to 2-day ‘work from office’ each week. Millions of square foot of commercial real estate would find its way back into the market. Who will occupy them? Also if this becomes the norm, what does it mean for future commercial developments?

In a way, I see an opportunity here for co-working spaces. If companies are going to allow 2-days-a-week ‘work from office’, the real estate needs are going to be ever fluctuating and co-working spaces can use a layer of technology and their per-seat model to cater to this dynamic requirement that many companies would have. If a company has 100 employees maybe 70 show up on Monday, 34 on Tuesday, 8 on Wednesday only for 80 to show up on Thursday and 3 on Friday. The question is would this become a norm for all companies. Just like the 9-5 was made a norm by industrialisation.

With the reduction in movement outside, fewer people are going to go out shopping; at least temporarily. Many stores will shut down in the short term. A lot of people have already moved to e-commerce for good in the meantime. What are the categories of retail which may never come back up – ones that do not provide differentiation or experience. Grocery Stores will find it very hard to climb up the ladder again. Also, it augurs very badly for any new FMCG brand that is being launched because discovery will become harder. 

It is going to be worse for restaurants which will have to limit the number of covers because of social distancing. Implying that a restaurant meant to cater to 120 people at a time will end up with 40. I expect there to be far fewer dine-out options by December 2020. Maybe more cloud kitchens.

Hospitals, for now, are in high demands but the rise of tele-consulting authorised by the government of India and many others also means small clinics will begin to disappear. The doctors can save the commute and spend more time consulting patients. Only those engaged in procedures such as dentists would probably need to hold on to their clinics. This change will not happen suddenly but the gradual shift will occur over the coming year(s). 

Education perhaps warrants an entire blog on its own. Apart from extra-curricular activities, education, at least in India, is a drab affair. None of which requires students to be in class. There is little to no team-based activities. If it is just about a teacher standing at the board and lecturing – kids, they do not need to be sent to a building to make that happen. This would be true of even engineering students (excepts for labs perhaps).

In Conclusion

Broadly, I expect demand for commercial real estate to plummet and never come back up to the levels that it was at before this episode began. Offices will have to be reimagined and so will retail. Hospitality will have to undergo a drastic transformation of capacity. Air traffic and business travel may not resume to levels of December 2019 for a couple of years if not more. How to get locals to use this capacity more?

Which brings us to residential real estate. A developer who is a native of Trichy or Chitradurga will no longer NEED to be based out of Bangalore or Chennai if work from home becomes the norm. Also, if the visit to the office is once or twice a week, can I live further away from the workplace? Even if it is 40 Kms, I don’t have to travel every day. Further, if more and more people are working from home, traffic on the roads are bound to be lesser thereby making the commute faster. Would this change the face of our cities altogether? Are the days of the high rise, high density living over? In the US, more and more families are making a move to the suburbs where the real estate costs are lower and space greater. This is going to mean residential real estate will only be purchased by those who will ultimately occupy it. Over the next 12 months, expect a pruning in prices based on how the work situation pans out. 

Different countries and markets might adopt different approaches to this. One thing is for certain, 100% of the workforce will not go back to work from an office. This will change the dynamics of real estate for certain. Where different markets end up remains to be seen. 

P.S. A lot of the construction activity in India is predicated on migrant labourers. Many of whom were driven to starvation and had to escape the cities they came to. Will they ever come back? How long before they venture out again? Who will fill the labour gap while these labourers are not available? Costs of construction are bound to rise as local labour is harder to find and has a rich set of options when the economy re-opens.