Working from home surged in popularity because of the COVID-19 pandemic and subsequent lockdowns. Although the crisis is largely in the rearview mirror, remote work continues to be popular because it offers flexibility and alleviates commuting stress.
Tesla Inc. CEO Elon Musk is not a fan of the trend.
“I’m a big believer that people are more productive when they are in person,” he told CNBC.
And it’s about more than productivity.
Musk noted that workers who make things people consume can't work remotely. And to assume that these workers have to work on site while you don't is “morally wrong.”
"It's like, really, you're going to work from home and you're going to make everyone else who made your car come work in the factory? You're going to make the people who make your food … that they can't work from home?" Musk said. “The people that come fix your house, they can't work from home, but you can? Does that seem morally right? That's messed up.”
The serial entrepreneur bluntly states, “The laptop class is living in la la land.”
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Calling BS
Remote work has long been a contentious topic. While many people appreciate the flexibility it offers, critics have raised concerns regarding managerial challenges and issues related to trust and productivity.
Access to remote work, as Musk points out, is another notable issue. Certain jobs inherently require on-site presence and cannot be performed remotely.
“People should get off the goddamn moral high horse with the work-from-home bullshit because they're asking everyone else to not work from home while they do,” he said.
Musk is not the only billionaire to call BS on remote work.
Real estate legend Sam Zell, who recently passed away, previously said that “all of this discussion about work from home is basically a bunch of bullshit.”
Zell had concerns about productivity.
“One of the biggest lies in the world is that people working from home are more productive than people working in the office,” Zell said. “You have much less productivity if you’re working from home in your pajamas with three little kids running around than if you’re in an office.”
Opportunities Ahead?
The rise of remote work has had a profound impact on office buildings. With a significant portion of the workforce embracing remote work, the demand for office space has experienced a notable shift.
During his recent Fox News interview, Musk said that “almost all cities at this point have record vacancies of commercial real estate.”
But if more employers share Musk and Zell’s view and bring their employees back on site, office properties could see better days ahead.
For investors looking to gain exposure to the segment, here are two real estate investment trusts (REITs) Wall Street finds particularly attractive.
Boston Properties Inc: Boston Properties Inc. BXP has a portfolio of office buildings concentrated in Boston, Los Angeles, New York, San Francisco, Seattle and Washington, D.C., totaling 54.5 million square feet. They are 91% leased with a weighted average lease term of 7.6 years. Evercore ISI analyst Steve Sakwa has an Outperform rating on Boston Properties and a price target of $66, implying a potential upside of 34%.
Alexandria Real Estate Equities Inc.: Alexandria Real Estate Equities ARE is a pioneer in the life sciences real estate niche. The company owns, operates and develops life science, agtech and advanced technology campuses in innovation cluster locations, including greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland and the Research Triangle in North Carolina. The REIT’s North American properties have an occupancy rate of 93.6%. Mizuho analyst Vikram Malhotra has a Buy rating on Alexandria and a price target of $145, around 22% above the current levels.
If you want to invest in real estate but don’t share Musk’s view on remote work, remember that there are other types of income-generating properties aside from office buildings. And you don’t have to risk too much to get in the game. With crowdfunding platforms, it’s easy for retail investors to buy shares of more resilient real estate assets such as multifamily properties or farmland.
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