seeing this from the business owners's lens not from the landlords or Property Management perspective or the the ownership perspective but from the business owner perspective of helping them are renting their property exactly the tenant the user of the space right Topline youve really you really excluding retail have three different categories of space you have office industrial and then research lab facilities and the office sector was hit hard and immediate as a result of Co you know when in 2020 all the employees within about a twoe period were told to go work from home you know I I always think had the internet not existed and had this happened 20 years before everybody would have been back to work in a month or two okay but because of zoom and remote working and internet connectivity people got very productive very quickly working from home and I immediately saw CEOs and business owners responding favorably to what they were terrified about which was people not being in the office people got working at home effectively comfortably and and this persisted for months now years and five years now postco the business owners are having a lot of difficulty getting all the horses back in the barn right behaviors changed people have moved all over the country remote working has become generally acceptable hybrid working has become more often than not the standard many corporations still don't have policies you you'd be shocked over 50% of the companies we talked to still don't have a return to office or remote working policy they're completely lafair and sort of let the employees do what they will as long as they're productive it's it's shocking actually how little leadership there has been around this and even those that do don't fire people because they can't enforce it probably it's essentially unenforceable right it's it's strongly encouraged strongly recommended and you're seeing some headlines right about some big companies threatening to enforce threatening to terminate people but most corporations in the country particularly businesses smaller than 500 employees just aren't willing to enforce this and and generally seem to be doing pretty well with hybrid and remote working so the the net result of that is companies need less office space okay so as covid began in 2020 Corporate America started shedding space either not renewing their leases putting space on the market for sublease or when their lease expires downsizing and so we now have 5 years of lease expirations where corpor America has given back millions of square feet of space every year back to building owners and landlords and generally availability rates around the country have hockey sticked and and it's going to be another three or four years of Carnage of this because there's still a lot of leases that haven't expired so there's a lot of 10year leases particularly in big Metro areas that were signed preco that still have yet to expire in the next 3 years and We Know by touring those companies spaces that they're all sitting around on way more space than they need so there's a lot of space still to come back there's another big shoe to drop and then you have industrial so the space is contracted they're under contract they're paying rent but then in few years from now they will not do that because they don't need the space that that's right and we go out and walk space for a living this is what we do we're in the market we're touring space with tenants helping them understand what their future requirements are and generally we see companies sitting on between 20 to 50% more space than they need so these are companies that have signed a 10year lease pre-co for 20,000 or 200,000 Square ft and they're in partial occupancy they're on multiple floors they've already baked the rent into their cost structure but when that lease expires they're all generally going to get smaller it's just a question how much smaller and it's this sort of death by a thousand slices thing where as thousands of leases expire over the next three years in each metro area and let's say 80% of those companies get smaller it's going to be a consequence right there the the amount of space given back versus what's retained or leased is going to be significantly less so we'll talk about kind of the numbers you because most Metro areas are now above 20% availability some like Denver 25 San Francisco 33 so these are historically High availability rates but you you only have San Diego County Orange County Miami that are in the heenes pretty much every metro area otherwise around the country is above 20% and that is the red zone for landlords you know once it's above 20% it's clearly a tenant Market landlords are in turmoil if it's if it's below 10% it's a landlord's market and that that range in between 10 and 15 is generally equilibrium historically above 15 means soft Market territory above 20 is is the red zone so a lot of a lot of office landlords have significant turmoil today and it's going to probably get worse over the next 3 years now what about the industrial uh space cuz industrial was booming right R were going up significantly yeah all that's true so when Co started very quickly the consumer moved to online purchasing right they stopped going to their local grocery stores and by the way the government gave away trillions of dollars of money right at the time and what did consumers do they started spending right so their home improvement projects uh pelons you name it people were spending trillions of dollars in the economy well most of that spending was online and so overnight big retailers like target.com walmart.com Amazon needed tens of millions of square feet of space in big big buildings that there was an extreme shortage of so there was a run on big buildings anything over 100,000 Square ft you almost couldn't find in Southern California like back in 2022 in the entire Orange County La region there were only about nine buildings on the market over 100,000 square F feet okay now there's 100 wow okay so what happened was you had this huge buildup by real estate developers in 2021 and 2022 to meet this demand well but developers kept going so in 2023 and 2024 developers built another one .2 billion billion square feet of industrial buildings around the country mostly in the Sun Belt so Inland umpire Phoenix Dallas Atlanta Denver so half a million to million square foot facilities and so if you big industrial big huge industrial buildings for the e-commerce companies that they thought would continue to grow well by 2023 we had started to normalize right consumers started going out in online sales became into equilibrium and so the Amazon of the world had as much space as they would ever need in fact Amazon has been a sublessor trying to get rid of space in the last two years so they're cutting back they're reducing back right they're they're now rationalizing their portfolio and they're trying to move into owned real estate or custombuilt buildings that have multiple levels in them as opposed to your traditional Warehouse building which is typically a a single level distribution environment so Amazon has changed ched how they use real estate and because of their lowcost of capital they've shifted to owning as opposed to leasing demand of apparated by the end of 2022 meanwhile Supply kept coming okay and so now across the country because of the Amazons and others wanting to suble space there's actually more space for suble in Warehouse inventory around the country than office space wow you know everybody talks about this glut of office space there's 220 millionare fet of office space for sub around the country there 250 million square ft of warehouse space available for sub so the industrial side is now getting hit really hard but nobody's talking about this right