Do Our Economic Policies Suck?

Economic policies are designed to enhance access to wealth and power. They're often purported to be discovered by a brilliant economist using math to prove a theory. And once such a theory is "proven", it's treated more as science than what it really is, a made up version of the world by an individual or individuals having their own bias – an answer in search of a question. This is what I've learned reading The Rebel Accountant's new book, Money Mania.

I'll admit it: I'm a skeptic. My personal default is to assume the game is rigged. Most of my career has been about ignoring the big questions (they are a distraction) so I can remain focused on the prize, maximizing my own results within whatever system I'm handed. I've not been ruthless but I've also not been especially contemplative. Money Mania forced me to consider some of the more prominent economic theories of the past century. It's hard to come away feeling like they didn't suck. Take Milton Friedman's 1970 argument that a company's only job is to grow shareholder profit. That idea pushed executives toward short-term wins over long-term strategy, and the result was often worse products, disengaged employees, and unhappy customers. A failed approach that did the opposite of what it was designed to do (e.g., it decreased shareholder value).

Here's the thing, economic rules aren't discovered, they're made up. Usually by the people who already have the most fortune and power. However they may be packaged, whatever massive benefit they proclaim to offer society, they were created to benefit a select few.

I've thought about my own career in Darwinian terms. It's always been me against everyone else. In my distorted version of my own economy, when things go well, it's because I've optimized my situation better than most. When things go badly, I've hit the limits of my resources. But I've rarely paused to consider the game itself.

Now we're at a moment of real consequence. A handful of world powers, individuals, and corporations hold the keys to AI, and AI will reshape everything. It may be the most economic power ever held by so few.

I'm a capitalist at heart. I want to believe in free markets. But Money Mania forced me to sit with how unevenly those markets spread their benefits, and to wonder if "free" mostly means free from government intervention, free from rules that would otherwise ensure broader distribution of benefit. All this so that a relatively small group can enjoy massive wealth and power.

Here's my takeaway: it's not enough to keep my head down and optimize for my own family. I must do better, to be mindful of the bigger picture. No, I won't be able to influence economic policy. But I can influence the small world of my economy. I can treat others better and strive to create opportunities for others in all that I do. Maybe that's how we make economic policy suck less.

The Unreasonable Landlord

As a tenant advisor, one of the hardest parts of my job is explaining to a client why a landlord won't accept terms that are otherwise reasonable and reflective of the market for comparable space, especially in a lease extension. The answer is tough to communicate, conveying as it does an element of responsibility to the client. You see, it's a matter of leverage, which is a function of time. When a tenant looking to extend an existing lease starts the process too late and fails to activate market leverage, the landlord can hold the line on above-market terms.

What occupiers sometimes miss is that while there's a comparable market where similar spaces, leased in a similar timeframe, tend to land at similar value, every transaction is still its own negotiation. The landlord is under no obligation to price its space "at market". In fact, their incentive is to maximize the value they extract from each lease. There's no ceiling or floor on that. The market is simply what a willing tenant will pay. And the "comparable market" is really just an average of outcomes, some negotiated well by tenants who used time and leverage, and some negotiated poorly by tenants who didn't.

The real difference isn't a comparison between reasonable and unreasonable, but what you get when you run a strategic process versus what you get when you show up late with no leverage. If I'm doing my job well, my client never has to ask why the landlord won't be reasonable. But the setup isn't always clean. I'm not always brought in early enough to build leverage before it's needed.

The fix is simple: start early and hire someone whose job is to build that leverage before you need it. Do that, and you'll find your landlord to be much more reasonable.

Thoughts on Agency

Regardless of the work, those with agency are the ones who thrive. It's what carries the mailroom clerk to the executive floor. It's what lets someone tune out the noise and just keep moving forward. It's the moment someone realizes the place they work is broken, and leaves to build something better themselves. It's where entrepreneurs live. When we have agency, we see ourselves as capable of more, capable of being better.

In truth, the best companies foster agency in their employees. They want people who think for themselves, who push boundaries, who color outside the lines. That's where the magic happens. It doesn't matter if you manufacture widgets or build AI: most of the advancements in your product will come from the relatively small percentage of employees who think for themselves.

There's no question we're in a time of great change. We're moving fast from changes in where we work to far more significant changes in how we work, driven by continued advances in AI. This is not a time to play the victim. It's a time to look for ways to be part of the future, not a time to get stuck in "this is how we've always done it." This moment calls for flexibility, for curiosity about what's next. In the end, agency brings accountability. Those who have it feel a measure of control over their work, and their lives, that is, ultimately, healthy.

The Advisor's Dilemma

Often, the quality of a company's real estate planning is limited more by internal dynamics than external market factors. Corporations are, after all, a collection of people, each with their own interpretations and behaviors. Soon after its first communication, a leader's vision risks getting lost in translation. And not all leaders have a clear vision to begin with. They got where they are by trusting their own instincts, by believing their ideas are better.  This can make them less open to being challenged, breathing life into bad ideas.

Real estate planning can feel like a less dramatic version of the movie Speed, in which Keanu Reeves and Sandra Bullock create and execute real-time strategy amid the chaos of keeping a bus above 50 MPH to avoid a bomb that will kill everyone aboard. No one's likely to die from a bad office. But your company might.

As an advisor, I sometimes see flaws in the mission itself, usually the result of leadership failing to consider all factors before setting objectives. For example: leadership wants a near-term sale of the company, valued as a multiple of EBITDA, then executes a lease that hurts EBITDA.

More common than a flawed mission is a lack of capability to execute it, which usually shows up in a very human way. The team tasked with the project is inexperienced and insecure. With the right advisor, inexperience isn't a problem, it's an opportunity. A good advisor-client partnership builds internal teams. Insecurity is the real killer. An insecure team hides its lack of knowledge out of fear of losing its job. That breaks the communication between advisor and client, and the outcome suffers.

The advisor's dilemma is how to address this. Advisors rarely have access to the top, where the flawed mission began, and even less often the credibility to question it there. At the execution level, the dilemma looks different: whether to flag internal team dynamics that threaten the outcome, and if so, to whom.

The advisor's own incentives complicate things further. Paid on completed transactions, it's easy to look the other way. Take the order, do the deal. Yes, the plan is flawed, but you're not paid to fight that fight, you're paid to transact. The strong advisor finds a way anyway: making sure leadership has considered every alternative, helping bridge gaps in capability, and putting the right solution ahead of just getting deals done.

Coming Soon!

At TenantSee, we're building tools to cut the risk and friction out of leasing office space — starting with Create Office, our proprietary algorithm that combines strategic market inputs with Cushman & Wakefield data to help you define the right target before you ever engage the market.
 
Answer a few questions and Create Office approximates the space you need, the capital required, and the annualized cost, giving you a clear read on where to focus your search. It connects the dots between space usage, building type, design, location, and lease term, so you can see the financial impact of each decision before you make it.
 
The result: align people, finance, design, and real estate around one optimal outcome, then go to market with a laser focus instead of noise. Less wasted time. Better economics. A stronger employee experience.
 
Create Office launches soon. Stay tuned.

Consulting vs. Brokering

The lease expires in 24 months. You've been in the space five years. Everyone likes it. The working assumption is you'll extend when the time comes. Nothing to think about just yet.

Or is there?

One of the persistent challenges in my business is breaking through institutionalized and misinformed assumptions about the office lease. Markets have trained companies to treat the lease as fixed: something you address when the term ends, or when some external force demands it, an expansion, a contraction, or a crisis. Broker relationships tend to be structured the same way. Communication picks up near expiration, when it's time to transact. You can forgive leaders for writing off the entire brokerage business as transactional, given the volume of emails and calls that materialize the moment a lease date appears on someone's radar.

The problem is what you're not seeing in the meantime.

During the final 36 months of a lease, three things deserve ongoing attention: how the space is actually serving the company, what the market is doing, and what's happening inside the building. This is the window where opportunities are routinely missed, not through negligence, but through a lack of structured awareness.

The use case question is fundamental. Is the space still working? Has headcount, work model, or collaboration behavior shifted enough to warrant a different footprint? If the bias is to stay, what changes would make staying the right answer?

The market question is equally important, and often counterintuitive. In-place economics that look favorable today can look very different in 24 months if rents are trending upward. When the intent is to renew, moving early to lock in current market terms can be a meaningful financial decision, avoiding as it does the cost of a spiking market.

And the building dynamic matters in ways that aren't always visible from the outside. A landlord managing a vacancy problem or a maturing loan has a different calculus than one operating from a position of strength. A tenant willing to extend early, adding weighted average lease term to the rent roll, may find the landlord unusually motivated to structure a deal that reflects that value. These moments don't announce themselves. They require someone who is paying attention.

The discipline to operate this way is not the norm. It is fundamentally at odds with a business model built around transaction volume. Brokers whose business centers on transacting have limited incentive to initiate conversations that may conclude with "not yet" or "nothing to do here." But there is a subset of tenant advisors who work differently. Consultative by nature, they stay in the conversation between transactions. Their clients don't think of them as brokers in the transactional sense. They think of them as advisors who happen to execute leases when the moment is right.

This is the layer of advisory where strategic opportunity lives.  It’s the difference between consulting and brokering.

Marketing Hype vs. Reality

Those who sell real estate services have rarely let the truth get in the way of a good story. Even before the promise of AI, it wasn't difficult to find marketing narratives that tested the boundaries of truth. Now, as the entire world braces for significant changes in how stuff gets done, the real estate industry is, once again, drawing the attention of those with designs on upending a business that has functioned the same way for decades.

From our vantage point, we welcome change. We've embraced powerful AI resources, like Claude, to streamline workflows and build and improve tools that previously may have required 3rd party software and/or were difficult to stand up. But for now, the markets are not agentic. Those looking to secure longer-term office solutions must still navigate a complex labyrinth of variables. Only a highly experienced and skilled tenant advisor can provide the strategy and resources necessary for optimal results. The best advisors draw on scaled resources like market research and deep market engagement, and they employ proprietary strategies to create market leverage.

For our part, we continue to lean heavily into the belief that the best office solutions reflect an upfront understanding of the nuanced interplay between key drivers, from budget to design to employee experience. You can't just wander into the market, start looking at buildings, and expect the best result.

Some new market entrants are selling the promise of better search, faster service, and avoidance of those pesky brokers that make everything unnecessarily complicated. These companies purport to offer one place to see all available space, making the process of leasing an office feel more like renting an Airbnb or searching for a home on Zillow. It's a tempting idea. The problem? There are many.

First, the premise of easy search is a fallacy. The limited supply one can find online reflects a small segment of total available supply and is often fraught with inaccurate information on availability, rental economics, and more. When you casually search for office space online, you are not seeing the full picture. The only way to conduct a thorough search is to first define your target objectives and then filter the entire available supply against those objectives.

Next, there is the problem of information. Startup and small real estate firms lack experience and depth in the markets. They're missing vital data. Their deficiencies run from lacking basic comps, to knowing which tenants are actively negotiating, to being unable to ascertain market trends, to failing to understand the capital market dynamics that shape how investors negotiate. Offers submitted by these advisors are typically weak and poorly crafted.

These advisors aren't really advisors at all. They're more like the concierge desk at your favorite hotel. They may describe their service as "free to you, the tenant." This disingenuous misrepresentation has been made by weak service providers for decades. The tenant broker fee is the same regardless of whether you use a highly qualified advisor or a fast-talking concierge. The "don't worry, we're free" narrative exists to distract you from asking what services you're actually getting for the fee.

To be fair, companies seeking office space are at least partially to blame for the emergence of these service-light models. Startup companies want an office market that functions like Airbnb. They want "AirOffice." For seed or Series A startups, this is understandable. They obtain funding and the first thing they want to do is hire and bring people together. But the markets are increasingly littered with bad real estate decisions.

It pays to do a little research before securing office space: understand how the process works and the role brokers play before jumping straight to identifying space options. The complexity of the market has not changed. Good outcomes are about more than pretty pictures. The information you need to make great decisions remains largely opaque, known only by those who are now and have long been deeply engaged in the markets. Be wary of the chasm between marketing hype and market reality - - - it’s where your lease shifts from asset to liability.

Starting at What, Not Where

Deciding where to lease office space can be unexpectedly challenging. Every decision variable eventually translates into economic value, either as a cost or a benefit. But the real challenge is what we call the search problem: companies often begin with “where” when they should begin with “what.”

Starting with what means bringing the right stakeholders together before the search begins. It means building consensus around the factors that drive value and clarifying what the company needs its office to accomplish.

Markets present options. Those options are all different. An occupier that starts touring space without a clear vision of the desired outcome oftenends up chasing one imperfect solution after another. Each option is abandoned when the team discovers it fails to meet a need they had not fully considered. One common example is when the people leading the search are not closely aligned with the financial considerations that matter most to the executive team.

The quality of a lease solution ultimately reflects how well it addresses the full spectrum of variables that define value, with each variable weighted appropriately.

Before you think about where, spend time defining what.

Put the right team in place, including finance and human resources. Study location drivers like employee commute patterns. Discuss the budget, not only annual rent expense but also the capital required to transact. Evaluate the time needed to execute the project correctly. Consider how different space solutions and designs may affect employee engagement, recruiting, and brand.

Bring in a real estate advisor early. The best tenant advisors guide companies through a thoughtful process that produces a specific target outcome, matched to a realistic timeline.

A strong “what” should include the target market, the type of space, the type of building, the project timeline, and the project budget. It may also reveal that certain objectives need to be adjusted because they are not realistically actionable. That is something you want to learn before going to market, not after.

Once your what is fully defined and tested, you’re ready for where.

The "Gretzky Market"

Three forces have converged to create upward pressure on San Francisco office rents. Yes, you read that correctly: upward pressure.

First, solvent landlords with a reasonable cost basis and stable capital stack are ignoring the headline statistics. They know the market vacancy rate exceeds 30%. They don’t care.  They don’t have to. Vacancy is heavily concentrated in distressed and lower-quality assets, while leasing activity remains focused on a much narrower segment of available supply. Conditions in one segment of the market do not necessarily dictate outcomes in another.

Second, sophisticated data analytics are changing how landlords price space.  By segmenting demand and supply with far greater precision and providing real-time visibility into market activity, these tools allow landlords to make increasingly strategic pricing decisions. As discussed in last week's article on dynamic pricing, owners are no longer relying solely on historical lease comparables to establish value.

Third, and perhaps most important because it involves human behavior and compensation, we are hearing anecdotal reports that leasing and capital markets teams are entering a phase of the cycle where winning assignments increasingly depends on telling owners what they want to hear rather than applying conservative underwriting assumptions. Once this dynamic takes hold, it tends to reinforce itself as competitors begin marketing some version of "market-plus" pricing to secure new business.

When these three forces come together, landlord rent expectations can begin to detach from what can reasonably be viewed as current market value.

I call this a "Gretzky Market."

Wayne Gretzky famously said, "I skate to where the puck is going to be, not where it has been."

Today, landlords are beginning to ask occupiers to pay based on where they believe rents will be, not where they are now.

Dynamic Pricing Has Arrived in the Office Market

Landlords are increasingly using sophisticated, real-time data to determine how they price available office space. Historically, asking rents were established primarily through comparable lease transactions. The problem is that comparable lease data is inherently backward-looking. By the time a transaction becomes part of the market narrative, the economics were often negotiated months earlier. It was also difficult to precisely isolate the true competitive set for a particular space and understand the real-time dynamics within that subset of supply.

That is changing.

Today, institutional landlords can access highly detailed leasing intelligence through platforms like VTS, a software system widely used to track leasing activity across institutional office portfolios. Landlords require their leasing teams and brokers to report market activity into the platform, creating an expansive real-time dataset. Most major institutional owners now operate within this ecosystem.

More importantly, AI is beginning to transform that raw activity into strategic insight.

Landlords can now dissect the market at a micro level, segmenting supply by building quality, floor size, geography, tenant profile, availability timing, and competitive positioning. Instead of relying solely on completed lease transactions, they can analyze active negotiations and letter-of-intent pricing to understand where the market is moving in real time. In many cases, this provides a more accurate picture of current pricing pressure than signed leases.

The implications are significant.

We are beginning to see landlords make strategic pricing decisions based not simply on where the market was six months ago, but on where they believe it is heading. In some cases, owners may intentionally hold space off the market, allowing competing inventory to lease first so their remaining availability enters a tighter supply environment. Scarcity drives leverage, and leverage drives pricing.

This introduces a new level of complexity for occupiers.

Companies and their advisors must now understand the mechanics of dynamic pricing and the data influencing landlord behavior. Tenant advisors must possess the strategic capability to interpret the data and get ahead of how the landlord is using it to gain leverage in the negotiations.

Our long-held belief in  “selling our client’s tenancy,” as opposed to simply helping them “lease space”, has never been more relevant. Data may support a landlord’s pricing thesis, but not all demand carries equal value. The tenant willing to pay the highest rent is not always the tenant a landlord most wants over the long-term.

The Symmetry Problem

Markets reward those who possess superior information. In commercial real estate, landlords, lenders, brokers, contractors, and vendors operate with deep knowledge advantages that most tenants simply do not have. When companies lease office space, they enter an opaque market where bad information, incomplete information, or misunderstood information can cost millions of dollars. The companies that achieve the best outcomes are not necessarily the biggest or most sophisticated. They are the ones that close the information gap.

The first breakdown usually occurs in the hiring of a real estate advisor. When companies do not fully understand the leasing process, or the actual role of a tenant advisor, they evaluate brokers using the wrong criteria. They mistake access for strategy. They assume tenant representation begins and ends with showing available space. As a result, they often work with multiple brokers simultaneously, or worse, rely directly on the landlord’s broker to guide them through the process.

This creates immediate disadvantage.

Many companies believe more brokers means more options and therefore a better outcome. What they fail to understand is that finding “space” is easy. Finding the right space, aligned with business objectives, culture, growth plans, labor strategy, economics, operational efficiency, and negotiating leverage, is extraordinarily difficult.

Without a high-level tenant advisor, companies skip the most important part of the process: defining the optimal solution before entering the market. They begin touring space before they understand what they are actually trying to accomplish. Search becomes chaotic because the strategy never existed in the first place.

Compounding the problem is the compensation structure itself. Brokers are typically paid when transactions close, and in most cases, the fee is funded by the landlord. Many tenants never even ask how much their broker is being paid. They view the commission as a side arrangement between landlord and broker, something akin to a referral fee.

It is not.

The tenant pays for the fee through the rent stream. Every dollar originates from the economics of the lease. The moment companies begin thinking about brokerage compensation as though they are writing the check directly themselves, expectations change dramatically. They begin asking the right questions:

What strategic value is this advisor actually providing? What expertise are they bringing to the table?  How do the services correspond to the fee?  

Tenants suffer from asymmetrical information. Hiring the best tenant advisor is the single most important step a company can take to mitigate this issue.

More or Less?

Two truths are emerging in the San Francisco office market.

The first is surging demand for space from AI companies. It is increasingly clear that San Francisco is, and will remain, the epicenter of AI. The critical ecosystem has already been established. Talent, venture capital, strategic partnerships, M&A activity, research institutions, and universities are all concentrated here. And these companies are growing fast.

The nature of AI work, interdisciplinary, fast-paced, iterative, and highly confidential, tends to favor an in-office culture. Job growth in the AI sector has been robust. While difficult to measure precisely, estimates suggest AI-related employment in the San Francisco region has grown at an annual rate approaching 40% since 2022. AI demand has dominated the office market over the past two years and, at least for now, shows no signs of slowing.

The second truth is that AI is also causing layoffs.

We are already seeing an acceleration in workforce reductions tied directly to AI-driven productivity gains. Over the past year alone, the rapid development and deployment of agentic AI has begun reshaping how companies execute work, often reducing the need for human labor in the process.

How will this play out over time?

Our view is that the regional office market will increasingly divide into two distinct categories: high-performance assets and economically obsolete assets.

To be sure, this is already happening. Demand is concentrated in key clusters and focused heavily on higher-quality buildings. Companies, both AI firms and traditional occupiers, are competing for a much smaller pool of truly desirable space. As a result, premium rents are holding firm despite historically high overall vacancy.

In fact, today’s market often behaves less like a market with 30% vacancy and more like one with sub-10% vacancy, because so much of the inventory is effectively outside the competitive set.

Over time, if and as the desirable portion of the market fills, some demand will inevitably spill into secondary locations and lower-tier inventory. This has historically been part of the dynamic driving Oakland’s cyclical performance. San Francisco becomes too expensive, and some tenants move across the bay in search of value.

The question is not what happens if demand outpaces desirable supply. We know how that story ends.
The larger question is whether AI job creation will ultimately outpace AI-driven job loss.

Early indications are cause for caution.

We see potential disruption across a broad range of white-collar professions that currently fill San Francisco office buildings. Software engineering, legal services, finance, administrative support, consulting, and middle management all appear exposed to varying degrees of automation and workforce compression.

AI may prove to be the most significant economic change agent of modern times, perhaps unlike anything we have previously experienced.
For now, the answer remains uncertain.

Will AI ultimately create more jobs, or fewer?

Why I Read Every Word of the Lease

Leases are not a good read. They are long, often 60+ pages, and filled with sentences you have to read three times to fully understand. It is no surprise that many brokers pass the document straight to the attorney without comment. “I’m not a lawyer, I can’t give legal advice.” Fair enough.

But that misses something important.

While a lease contains legal concepts that absolutely require a strong attorney, its core purpose is to document the business deal. The terms negotiated in the letter of intent are not legal abstractions. They are business decisions. And ensuring those terms are carried through accurately is the broker’s responsibility.

No one is better positioned to do that.

Does it matter? It does. I routinely see lease language that subtly, and sometimes materially, erodes a tenant’s position.

I came across a good example this week.

My client is leasing second-generation space, previously built and largely usable as-is. The landlord is providing a tenant improvement allowance, but like most tenants in this situation, my client is not spending evenly across the entire premises. In their case, the bulk of the investment will be focused at the entrance of the space.

Spending tenant improvement funds on isolated areas of a second-generation space is common.

What was not normal is the language I found buried in Work Letter of the draft lease.   Here, I found a provision requiring the tenant improvement allowance to be spent evenly across the entire space. If the tenant concentrated improvements in only half the premises, for example, the landlord could reduce its contribution proportionally.

Same allowance. Very different outcome.

That kind of language rarely shows up in a letter of intent. It appears later, in the lease, where it is easy to miss if no one is looking for it.

This is why I read every word.

Tricky Markets

The trajectory of rental economics varies dramatically by market. In St. Louis, for example, historical rents show relatively little movement over time. The market is largely flat. In San Francisco, the opposite is true. Rental values have swung by 50% or more in both directions across cycles.

San Francisco is a boom-and-bust market. Tethered to the tech sector, it responds quickly and often violently to the cycles of the innovation economy. For owners, this demands a forward-looking mindset. Values that fall sharply have a tendency to rebound just as quickly. Locking into long-term economics at the bottom of a cycle can prove costly.

We are in that kind of moment now. Landlords are weighing whether to transact today at current market levels with a stable, long-term occupier or hold out for improved pricing in a recovery. Among higher-quality assets, there are early signs of hesitation, even regret, around deals struck at today’s terms.

This is when markets become difficult. The best landlords stay disciplined and honor their commitments. Others don’t. We are already seeing instances of owners attempting to re-trade previously agreed terms. Every landlord has the right to set pricing. But once a tenant commits at that level, the terms should hold. Moving the goal posts undermines trust and introduces unnecessary risk into the process.

Critical Steps in Managing the Cost of Designing and Constructing Office Space

Tenants who fail to rigorously assess design and construction costs before signing a lease expose themselves to budget overruns and difficult decisions under schedule pressure. These decisions are often reactive and suboptimal. This dynamic is the result of poor planning and is highly avoidable.

A great tenant advisor adds value in many ways, but one of the most important is assembling the right team at the right time. For tenants pursuing long-term leases with custom-built space, that team must include both an architect and a general contractor.

Experienced brokers can provide an early cost framework to help establish a realistic budget before a space is selected or designed. This is an essential first step, but it is only a starting point.

Architects and designers are creative by nature. Their initial designs often exceed budget. That is not a flaw, it is part of the process. The next step is cost engineering, where the design team and contractor work together to align the vision with the budget while preserving key elements of the design. This is a disciplined and highly collaborative exercise.

Having the right team is not enough. They must be engaged in a way that aligns with the tenant’s objectives. In most cases, this means bringing on a general contractor early under a “GC and Fee” structure. Under this approach, the contractor is retained for a fixed fee covering general conditions and overhead, rather than being selected later through a lump sum bid.

Early engagement creates accountability and improves cost visibility. It also reduces the risk of change orders, which are a primary driver of budget overruns. The goal is to enter the final bidding phase with a fully developed set of construction drawings and a well-vetted cost.

At that stage, the general contractor runs a competitive bid process across all sub-trades. With this level of preparation, tenants significantly increase the likelihood of delivering their space on budget and on schedule.

Making Room for What's Next

Here in the early days of 2026, information economy workers could be forgiven for abandoning their fight over remote work. After all, squabbling about where work is done when your job is not secure seems a bit like rearranging the deck chairs on the Titanic.

This got me thinking about how we sometimes don’t appreciate what we have until it’s gone. During and after the pandemic, information economy workers enjoyed a moment when it seemed they could demand more from their employers. Many seized the opportunity to redefine where (and sometimes when) they work. With a tight labor market, employers, nervous about losing staff, begrudgingly met such demands. But that’s no longer the case. Especially in the tech sector, where companies seem more focused on firing than hiring.

It seems clear that advancements in AI achieved over the past year have created the real possibility of significant changes in how work is done in the information economy. Indeed, recent layoffs seem to confirm that such changes are already underway. It’s time for affected workers to make room for what’s next. To do so requires an adaptive mindset, one that seeks a way to participate in, not run from, the increasing presence of AI in the workplace.

Why You Shouldn't Be Paying the AI Startup Rate

The San Francisco office market is white hot. Demand is at a record high. Huge AI companies like OpenAI and Anthropic grab headlines when they take down entire buildings. But it’s the steady surge of smaller startups that pushes demand to its current highs.  

38% of the leases completed in Q1 2026 were with AI companies. At the top end, these companies are competing for large blocks (such as Anthropic’s lease of all of 300 Howard Street), a market that is increasingly scarce.  At the low end, series A and B startups are scrambling to secure well-located, pre-built (even furnished) spaces they can lease immediately. Speed is a key driver. They will pay a premium for occupancy-ready space.

Both ends of the AI demand spectrum present risk to the landlord.  Many of these companies end up paying a risk premium.  The rents they pay define the market.  Beneath the surface, landlords are aware of the risk. Even OpenAI, the largest AI tenant in San Francisco, is high risk due to its massive compute spend, which requires it to continue raising large rounds of funding.

Your profitable, stable company presents a decidedly different risk profile to the landlord. You should not be paying the risk premium. We’re beginning to see landlords favor stability. After all, this is San Francisco. The market has a long history of boom-and-bust tied to tech demand. The key is to negotiate from a position of strength, aligning your occupancy with stability. Let the guys with 12 months of burn pay the premium.

Landlord as Bank: The Hidden Cost of "Convenient" TI Financing

The cost to build office space is at an all-time high, forcing companies to make deliberate decisions about how tenant improvements are funded. These decisions directly impact cash, balance sheet, and EBITDA—and should not be left solely to the real estate team.

For companies where valuation matters, structure matters. A business preparing for a sale, for example, may choose to fund all or a portion of the improvements with cash to preserve EBITDA, given valuation is often tied to an EBITDA multiple.

Sometimes when there is a shortfall between the tenant improvement allowance a landlord has offered as a concession to the lease and the total cost to build the space, the landlord will offer to finance the difference.

At first glance, this may appear to be an efficient solution. But the details matter.

If structured as a true loan—separate from the lease—the tenant can capitalize the improvements, record debt, and keep rent lower. This is typically more favorable from an EBITDA perspective.

But most landlords aren’t truly interested in acting as a lender. Their real motivation is to optimize for asset value.

They do so by embedding the additional funding into the lease as rent. This step makes the cost of the financing more expensive to the tenant while turbo-charging the value it creates for the landlord. How? By adding the loan value to rent, it becomes subject to the annual rent escalations common in most leases (typically 3%), further compounding the cost of the loan. Most importantly, the increased rent drives higher net operating income, which directly increases the landlord’s asset value upon sale.

Tenants must carefully assess the implications of landlord offers to finance additional tenant improvements, as the proposed structures often carry hidden costs.

Why Non-Tech Companies Need More Time to Lease Office Space in San Francisco

At roughly 86 million square feet, the San Francisco office market is not particularly large. When you break it down by submarkets, building class, or premium view space, it becomes even smaller. With approximately 8 million square feet of active demand, much of it concentrated in the best submarkets and best buildings, the leasing environment can become challenging for companies that want to make thoughtful, well-informed decisions.

Technology companies, especially AI firms, represent the largest share of that demand. But San Francisco is home to many companies outside the tech sector. These businesses must often operate in a market shaped by the behavior of fast-moving technology tenants.

That dynamic creates friction.

Tech companies frequently move faster and are often willing to pay more to secure the right space. Historically they have absorbed space quickly and sometimes with less sensitivity to deal terms. It is not that terms do not matter to them. Their priorities are simply different. In the technology economy, speed often determines the winners. Companies race to scale and investors continue to provide enormous capital to the firms they believe will get there first.

For more mature, non-tech businesses, this can make the leasing process difficult. Space they carefully evaluate can disappear overnight when a technology company decides to move faster or pay more.

So what should these companies do?

Allow more time for the leasing process.

Time creates flexibility. It allows companies to evaluate options thoroughly, negotiate with multiple landlords, and pivot when opportunities disappear. When tenants lose space to faster-moving competitors, the real problem is rarely the leasing strategy. The problem is usually a lack of time to recover and pursue alternatives.

Starting early does not mean starting blindly. Begin too early and the process can lose momentum. But if companies are going to make a mistake on timing, it is far better to err on the side of starting too early rather than too late.

Because in San Francisco’s office market, time is not just part of the leasing process.

It is often the single greatest source of negotiating leverage an occupier has.

Block’s Layoffs: Validating the Citrini Thesis, or Solving for Gross Mismanagement?

Last week, Jack Dorsey, CEO of Block, Inc., announced the company is laying off a whopping 40% of its workforce, more than 4,000 employees. Coming on the heels of the Citrini Memo, it is difficult not to at least consider the parallels between Block’s actions and the fictional scenarios portrayed therein. Indeed, Dorsey’s commentary on the matter reads as if taken directly from Citrini’s dystopian narrative:

“The core thesis is simple. Intelligence tools have changed what it means to build and run a company. I don’t think we’re early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.”

In the aftermath of this announcement, a number of people, including former Block employees, have argued the layoffs are really about eliminating corporate bloat. AI, they suggest, is simply a convenient narrative that creates better optics by making the company appear to be getting ahead of a meaningful trend, rather than correcting for poor management decisions that resulted in massive overhiring.

I have questions.

If Dorsey’s stated case for the layoffs is valid, does this not align squarely (pun intended) with Citrini’s doomsday scenario? Alternatively, if this is really about correcting corporate bloat, how did Block management get so far off track as to add 40% more employees than necessary to run the company effectively?

To be sure, Dorsey makes clear that “gross profit more than doubled from the first quarter to the fourth quarter of 2025.” He goes on to write, “We believe this financial performance is just beginning to reflect the product development velocity improvements we drove this year.”

Is it possible Block generated $2.87 billion in profit while carrying $235 million in excess labor spend? Or is it more plausible that AI has already automated workflows that previously required large teams, making certain roles expendable?

The answer may lie somewhere in the middle. Yes, Block likely over hired. And yes, AI may now be enabling the company to automate work previously done by humans.

Either way, we will all be watching closely for signs that Dorsey’s prediction proves correct: that “the majority of companies will reach the same conclusion and make similar structural changes.”

One thing is certain. If AI-driven workforce reductions approach anything close to the scale of Block’s recent layoffs, and if similar levels of job elimination become commonplace, we should all be concerned.