Remote work has been debated for the better part of three years. Should employees be given total flexibility in where they do their jobs or none at all? And are they more productive from home or less?
This fall, the debate was supposed to be settled after the pandemic was declared officially over. Many companies insisted that their workers return to the office and go back to the pre-COVID reality of packed cubicles and in-person meetings.
Stephen Schwarzman, the billionaire CEO of investment giant Blackstone, the world’s biggest commercial property owner, is squarely on the side of people returning to the office. But he’s skeptical that it will ever return to how it once was because, in his words at the Future Investment Initiative conference in Saudi Arabia earlier this week, “they didn’t work as hard, regardless of what they tell you,” didn’t have to wear work clothes, and saved time and money on their commutes. Translation: Many offices will continue to sit empty, and as a result companies will unload office space, knowing they’ll need less of it in future.
Blackstone declined to comment for this article.
As for Blackstone, it was among the first companies to require employees to return to the office. Since June 2021, the company’s employees have had to be at the office five days a week. At the outset, COVID was a bigger threat, so Blackstone spent $20 million installing precautions in its offices. The company even covered cab fare for employees to commute so they wouldn’t have to take public transportation, Insider reported.
Even before, Blackstone was among the earliest major companies to reopen its offices after COVID lockdowns, giving employees the option to return as early as the summer of 2020. The decision caused some employees to balk at the idea of socializing with others when a vaccine was still unavailable.
Blackstone is the world’s biggest commercial property owner
Blackstone, which Schwarzman founded in 1985 with just $400,000, is the world’s largest commercial property owner. Commercial real estate faces “real fundamental headwinds,” president Jonathan Gray acknowledged on a July investor call. Despite Blackstone’s heavy investments in real estate, Gray said at the time that U.S. Offices account for only about 2% of Blackstone’s real estate equity portfolio. That represents a significant reduction from 2007, when commercial real estate accounted for 61% of Blackstone’s overall holdings.
At that point, Blackstone started to slowly wind down its office holdings. Since the pandemic, it’s had to write down the value of some office buildings that it still owns and defaulted on $562 million in Finnish bonds backed by a portfolio of office properties.
Because remote work is here to stay, Schwarzman believes companies will give up leases or not renew them when they expire. After that, those properties will “not [be] survivable as economic entities,” he said at the conference in Saudi Arabia.
Like most of Wall Street’s biggest names and richest men, Schwarzman abides by a work-round-the-clock ethos, saying once in an interview with Bloomberg that he worked 18-hour days when starting out. In 2019, he published a book of management principles that hinted at the hypercompetitiveness that drives his work ethic. “Never get complacent…Your competition will defeat you if you are not constantly seeking ways to reinvent and improve yourself,” he wrote.
Schwarzman is a big-time donor
Schwarzman, who has a net worth of around $30 billion, has been a longtime political donor. Earlier this year he made headlines for saying he wouldn’t support former President Donald Trump in the current Republican primary. During the 2020 presidential race, he donated around $3 million to America First Action, a super PAC that supported Trump’s reelection campaign. In the 2016 elections, Schwarzman had originally supported Jeb Bush, donating $100,000 to a super PAC that supported him. Once Trump won the nomination, however, Schwarzman backed Trump’s campaign.
Over the years, Schwarzman has also thrown his huge fortune around in the art world as a donor. He’s a trustee of the Frick Collection and underwrote an exhibition at the Museum of Modern Art in 2018; the main branch of the New York Public Library bears his name thanks to a $100 million donation in 2008. His donations have also extended to higher education. In 2015, Schwarzman donated $150 million to his alma mater, Yale University. Some of that money went toward building a performing arts center on campus. In 2019, he donated £150 million, or $188 million, to Oxford University for AI research, anticipating what has become a buzzy area of tech.
Correction, Oct. 24, 2023: This article’s headline was updated after publication to reflect that Blackstone is the world’s largest commercial property owner.