The past year has been a brutal one for office buildings -- and the people who invest in them. The coronavirus pandemic has forced countless employers to shift their staff to remote work, and now, more than a year later, so many companies are used to this setup that they're thinking of sticking with working from home for the long haul. After all, today's tools and technology make it possible for workers to collaborate from afar, and there are big savings to be reaped by dumping office space and not re-signing leases.
Of course, many office real estate investment trusts (REITs) have seen their value plummet since the pandemic began. This trend has been especially notable in markets like New York City.
But one tech giant has just announced plans to sink money into a new office campus. And that should give office REIT investors a reason to keep the faith.
Apple is going big on office space
Apple (NASDAQ: AAPL) has announced that it will be opening a new campus in the Raleigh, North Carolina area. Its price tag? Upward of $1 billion.
The new campus will employ an estimated 3,000 people in the technology field, including software engineers. This campus is on top of the $1 billion Apple campus in Austin, Texas, that's expected to open up next year.
What's interesting about Apple's expansion plans is that as a tech company, it's perhaps more suited than most companies to maintain a remote work setup. And many software engineering jobs are, by nature, less collaborative and more dependent on skilled individuals hammering away on their computers -- something they have the capacity to do just as well at home.
Still, it's clear that Apple values in-person work, since it's not in the business of just throwing its money away. And so its expansion should give real estate investors reason to believe that office buildings have the potential to stage a comeback.
What's also notable about Apple's plans is that the company is looking to set up office space far away from Silicon Valley, which has long been home to major tech companies. And it's not the first company to pass over an expensive market in favor of a cheaper one. Last year, Oracle (NYSE: ORCL) announced plans to relocate its company headquarters from California to Austin, Texas.
In addition to its new North Carolina campus, Apple is making plans to expand to other cities, including San Diego and Boulder. The company also plans to add 20,000 U.S. jobs over the next five years.
The Millionacres bottom line
To be clear, Apple will continue to use Silicon Valley as its home base. But the fact that it's also looking at other markets could spell real opportunity for investors once the demand for office space opens back up on a national level. While there's still probably a way to go until leasing demand increases in most markets, there are already enough signs of life to leave office REIT investors in a much better place than they were at the start of the year.