The “trad wife” may be making a comeback, but the “trad commute” definitely isn't – and that's bad news for owners of commercial high-rises and other office buildings.
The rise of artificial intelligence is even more bad news for commercial property owners.
A “tradwife” is short for “traditional wife,” and is a woman who accepts traditional gender roles: she stays at home raising the children, cooking the meals, and keeping the house clean, while her husband focuses on providing for the household.
For those of a certain generation, think June Cleaver from “Bend Over Beaver,” or, for this decade, Betty Draper from “Mad Men.”
Thanks to these influential people, the traditional wife lifestyle has become popular again in recent years, but there are very few people like Don Draper – those who commute.
Suburban commuters are becoming a thing of the past… latest data from the New York-area Metro-North Railroad makes that abundantly clear: total ridership on these commuter rail lines is barely changing since 1990 and 30% below its peak levels in 2019. A steep decline in monthly passes and other “commuter tickets” explains much of this decline.
Commuter passes accounted for just 31 percent of total ridership last year, half the number in 1990. Voluntary one-way passes are filling some of the void, but Metro-North executives explain…
Because hybrid schedules do not require passengers to travel to the office every day, many passengers use non-commuter or discretionary tickets to travel to work. As a result, ticket purchasing has shifted from commuter tickets to these mediums.
New York’s commuting trends are not unique. They are representative of trends seen across the US, which is why many major city centres have vacancy rates well above the national average. Check out the graph below…
The growing work-from-home trend has been weighing on office demand for years now, and artificial intelligence is putting further downward pressure on that demand by eliminating jobs across all professions.
According to a Forbes article, “The State of the Hybrid Workspace in 2024,” 12.7% of full-time employees currently work from home, and 28.2% are using a hybrid model that includes both home and office activities. Both percentages are growing rapidly.
As expected, Colliers' US office market outlook report for the end of 2023 is bleak. The report states:
The U.S. office market currently has 233.3 million square feet of space available for sublease, well above the last cycle's peak of 133.3 million square feet in the second quarter of 2009. Lenders have been aggressive in extending and faux-extending loans, but with $2.8 trillion in loans coming due across all asset classes through 2028, the problem will intensify.
Colliers also reports that the national average vacancy rate in U.S. central business districts (CBDs) has soared to an all-time high, as the graph below shows.
Surprisingly, vacancy rates for downtown Class A properties are outpacing suburban office vacancies. This data coincides with the fact that more workers are choosing to work closer to home, if they are going to the office at all.
So while the “trad wife” may be making a comeback, the “trad commute” certainly isn't coming back, and while urban office space still has a role to play in the modern economy, it's now in the crosshairs of the AI megatrend.
And as this megatrend will only accelerate, it's important to prepare for the inevitable disruption – something I highlighted at the Road to AGI Summit last Thursday.
In that presentation, I also laid out my “future-proof” blueprint and revealed the name of my number one stock idea on the path to AGI. If you missed it, click here to watch the replay.
Now, let's take a look back at what we covered on Smart Money last week…
Smart Money Summary
AI could bring about “mental death”
The road to AGI raises important questions about our future. In this special guest issue, InvestorPlace Digest Editor Jeff Remsburg draws parallels between John B. Calhoun's mouse utopia experiment and the possible impact of artificial general intelligence (AGI) on humanity. Curious about the implications? Read more about the possible effects of AGI here.
The road to AGI dangers (and how to avoid them)
The rapid advances in AI present unique investment opportunities. While you may get more return in the short term by investing directly in AI technology, Eric believes the most promising long-term strategy is counterintuitive. As AI matures, it will disrupt technology-centric businesses. Therefore, investing in industries that AI cannot replace may be one of the best ways to prepare for AGI. Click here to learn more about these “future-proof” sectors.
Take these steps before technology takes over our minds
At Smart Money, we frequently study global macro trends and cycles, from healthcare to precious metals. Understanding these patterns not only helps us understand where we come from and how we've evolved, but also helps investors more accurately predict the future. But what happens when faced with a disruptive force that no one has seen before and that has no clear historical precedent? Click here to learn more.
The 'unpopular' stock that can beat Nvidia
One tech giant has been making headlines lately… but the wrong kind of headlines. But I believe this big-name company has the potential to blaze new paths to success with AGI, and I expect its unpopular stock to outperform wildly popular Nvidia shares. Read on to find out why I haven’t written off this leader just yet.
Elon Musk's AI startup xAI is pushing the boundaries of technology. With AI advancing so rapidly, Musk predicts we will be living in an AGI world within just 24 months, and xAI's investment opportunity gives the startup the potential to be at the forefront of this revolution. In our special guest issue on Sunday, Luke Lango shares the latest on xAI and how this venture could impact your portfolio. Read more here.
I'm looking forward to it
The Road to AGI Summit has officially concluded, but the journey is not over. In fact, it's just beginning. For investors, this means new opportunities arise as the AI landscape evolves.
While we weren't able to answer all of your questions during the event, we didn't want to leave your most pressing questions hanging.
Keep an eye on your inbox later this week as we answer some of the most important questions about the path to AGI.
stay tuned.
Thank you very much.
Eric Fry
