Offices Across America Must Be Torn Down, Says Investor Who Won Big in 2008

Kyle Bass has some advice for real estate investors: Tear it down.

The founder of Dallas-based Hayman Capital Management says office buildings in cities need to be demolished because demand isn’t returning and it’s impractical to turn most towers into apartments.

“It’s one asset class that just has to get redone, and redone meaning demolished,” said Bass.

The Dallas-based investor shot to fame more than a decade ago betting against subprime mortgages before the US housing collapse. He’s since pushed a series of contrarian investments that have occasionally burned investors such as predicting the collapse of Japanese government debt and Hong Kong’s dollar.

His expectation of more pain in the office market reflects a more widespread view that the pandemic has driven a semi-permanent shift toward remote and hybrid work that imperils lower quality buildings that are older and lack amenities.

The office vacancy rate in the US climbed to 20.2% in the first quarter, up from 19.6% in the last three months of 2022, according to Jones Lang LaSalle Inc., and recent weakness in tech has forced companies including Meta Platforms Inc. and Inc., to scale back their footprint.