Researchers from the NYU Stern School of Business and the Columbia University Graduate School of Business say the work-from-home movement will result in $500 billion of lost value in office real estate.
In a recent study, the researchers found a 32% decline in office values in 2020 and predict a 28% fall “in the longer-run.” The work-from-home shift since the pandemic has caused significant changes in lease revenues, office occupancy, lease renewal rates, lease durations, and market rents, researchers say.
Robust tools for working from home had been in place for years, but the necessities of the pandemic pushed widespread adoption of remote work. According to the researchers, office occupancy dropped from 95% in February 2020 to 10% within a month. By May 2022, it had only bounced back to 50%.
If the trend remains strong, a lot of office space might not be necessary. That would mean massive financial implications for land values and valuations in lending, nearby retail space, and tax resources for local governments.
The declines don’t fall evenly. There is “some evidence of a ‘flight to quality,’ particularly in rents,” researchers say. But rents may have yet to bottom out, as vacancy rates are at 30-year highs in many cities, and on average two-thirds of leases haven’t come up for renewals yet.
Related Stories
Office Buildings | Apr 4, 2017
Amazon’s newest office building will be an ‘urban treehouse’
The building will provide 405,000 sf of office space in downtown Seattle.
Standards | Mar 29, 2017
Wellness movement is catching on with AEC firms
Hord Caplan Macht the latest to join the club by submitting its offices for certification under Fitwel’s program.
BIM and Information Technology | Mar 28, 2017
Digital tools accelerated the design and renovation of one contractor’s new office building
One shortcut: sending shop drawings created from laser scans directly to a wood panel fabricator.
Office Buildings | Mar 27, 2017
New York warehouse to become an office mixing industrial and modern aesthetics
The building is located in West Chelsea between the High Line and West Street.
Office Buildings | Mar 24, 2017
Brookfield expands its ‘office of the future’ brand to Houston
The developer engaged four design firms to come up with unique suites it will market under its DesignHive label.
Office Buildings | Mar 21, 2017
Fruit company’s HQ acts as an oasis among surrounding industrial processing yards
Graham Baba Architects designed the project around a central, landscaped courtyard.
Office Buildings | Mar 20, 2017
The new workplace: More than a generational issue
Today’s workplace requires designers and employers to look holistically at the organization’s culture, its criteria for success, and its place in the world.
Office Buildings | Mar 7, 2017
Large creative office projects generate staggering returns for property investors
A new Transwestern report examines the adaptive reuse trend across the U.S.
Office Buildings | Mar 2, 2017
White paper from Perkins Eastman and Three H examines how design can inform employee productivity and wellbeing
This paper is the first in a planned three-part series of studies on the evolution of diverse office environments and how the contemporary activity-based workplace (ABW) can be uniquely tailored to support a range of employee personalities, tasks and work modes.
Office Buildings | Mar 2, 2017
Office renovation and addition give new life to a section of Huntsville, Ala.
The newly opened Freedom Center, near Redstone Arsenal, includes a 10,000-sf conference center.