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 | Jul 5, 2019
This will become the tallest shipping container building in the world
Patalab is designing the building.
Design Innovation Report | Jun 25, 2019
2019 Design Innovation Report: Super labs, dream cabins, office boardwalks, façades as art
9 projects that push the limits of architectural design, space planning, and material innovation.
Office Buildings | May 29, 2019
Smart buildings can optimize wellness
Employees want wellness initiatives built into their work experience, especially when they’re in spaces that can leave them feeling stiff, stressed, and sick.
Office Buildings | May 29, 2019
HQ2 in cue: Amazon’s Arlington, Va., headquarters has energy-efficient design
With more than two million sf of LEED-certified office space planned, Amazon's new designs for its second headquarters in Arlington, VA, also will have green space, a one-acre park, and bicycle and public transportation access.
Sustainability | May 28, 2019
Carrier’s world headquarters in Florida goes green
The structure is the first commercial building in Florida to achieve LEED Platinum v4 Certification.
Office Buildings | May 14, 2019
Sail on, Royal Caribbean: HOK-designed headquarters celebrates cruise ship industry
The building’s design is inspired by the design of its fleet of cruise ships—with flowing lines.
Mixed-Use | May 2, 2019
A series of green bridges will connect these two towers in Shenzhen, China
Steven Holl Architects designed the project.
Office Buildings | May 2, 2019
HOK’s latest study takes a new look at tech workplaces
The report provides insight into the relative importance of such things as amenities and occupant health for recruiting and retaining workers.
Office Buildings | Apr 25, 2019
Study: Half of corporate and government offices offer wellness programs
Nearly 30% of worksites offer programs for physical activity and fitness, according to the CDC.
Office Buildings | Apr 8, 2019
It’s time for office amenities to get to work
Amenities with the greatest impact on effectiveness and experience are those that directly support the work needs of individual employees and their teams.
