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 8, 2019
Denver office building features 13,000 sf green roof
Dynia Architects designed the building.
Office Buildings | Apr 5, 2019
2019 trends in the workplace
From retention and career advancement to the ethics of inclusion and diversity, these five trends will play a major role this year in design, strategic planning and workplace development.
Industrial Facilities | Mar 10, 2019
The burgeoning Port San Antonio lays out growth plans
Expansions would accommodate cybersecurity, aerospace, and defense tenants, and help commercialize technologies.
Office Buildings | Mar 6, 2019
How to leverage design and culture’s two-way relationship for better workplaces
The relationship between workplace design and company culture isn’t all that different from a tango.
Office Buildings | Feb 15, 2019
A healthier perspective: Office developers bet on wellness amenities to attract top-notch tenants
Owners and developers are driving demand for wellness features and practices—active stairways, biophilia, enhanced air quality, etc.—as one more way draw tenants.
Office Buildings | Feb 15, 2019
Vancouver’s new office building will be a stack of reflective boxes
OSO and Merrick Architecture designed the building.
Office Buildings | Feb 11, 2019
Real-world wellness pays off
3form, a materials manufacturer, did a top-to-bottom remodel of its Salt Lake City headquarters campus that included adding a 14,500-sf gym.
Office Buildings | Feb 5, 2019
Duluth Trading Company moves to new HQ building
Plunkett Raysich Architects designed the project.
Interior Architecture | Jan 14, 2019
To get more involved earlier in projects, a leading furniture dealer launches a firm for commercial interiors construction
Vantis is positioned to integrate design with offsite customized fabrication.
Office Buildings | Jan 11, 2019
Open offices are bad!
The Harvard studies on the unintended effects of open office defines it as space where 'one entire floor was open, transparent and boundaryless… [with] assigned seats,' and the other had 'similarly assigned seats in an open office design, with large rooms of desks and monitors and no dividers between people's desks.'
