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 | Feb 8, 2017
London office building employs transitional forms to mediate between the varied heights of surrounding buildings
Friars Bridge Court will provide a transition between the unvarying height of the buildings to the south and the more varied heights of the northern buildings.
Office Buildings | Feb 7, 2017
SOM-designed HQ will provide new riverfront space for C.H. Robinson
Over 1,000 employees will work in the HQ building when completed.
Office Buildings | Feb 6, 2017
The see-through office: Why interior glass is all the rage in workplace design
The hottest material in workplace design—interior glass—opens offices to light and collaboration. But what about privacy and acoustics?
Office Buildings | Feb 3, 2017
Zurich defies center-core office archetype with stacked, cantilevered HQ
The top bar is 500 feet long, spans 180 feet between the bottom two bars, and cantilevers out 60 feet to the east.
Office Buildings | Feb 2, 2017
3 tips for designing workplaces that support culture, brand, and community
An authentic culture cannot be forced, but can be encouraged and supported.
Office Buildings | Dec 14, 2016
The importance of 'Place' in the workplace
More, and more, companies are emphasizing the importance of creating a meaningful sense of place in the office environment for all of their employees, writes Gensler's Kevin Rosenstein.
High-rise Construction | Dec 13, 2016
The tallest building in Manhattan’s Meatpacking district tops out
The office, designed by CetraRuddy, will be completed in 2017.
| Dec 6, 2016
Workplace pilots: Test. Learn. Build
Differentiated from mock-ups or beta sites, workplace pilots are small scale built work environments, where an organization’s employees permanently reside and work on a daily basis.
Office Buildings | Dec 6, 2016
eBay’s San Jose headquarters has a new interactive hub and welcome center named Main Street
The campus’s new ‘front door’ is designed to immerse visitors and employees into the company’s global commerce.
Office Buildings | Nov 16, 2016
Bjarke Ingels Group and Heatherwick Studios confirmed as architects for Google’s new London Headquarters
The headquarters will be located at Kings Cross, London.
