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
| Oct 10, 2013
Carnegie Mellon study looks at impact of dashboards on energy consumption
A recent study by Carnegie Mellon took a look at the impact of providing feedback in an energy dashboard form to workers and studying how it impacted overall energy consumption.
| Oct 9, 2013
SOM gets second crack at iconic modernist structure in New York
More than 50 years after SOM completed the Manufacturers Hanover Trust building, the firm is asked to restore and modernize the space.
| Oct 7, 2013
Nation's first glass curtain wall exterior restored in San Francisco
The Hallidie Building's glass-and-steel skin is generally recognized as the forerunner of today’s curtain wall facilities.
| Oct 7, 2013
10 award-winning metal building projects
The FDNY Fireboat Firehouse in New York and the Cirrus Logic Building in Austin, Texas, are among nine projects named winners of the 2013 Chairman’s Award by the Metal Construction Association for outstanding design and construction.
| Oct 2, 2013
Corporate HQ in 10 months made possible with BIM coordination
An integrated Building Team uses BIM/VDC to convert a 1940s-era industrial building into a flashy new headquarters for Hillshire Brands in a matter of months.
| Oct 1, 2013
13 structural steel buildings that dazzle
The Barclays Center arena in Brooklyn and the NASCAR Hall of Fame in Charlotte, N.C., are among projects named 2013 IDEAS2 winners by the American Institute of Steel Construction.
| Sep 24, 2013
8 grand green roofs (and walls)
A dramatic interior green wall at Drexel University and a massive, 4.4-acre vegetated roof at the Kauffman Performing Arts Center in Kansas City are among the projects honored in the 2013 Green Roof and Wall Awards of Excellence.
| Sep 19, 2013
What we can learn from the world’s greenest buildings
Renowned green building author, Jerry Yudelson, offers five valuable lessons for designers, contractors, and building owners, based on a study of 55 high-performance projects from around the world.
| Sep 19, 2013
6 emerging energy-management glazing technologies
Phase-change materials, electrochromic glass, and building-integrated PVs are among the breakthrough glazing technologies that are taking energy performance to a new level.
| Sep 19, 2013
Roof renovation tips: Making the choice between overlayment and tear-off
When embarking upon a roofing renovation project, one of the first decisions for the Building Team is whether to tear off and replace the existing roof or to overlay the new roof right on top of the old one. Roofing experts offer guidance on making this assessment.
