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
| Dec 12, 2011
Mojo Stumer takes top honors at AIA Long Island Design Awards
Firm's TriBeCa Loft wins "Archi" for interior design.
| Dec 10, 2011
10 Great Solutions
The editors of Building Design+Construction present 10 “Great Solutions” that highlight innovative technology and products that can be used to address some of the many problems Building Teams face in their day-to-day work. Readers are encouraged to submit entries for Great Solutions; if we use yours, you’ll receive a $25 gift certificate. Look for more Great Solutions in 2012 at: www.bdcnetwork.com/greatsolutions/2012.
| Dec 10, 2011
Energy performance starts at the building envelope
Rainscreen system installed at the west building expansion of the University of Arizona’s Meinel Optical Sciences Center in Tucson, with its folded glass wall and copper-paneled, breathable cladding over precast concrete.
| Dec 10, 2011
Turning Balconies Outside In
Operable glass balcony glazing systems provide solution to increase usable space in residential and commercial structures.
| Dec 10, 2011
BIM tools to make your project easier to manage
Two innovations—program manager Gafcon’s SharePoint360 project management platform and a new BIM “wall creator” add-on developed by ClarkDietrich Building Systems for use with the Revit BIM platform and construction consultant—show how fabricators and owner’s reps are stepping in to fill the gaps between construction and design that can typically be exposed by working with a 3D model.
| Dec 9, 2011
BEST AEC FIRMS 2011: EYP Architecture & Engineering
Expertise-Driven Design: At EYP Architecture & Engineering, growing the business goes hand in hand with growing the firm’s people.
| Dec 8, 2011
HDR opens office in Shanghai
The office, located in the Chong Hing Finance Center in Shanghai’s busy Huangpu District, will support HDR’s design efforts throughout Asia.
| Dec 8, 2011
HOK elevates the green office standard
Firm achieves LEED Platinum certification in New York office that overlooks Bryant Park.
| Dec 6, 2011
?ThyssenKrupp acquires Sterling Elevators Services
The acquisition of Sterling Elevator Services Corporation is the third acquisition completed by ThyssenKrupp Elevator AG in the last three months in North America.
| Dec 6, 2011
New office building features largest solar panel system in New Orleans
Woodward Design+Build celebrates grand opening of new green headquarters in Central City.
