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 18, 2011
Dow Building Solutions invests in two research facilities to deliver data to building and construction industry
State-of-the-art monitoring system allows researchers to collect, analyze and process the performance of wall systems.
| Oct 17, 2011
Big D Floor covering supplies to offer Johnsonite Products??
Strategic partnership expands offering to south and west coast customers.
| Oct 17, 2011
Schneider Electric introduces UL924 emergency lighting control devices
The emergency lighting control devices require fewer maintenance costs and testing requirements than backup batteries because they comply with the UL924 standard, reducing installation time.
| Oct 14, 2011
AISC develops new interoperability strategy to move construction industry forward
AISC is working to bring that vision to reality by developing a three-step interoperability strategy to evaluate data exchanges and integrate structural steel information into buildingSMART's Industry Foundation Classes.
| Oct 12, 2011
Vertical Transportation Systems Reach New Heights
Elevators and escalators have been re-engineered to help building owners reduce energy consumption and move people more efficiently.
| Oct 12, 2011
Building a Double Wall
An aged federal building gets wrapped in a new double wall glass skin.
Office Buildings | Oct 12, 2011
8 Must-know Trends in Office Fitouts
Office designs are adjusting to dramatic changes in employee work habits. Goodbye, cube farm. Hello, bright, open offices with plenty of collaborative space.
| Oct 12, 2011
FMI’s Construction Outlook: Third Quarter 2011 Report
Construction Market Forecast: The general economy is seeing mixed signs.
| Oct 11, 2011
Pink light bulbs donated to Society of Memorial Sloan-Kettering Cancer Center
For every Bulbrite Pink Light Bulb that is purchased through the Cancer Center Thrift Shop, 100% of the proceeds will be donated to help support breast cancer research, education, screening, and treatment.
| Oct 11, 2011
ThyssenKrupp elevator cabs validated by UL Environment
The conclusive and independent third-party validation process is another step toward a green product line.
