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
| Aug 11, 2010
CTBUH changes height criteria; Burj Dubai height increases, others decrease
The Council on Tall Buildings and Urban Habitat (CTBUH)—the international body that arbitrates on tall building height and determines the title of “The World’s Tallest Building”—has announced a change to its height criteria, as a reflection of recent developments with several super-tall buildings.
| Aug 11, 2010
BIG's 'folded façade' design takes first-prize in competition for China energy company headquarters
Copenhagen-based architect BIG, in collaboration with ARUP and Transsolar, was awarded first-prize in an international competition to design Shenzhen International Energy Mansion, the regional headquarters for the Shenzhen Energy Company.
| Aug 11, 2010
Jacobs, Arup, AECOM top BD+C's ranking of the nation's 75 largest international design firms
A ranking of the Top 75 International Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
New air-conditioning design standard allows for increased air speed to cool building interiors
Building occupants, who may soon feel cooler from increased air movement, can thank a committee of building science specialists. The committee in charge of ANSI/ASHRAE Standard 55 - Thermal Environmental Conditions for Human Occupancy—after months of study and discussion--has voted recently to allow increased air speed as an option for cooling building interiors. In lay terms, increased air speed is the equivalent of turning up the fan.
| Aug 11, 2010
Architecture Billings Index flat in May, according to AIA
After a slight decline in April, the Architecture Billings Index was up a tenth of a point to 42.9 in May. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. Any score above 50 indicates an increase in billings.
| Aug 11, 2010
Free-span solar energy system installed at REM Eyewear headquarters
The first cable-suspended free-span solar energy system was completed today over the REM Eyewear headquarters parking lot in Sun Valley, Calif. The patented, cable-supported photovoltaic system created by P4P Energy is expected to generate 40,877 kilowatt-hours of renewable electricity per year, enough to power five to six single family homes and to prevent 1.5 million pounds of carbon from being released into the atmosphere.
| Aug 11, 2010
Construction employment declined in 333 of 352 metro areas in June
Construction employment declined in all but 19 communities nationwide this June as compared to June-2008, according to a new analysis of metropolitan-area employment data released today by the Associated General Contractors of America. The analysis shows that few places in America have been spared the widespread downturn in construction employment over the past year.
| Aug 11, 2010
Jacobs, Hensel Phelps among the nation's 50 largest design-build contractors
A ranking of the Top 50 Design-Build Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Arup, SOM top BD+C's ranking of the country's largest mixed-use design firms
A ranking of the Top 75 Mixed-Use Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
