NYC's $58 billion remote work wipeout
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
The shift to remote work destroyed about $58 billion, or 33%, in the value of office real estate in New York City through 2021, according to a working paper.
The big picture: The provocatively titled "Work From Home and the Office Real Estate Apocalypse," published earlier this summer, underscores how the work-from-home boom was largely a bust for pricey corporate office space.
- If it turns out that office culture has permanently moved away from a five-day-a-week in-person model — and there are strong signs that's happening — than there will be more losses to come, the authors say.
Why it matters: While no one is crying for big office landlords, the decline in value — and loss of workers it signals — could have significant spillover effects on the city, which depends on a steady stream of commuters to fill-up tax coffers.
Details: For their paper, the researchers looked at a range of data, including office building valuations and occupancy rates, real estate investment trust (REIT) stock prices, and the market for commercial mortgage-backed securities.
- Higher-quality office buildings saw less of a decline in value, according to their analysis.
- That could signal a shakeout in office space not unlike what's happened to retail malls. The best real-estate sticks around, while more middle-of-the road properties wind up getting repurposed for other uses — or leased by companies that wouldn't have been able to afford such space before.
Wait, didn't the authors say something about an "apocalypse"? Since the paper was released online, there's been some pushback on the term, said coauthor Arpit Gupta, a finance professor at NYU Stern School of Business. Still, he maintains that this is a significant moment.
- "Certainly we think there are a lot of important knock-on consequences this shift is going to have," he said.
