Home News New York Offices to See $453 Billion in Value Wiped Out Due to Remote Work

New York Offices to See $453 Billion in Value Wiped Out Due to Remote Work

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office New York in part, remote workaccording to a new study by the National Bureau of Economic Research (NBER).

According to a study conducted by researchers at New York University and Columbia University, office New York City dropped about 45% in 2020 after the COVID-19 pandemic caused “dramatic changes to where people work.”

Research shows that increased remote work will cause real estate values ​​to fall 39% below pre-pandemic levels over the long term, representing $453 billion in value destruction.

“As a result, the overall decline in commercial office valuations could be about $518.71 billion in the short term and $453.64 billion in the long term,” the study notes. .

The study, which has not yet been peer-reviewed, utilized lease-level data from real estate data platform CompStak and real estate investment trust financial reports.

It focuses on New York City, but includes data for 105 office markets nationwide for the period 2000 through May 2022.

“While high-quality office buildings were somewhat cushioned against these trends by a flight to quality, low-quality office buildings saw a much more dramatic shift,” the study noted. I’m here. “These valuation changes will affect the stability of local finances and the financial sector.”

“Impact on local finance”

High-quality office buildings generally refer to buildings that have been recently constructed or renovated and are fully equipped with high-quality facilities. They are generally “Class A+

As of the end of February 2020, 95% of US office space was occupied. However, by the end of March 2020, the occupancy rate had fallen to 10%, the authors said, adding that occupancy levels have remained “downhill ever since.”

The study also noted that as of mid-September, the average office occupancy rate was 47%, and the impact of remote work on office values ​​could have a significant impact on local government finances. I’m here.

“For example, New York City’s property tax share of the budget will be 53% in 2020, of which 24% will be office and retail property taxes. financial hole made [central business district] Office and retail tax revenues will need to be blocked by raising tax rates or cutting government spending,” they wrote.

The latest findings show that, due in part to the economic benefits associated with allowing employees, a range of companies across the United States are adopting work-from-home protocols initiated during the COVID-19 pandemic and ensuing lockdowns. This is due to the choice to properly maintain the work remotely.

But many companies, including Elon Musk’s Tesla, are telling workers they need to. Go back to the office or risk losing your job.

August, a group of Apple employees started a petition After the company told employees they would have to be back in the office three days a week starting the week of September 5, they asked for more flexibility in how they work.

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Katabella Roberts is a news writer for The Epoch Times, focusing primarily on US, world and business news.

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