Remote work risks wiping $800 billion from the value of office buildings in major cities, highlighting the potential losses that landlords are facing from post-pandemic changes in employment trends.
Covid-19’s push toward hybrid work has driven the need for office space down with vacancy rates rising, McKinsey Global Institute said Thursday in a report that modeled the impact on valuations by 2030 in nine cities globally.
The estimate for $800 billion in valuation losses represents a 26% decline compared to levels in 2019, with the blow at risk of deepening to as much as 42%, the consultancy firm said.
Lower office attendance has driven down asking rents in real terms. US cities have generally seen sharper drops, with San Francisco and New York City showing declines of 28% and 18% respectively, while European centers such as Paris, London and Munich have been more resilient.
— source bnnbloomberg.ca | Jul 12, 2023