Posted on 10/03/2022 4:27:33 PM PDT by FarCenter
The surge in remote work, and a decline in demand for office space, during the COVID-19 pandemic has apparently wiped an estimated $453 billion off commercial real-estate value. That's not good news for investors and pension funds relying on the value of these buildings.
The US National Bureau of Economic Research (NBER) came up with the figure, and is predicting what it calls an "office real estate apocalypse." While it focused its work on New York City, data from 105 office markets throughout America between 2000 and 2022 was included in a report this fall.
Prior to the coronavirus outbreak, 95 percent of office space was occupied in the US, according to the bureau. By the end of March 2020, occupancy dropped to 10 percent, it said. As of only a couple weeks ago, the NBER said office occupancy is still only 47 percent.
Around the US, that resulted in a 17.5 percent decrease in lease revenue between January 2020, and May 2022, and not only because fewer offices were being occupied, but also because those that are being rented are going for shorter terms, lower prices per month, and a lot less floor space is needed as staff are told they can work from home for most or all the week.
Prior to the pandemic, 253 million square feet were rented per year; as of May 2022, just 59 million square feet had been rented, NBER's data indicates. "This indicates a massive drop in office demand from tenants who are actively making space decisions," NBER said.
There's another problem: vacancy rates are not only at a 30-year high, NBER said 61.7 percent of in-force commercial leases haven't come up for renewal since the pandemic. What that means is that commercial "rents may not have bottomed out yet," NBER said.
(Excerpt) Read more at theregister.com ...
Thanks, Pence-FRAUDci.
My former company closed their massive call center in Austin once all the employees started working from home.
Cottage demand is up?
That’s not much of a loss overall.
All the restaurants, delis, stores, etc., that relied on office workers being nearby with money to spend ... what of them?
They’re done. Stuff happens...oh well!
Those sorts of businesses are hurting and some have probably closed permanently.
Use it to create residential housing?
This is why there’s a push to get workbees back to the office. That’s a lot of tax money gone bye-bye.
Just as I predicted in March 2020 ...
Economic Darwinism. (Many of them won't be coming back.)
They're not putting the toothpaste back into the tube. It's obvious that many people don't have to shuffle into the workplace five days a week, and there are employers more than willing to hire those who have no interest in playing that game anymore.
For the employers that insist people return to the office, the price they will pay for the unnecessary panic in March of 2020 will be a high one; they will find themselves either allowing staff to remain at home or losing them altogether.
Time to start converting them to residential space of people have a place to live that doesn’t cost $1 million.
That is one job that is easily remote. You will have to be on "call" every minute except when you are on a break or taking a lunch. It is specific enough so everyone knows what they are expected to do. But other jobs, we'll see the employers require their employees return to the office.
Can we ever just say "prices are going to come down"? Is everything a danged apocalypse now? (See what I did there?)
I suppose calm analysis doesn't sell papers.
Here in L.A. it’s the REVERSE. They are selling / leasing warehouse space for ecommerce and manufacturing. Just spoke with a couple of rich Jew owners who sell on Amazon and Ebay and they are having problems leasing / buying buildings. for expansion.
Manufacturing is coming back to L.A.?
I’m never going back. I won’t even agree to work on a hybrid basis. Its 100% remote or I look for some other opportunity.
They’re dead. A lot more money is going to stay in the suburbs or move out of the big cities and to small towns and to rural areas.
For the first time in 150 years since the start of industrialization, the economic forces are going to cause people to move out of big cities.
I enjoy going in. Run a charity auction house. Most of it is online sales but I have fun. Something to be said about getting work done, physically working with the product and stuff. The people I work with are awesome.
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