Remote Work Will Have A Huge Potential Impact On Office Building Values
The San Francisco Business Times had an article on June 9, 2022 where studies are showing that due to remote work office values could drop by half a trillion dollars in the United States during this decade. This $500 Billion dollar negative valuation change would affect not just investors but also local governments who rely on property tax revenue for their operations. Class A+ office building rents might rise, but Class B office buildings could take the biggest hit as companies downsize and relocate to quality. One factor having a major impact on the return to the office is employee commute patterns. During the pandemic many renters and buyers relocated to less expensive locales, much more distant from the office as they worked remotely, but now with many companies requesting or requiring a return to the office even coming in a few days a week can be problematic. The average one way commute time in 2019 was 27 minutes, and for 10% of employees over an hour. For those taking the train, ferry or commuter rail the average one-way commute was 71 minutes. “Moody’s is forecasting the current office vacancy rate of 18% nationally to remain around that rate for the next 18 to 24 months. What is the silver lining in all of his? If the landlord has little or no debt they can be creative in their leasing strategies. Tenants will remain on top of the negotiating game for the next few years. Amd as I am a tenant rep specialist this is great news for my clients.
