According to a recent report by McKinsey, offices in major cities worldwide are facing a significant risk of losing $800 billion in value due to the rise of remote work. The study also sheds light on the challenges landlords are encountering due to post-pandemic shifts in employment trends.
The pandemic accelerated the adoption of hybrid work cultures, leading to a decreased demand for office spaces. This decline in valuation represents a substantial 26% drop compared to 2019 and could potentially expand further to 42%.
McKinsey’s findings indicate that remote work is not only impacting the value of office real estate but also influencing the worth of retail and residential properties, as people’s changing habits influence their shopping and living preferences.
The report predicts a moderate scenario in which the demand for office space will be 13% lower by the end of the decade. Currently, employee attendance remains below 30% compared to pre-pandemic levels, with only 37% of employees returning to the office on a daily basis.
As a result of reduced attendance, rental prices have experienced a significant decline in real terms. San Francisco, a prominent U.S. city, has witnessed a substantial 28% decrease, while New York has seen an 18% decline. Meanwhile, European centers such as Paris, London, and Munich have demonstrated more resilience in the face of these changes.”