Researchers at New York University and Columbia University revised a study they released last year measuring the effect of work-from-home on New York City’s office stock.
The update shows that the city’s offices will lose 44% of their pre-pandemic value by 2029 — up from the estimated 28% when the authors first published the study a year ago.
With the return to office seemingly stabilizing at about 50% occupancy, the long-term impact of remote work on New York’s office values increased.
“We now estimate a more persistent work-from-home regime, which has more of an impairment of office values even in the long run” Said one of the authors.
New York’s office buildings saw a notable surge in physical occupancy after Labor Day last year, hitting nearly 47%. But that seems to have been somewhat of a ceiling. As of May, occupancy was slightly higher than 48%.
The authors found that companies that make little use of their office space are declining to renew leases or moving forward with only a portion of their space. Data from Cushman & Wakefield show that 78% of Manhattan’s office stock was contractually leased in the fourth quarter — a 30-year low.
“Firms appear to demand substantially less office space when they adopt hybrid and remote work practices. Such practices appear to be persistent.” Said one of the authors.