Work from home risks losing $800B from the value of office buildings in major cities, highlighting the potential losses landlords face from post-pandemic changes in employment trends.
Covid-19’s push toward hybrid work has depressed the need for office space, and vacancy rates are rising, the McKinsey Global Institute said. The $800B estimate in valuation losses represents a 26% decline compared to 2019 levels, with the blow potentially deepening to as much as 42%, the consultancy firm said.
A conservative scenario predicts losses of $800B, which is a 26% drop in the market to 2019 levels. The worst-case scenario is the market falling by as much as 42%. The impact may be greater due to the impact of high interest rates. In the best-case scenario, the demand for office space will fall by only 13% by 2030.
Currently, office space attendance is 30% lower than it was before the pandemic, and only 37% of workers have returned to offices.