Real Estate

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Feb 11, 2022

What’s Happening to All That Vacant Office Space?

by Gordon Polovin

With office vacancies climbing to unprecedented levels, the commercial office space market is clearly in turmoil. The driving force behind this dilemma is the popularity of remote working, brought on by the COVID-19 pandemic. Companies have discovered that there’s nothing wrong with employees sitting at home connecting through digital communications and the latest apps. Even with a rapid decline in COVID cases and the health threat receding, people globally prefer home base to office space. Why? Cutting out commutes saves incredible time and erases frustration from battling rush hour traffic. Additionally, enhanced flexibility allows for more family time and workout schedules. The property companies that build and own office space under REITS, pension funds, insurance institutions, and other organizations are in a bind: with a construction slowdown (if not complete stagnation), office rents are falling off a cliff, business-centric eateries are going belly up, and local/state authorities are seeing a hit to the bottom line. But are things really that bleak? Here are some stats to consider: Starting in March 2020, Manhattan office towers and the center of the USA’s two largest central business districts reflect value depreciation touching 25 percent, according to city projections released in April 2021. The collapse cited above represents close to a $1 billion disappearance in property tax revenue. Iconic entities such as JPMorgan Chase, Ford Motor, Salesforce, and Target are relinquishing office space. Indications are that for every 100 bank employees previously accommodated under an office roof, only 60 (a 40 percent reduction) have […]

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