back to article Remote work wipes $453b off office real estate

The surge in remote work, and a decline in demand for office space, during the COVID-19 pandemic has apparently wiped an estimated $453 billion off commercial real-estate value. That's not good news for investors and pension funds relying on the value of these buildings. The US National Bureau of Economic Research (NBER) – a …

  1. Yet Another Anonymous coward Silver badge

    In the words of Nelson Munce


  2. ecofeco Silver badge

    On no!


  3. Sorry that handle is already taken. Silver badge

    My heart bleeds

    Wait, no. My heart warms.

    And don't try to make me feel guilty for enjoying the collapse of a real-estate bubble just because unspecified "pension funds" might have been affected.

  4. rcxb

    That's not good news for investors

    "Investors"? "Speculators" is more likely... Property investors already get a sweetheart of a deal, able to get a tax write off for every dollar of reduction in profits, no matter how harebrained the plan.

    There's no shortage of demand for property in cities. If those commercial properties can be converted into apartments/condos, perhaps rents will finally fall, at least slightly relative to salaries, turning around the long decline of the middle class.

  5. DS999 Silver badge

    Balanced by gains in residential real estate values

    Given how quickly rents are going up in the same cities where commercial real estate values are dropping, real estate investors will be fine so long as they have exposure to both commercial and residential.

    It is strange to see rents going up when the need for actually living in e.g. NYC or SF is less than it was before the pandemic. Very strange, that's not what would happen in an unmanipulated market.

    1. Blank Reg Silver badge

      Re: Balanced by gains in residential real estate values

      Markets have been massively manipulated for more than a decade because of the stupidly low interest rates.

      Now the inevitable inflation has arrived and it's all unravelling. The stupidity bubble has popped and you actually need to think about how to invest, that's beyond the capabilities of most money managers.

  6. NeilPost Silver badge

    Fucking Good

    How many hundreds of Bn’s has it left in peoples hard pressed pockets not having to buy fuel , train tickets, over priced coffee and lunch.

    Money spent in the community, spent on homes, spent on the family, reducing CO2 emissions and for some offsetting the Tory Tripple-whammie Catastrofuck of Brexit, COVID and current financial crisis…. Plus global pressures on supply chains and impact of Ukraine on energy commodities speculation/profiteering by pretty much everyone from Putin, through BP/Shell, Tesco, Sainsbury’s to Kamikwazi Kwarteng/Truss.

    1. Sherrie Ludwig

      Re: Fucking Good

      How many hundreds of Bn’s has it left in peoples hard pressed pockets not having to buy fuel , train tickets, over priced coffee and lunch.

      Well, I will spare a tear for the little coffee and sandwich shops opened in and near downtown offices. Starblech's can just suck it, however.

  7. Anonymous Coward
    Anonymous Coward

    Turn the office buildings into homeless shelters

    There’s definitely a need for that.

    1. Howard Sway Silver badge

      Re: Turn the office buildings into homeless shelters

      Or even better, into actual homes, even if they're only modest studio flats. Then homeless people can have secure personal homes and rebuild their lives. Keep the rents cheap by mortgaging out the cost for 25 years and you solve both the cost of recouping the investment and a lot of homelessness. Nobody needs to make vast profits, just recover the overall costs.

      1. John Brown (no body) Silver badge

        Re: Turn the office buildings into homeless shelters

        "Nobody needs to make vast profits,"

        HERETIC!!!!! BURN him at the STAKE!!!!!

        You think those poor billionaires can survive with just one tiddly little yacht?

  8. deadlockvictim Silver badge


    Does this mean that there will be more reasonably priced offices for startups and small businesses in places where the rent is just too goddamn high (to quote teh journalist Matt Yglesias)?

    Is there any chance, then, that rents will fall for office space or does economics only work in one direction?

    1. Headley_Grange Silver badge

      Re: Economics

      Maybe, but why would you? The dispersion of workers applies to companies even more. There's no need to be in the old centres any more cos your customers and workers are no longer there. Park yourself in a provincial city, with good transport links and decent quality of life for workers.

    2. Bearshark

      Re: Economics

      "Does this mean that there will be more reasonably priced offices for startups and small businesses..."


      Just search for Louis Rossmann & real estate. He has some on-the-ground videos of the shame that 'IS' New York City real estate.

  9. Kane Silver badge

    Finally, the truth will out... is why everyone has been banging on about getting everyone back into the office.


    1. iron Silver badge

      Re: Finally, the truth will out...

      It has been pretty obvious, the people shouting about returning to the office loudest have been those whose business relies on people being in offices like office landlords.

      1. John Brown (no body) Silver badge

        Re: Finally, the truth will out...

        And those CEOs and board members don't just leave their money sitting in the banks, and definitely not all in their own compan's shares! They invest, and "everyone knows" property/real estate is where the big returns are.

  10. GruntyMcPugh Silver badge

    Are we sure it's Covid and WFH that's done this,...

    ... and it's not just a re-appraisal of the value of Trump's holdings?

    1. Evil Scot

      NO... You are fired.

      After all it is not just trump that is losing out. Other Reality show hosts are getting burned too.

      After creating the @mailer you think he would have seen this coming.

      1. John Brown (no body) Silver badge

        Re: NO... You are fired.

        A lot of Alan Lord Sugars wealth is property these days. He might have to sell his private jet!

  11. Lazlo Woodbine

    I always wonder about the maths behind these reports.

    Yesterday I read a report from a consumer organisation about power saving, they claimed that a TV uses 1.6Kw/h when on standby, so switching it off at the wall would save £275 a year,

    A simple check of my TV's manual (Hisense 55U8HQ) shows it uses less than 0.5w/h on standby, so assuming it's on standby 20 hours a day, I will save a total of £1.25 turning it off at the wall based on my current billing rate...

    1. Piro Silver badge


      You're using some funky units there, that don't make sense.

      The TV is maybe using 0.5w, but not watts per hour, that makes no sense as watts already includes a temporal component.

      Not to be confused in any way with kWh, kilowatt-hours, which is most definitely NOT kilowatts "per" hour, but rather an amount of energy consumed, as opposed to watts, which is a measure of power draw.

      1. ChrisC Silver badge

        Re: Units?

        It also sounds like the consumer organisation has got themselves royally confused here - 1.6kWh sounds more like the *annual* standby consumption of a "<0.5W on standby" TV, and I can't then figure out what byzantine calculations they managed to perform based on this figure to come up with an estimated 75p/day saving (unless this was just a *really* old report that's been reprinted without taking into account current unit pricing) if the TV were switched off completely...

        1. Lazlo Woodbine

          Re: Units?

          This is my point, I think the people who wrote the paper looked at a manufacturers enviroment statement of annual consumption then decided that was hourly consumption...

      2. Lazlo Woodbine

        Re: Units?

        So when my TV's manual says it consumes less than 0.5W on standby, how much power is it using per hour so I can work out the cost saving?

        I've assumed 20 hours standby per day and 34p per unit as stated on my latest bill...

        1. ChrisC Silver badge

          Re: Units?

          Your calculations have given you the correct end result (£1.25/year), it's just the units you used (w/h, which would imply watts per hour rather than watt-hours) in your earlier post which drew the attention of t'other poster...

    2. Captain Scarlet Silver badge

      £275, wow imagine turning off the smart meter in your home which has its display on for most of the day (I must admit I was meaning to test how much mine consumed as it has a battery in it as well)

    3. Michael Wojcik Silver badge

      Precise figures and units aside, you can simply apply Monroe's Heuristic: If the external power supply (if the device has one) and the device itself aren't emitting much heat on standby, then they're not dissipating much power.

      In the US, residential power use is dominated by space heating and cooling and by water heating – that's almost half of a typical residence's power use. Turning TVs and phone chargers "off at the wall" (which in the US would mean unplugging or using a power strip, since most of our receptacles aren't switched) has a negligible effect.

      Over-sized, over-powered personal vehicles are another major source of individually-controllable energy waste here, as is waste in general – wasting food (when considering total energy cost across the entire production chain), replacing products that could be kept in use, wasting treated water, etc. But people love to focus on little things that have no real benefit but also no real personal cost.

    4. John Brown (no body) Silver badge

      "Yesterday I read a report from a consumer organisation about power saving, they claimed that a TV uses 1.6Kw/h when on standby, so switching it off at the wall would save £275 a year,"

      The BBCs Reality Check section has covered this a few times. Most of these reports are based on very old data or "common knowledge" that is either out of date or was only ever apocryphal in the first place. About the only thing worth not leaving in "stand-by" are the games consoles that have "instant on" function. Pretty much everything else that's less than 10 years old is costing you a £1 or £2 per year on stand-by, if that. The same misconception has also be covered by them in relation to consumer groups and government banging on about "green" issues. If a million people turned of their TV at the wall every night, it'd probably save less than the power used for the fancy coloured lights illuminating the outside of some architects "masterpiece" in a major city centre for one night.

      1. Lazlo Woodbine

        I guess this is my point, telling people they can save £275 a year by turning your TV off at the wall is giving them false hope.

        For instance, my TOTAL electricity bill last year was £235 and I have two TVs and a 32" monitor on standby, how does that work even if the unit cost was 50% what it is now.

        Another rubbish one I saw yesterday is the myth you'll save £20 a year if you turn your router off at night. A quick look at my router specs, which I assume would be the same for most people as I have one of the standard Thompson routers, shows it will cost around £20 a year to power the router 24/7 at current prices (34p a unit) so I assume it uses all that power between midnight and 8am if turning it off over night will save me the same £20...

  12. Alpharious

    It's only going to snowball

    The other driving force is that smarter companies have expanded their talent pool to incorporate WFH remote workers. So not only are they avoiding costly overhead but they are also getting talent they would not have traditionally. For cities this is extremely bad news, on multiple levels.

    When we look at the big picture, at the police shortage, we see that this loss of tax revenue is going to make it harder to recruit police, meaning fewer police, meaning the offices will not be renting as much due to safety concerns. a feedback loop is starting. It's not just police either, but other infrastructure as well. This is going to make business much harder in cities.

  13. Anonymous Coward
    Anonymous Coward

    it is a building...

    It can have commercial tenants or residential tenants... this is BS fear statistics... owners will either convert to residential or sell to someone that will.

  14. Marty McFly Silver badge

    Old brick buildings....

    Anyone remember the old town brick buildings that used to sit in decay? Picture the classic textile building which has sat vacant for decades? Savvy investors converted them in to trendy studio apartments and hip communities.

    Today's unused office buildings are tomorrow's vacant slums, and next decade's hot trend. The cycle will always continue.

    1. Michael Wojcik Silver badge

      Re: Old brick buildings....

      When you can get the municipality to agree.

      Anecdotes are weak evidence, but... a good friend of mine is a commercial-property owner and developer. Of the old school: he (like his father before him) is a licensed general contractor who buys distressed/abandoned commercial properties, rehabs them with his crew, finds tenants, makes the buildings profitable again, and maintains them. He works with his tenants to keep them happy; extended a lot of rent deferments, reductions, and forgiveness during COVID lockdowns, for example.

      He has a large building that used to be a shoe factory. It's in a mixed residential/commercial/industrial neighborhood in a suburb of a major city. He and his father got it all cleaned out, removed environmental contaminants, certified for occupancy, etc. It's been tough getting commercial tenants for it, so he had a plan to repurpose it as residential units. The location is convenient for parking and access to the commuter train lines. It's in walking distance of some shops, restaurants, green space.

      City council politics led to one councilor blocking the rezoning. This guy would rather keep the building empty to spite someone else than have the tax revenue. So the building's still sitting mostly empty, looking for a buyer with the local political juice to be able to rezone it.

      Zoning is important, as are building codes and environmental regulations and the rest. But they can also become weapons in the hands of local-government martinets who don't give a damn about residents or developers, but only about building their personal fiefdoms and settling scores.

  15. dave 76

    Pension Funds are investors too

    As the article points out, a lot of the investors in Commercial Real Estate are pension funds because normally it is a good long term investment.

    So this will affect us, just not immediately.

  16. TabithaMcgee

    It was to be expected. Most workers prefer working from home if possible. Such working conditions are much more attractive to the specialists. This is especially true for IT workers, who can perform their tasks from anywhere in the world. The Covid-19 pandemic has given a major boost to remote working.

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