After the remote-work rush, vacant offices and empty downtowns
Core business centers in large and small cities throughout the US are suffering the effects of hybrid- and remote-work policies, which has led to a 20% to 40% reduction in office space use, according to global management consulting firm McKinsey & Company.
The switch to primarily remote work at the start of the COVID pandemic in March 2020 left downtowns largely empty. Since then, commercial areas have seen a slow, but steady, return to the office, with average office occupancy hitting 50% of pre-pandemic levels this past March, according to commercial real estate services firm CBRE Group.
But that’s enough to offset sizeable drops in the value of office space, and the need to re-think what an “office” now is. In San Francisco, for example, an office building worth $300 million before the pandemic could now be worth just $60 million, an 80% loss in value. Nearly 30% of downtown office space is vacant, according to CBRE.