In the video above, Columbia Business School Professor Stijn Van Nieuwerburgh describes his research into the impact of remote work on the commercial office sector, and the seismic economic challenges brought about by the work-from-home revolution.
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The COVID-19 pandemic triggered a remote work revolution that is transforming cities and the commercial real estate market.
With only 5 percent of office work done from home pre-pandemic, now approximately half of office worker days are remote, according to Columbia Business School Professor Stijn Van Nieuwerburgh. This dramatic shift in location flexibility has led to plummeting demand for office space.
Professor Van Nieuwerburgh's research shows leasing revenues have already dropped around 19 percent since early 2020, and only one-third of office leases have come up for renewal so far. With vacancy rates at all-time highs, his analysis finds a stunning 40 percent value decline for New York City's office stock, mirrored in many other U.S. cities.
What does this mean for urban economies?
With cities reliant on property taxes for budget revenue, Professor Van Nieuwerburgh warns falling property values could prompt a dangerous "doom loop." Lower tax income would force cities to either raise other taxes or cut spending on services like education and infrastructure. This urban decline would then deter residents and accelerate office vacancy, requiring even more tax hikes and service cuts—a downward spiral.
However, Professor Van Nieuwerburgh points to a promising solution in converting obsolete offices into much-needed housing.
While not all spaces allow for residential retrofits, pre-war office buildings tend to be prime for conversion. This approach could simultaneously ease the office glut, create housing, and—by upgrading aging structures for sustainability—help the climate.
The work-from-home revolution has sparked a period of profound adaptation for cities, workers, and employers. But as Professor Van Nieuwerburgh's research shows, the flexibility of remote work also presents opportunities to reimagine urban spaces in ways that support resilience, equity, and quality of life.