The value of office buildings could decline in the future according to researchers from New York and Columbia universities.
The popularity of remote work could cause office valuations in New York City to fall 28% by 2029, which would represent a value destruction of $49 billion.
Around $500 billion in office assets valuations are predicted to be wiped out by 2029 if this trajectory continues.
The report said that remote work changed the risk premium on office real estate. Office returns are now pricing in the risk that remote work is an important risk for offices.
The study was able to identify which factors are most impacting office usage.
The report found that lease revenue fell from January 2020 to December 2021 due to lower rent and leasing volume.
The data shows that most of the New York leases are not up for renewal in the near future.
There is a different story unraveling for Class A Buildings.
The authors of the report stated that higher quality office buildings were somewhat buffered against these trends due to a flight to quality.