# Work From Home and the Office Real Estate Apocalypse

1 Research Highlights July 25, 2022 ![Arpit Gupta](/sites/default/files/styles/246w/public/assets/images/agupta%20headshot%20article.jpg?itok=MaTyKYFw)In “Work From Home and the Office Real Estate Apocalypse,” NYU Stern Professor Arpit Gupta and co-authors Vrinda Mittal and Stijn Van Nieuwerburgh (Columbia Business School) analyze the impact that remote work has had on the New York City commercial office space sector.

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**Overview**: In “[Work From Home and the Office Real Estate Apocalypse](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4124698),” NYU Stern Professor [Arpit Gupta](https://www.stern.nyu.edu/faculty/bio/arpit-gupta) and co-authors Vrinda Mittal and Stijn Van Nieuwerburgh (Columbia Business School) analyze the impact that remote work has had on the New York City commercial office space sector.

**Why study this now**: The Covid-19 pandemic drastically altered the manner and location in which people worked. Of the major U.S. cities analyzed by the co-authors, between the end of February 2020 to the end of March 2020, physical office occupancy fell from 95% to 10%. The researchers aim to assess the implications of future remote work on the valuations of office buildings.

**What the researchers found**: Analyzing shifting lease revenues, office occupancy, lease renewal rates, lease durations, and market rents during the pandemic, the researchers determined that:

- In the NYC office market, there was a 32% decline in the values of offices in 2020, and a 28% decline in future values.
- Higher quality office buildings (those that are built more recently and have more amenities) were somewhat protected against the declines, while lower quality buildings saw dramatic swings in valuation.
- Extrapolating their estimates to the rest of the country, as hybrid work options continue to take hold and lease revenues continue to decrease, office values could be cut by nearly $500 billion in the next decade.

**Key insight**: Significant decreases in valuations will negatively affect local public finances and the stability of the financial sector.

**What does this** ***change***: As office and retail property taxes decrease, cities will have fiscal holes in their budgets. Governments would need to supplement this by raising tax rates or decreasing their spending – both of which can affect the attractiveness of that city as a place to live and work.

## More from Arpit Gupta

- [After the Mamdani Rent Freeze.](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/research-highlights/after-mamdani-rent-freeze)
- [How New York City Can Come Out a Winner in the AI Age.](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/research-highlights/how-new-york-city-can-come-out-winner-ai-age)
- [Who Benefits from Remote Work?](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/who-benefits-remote-work)
- [How Property Taxes Could Make Housing Affordable for Young Families](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/how-property-taxes-could-make-housing-affordable-young-families)
- [Do We Need to Reform Private Equity Tax Benefits to Better US Economy and Society?](https://www.stern.nyu.edu/index%2ephp/experience-stern/faculty-research/do-we-need-reform-private-equity-tax-benefits-better-us-economy-and-society)