According to a report by McKinsey Global Institute, the rise of remote work due to the pandemic could result in a loss of $800 billion in the value of office buildings worldwide by 2030.
Office attendance has stabilized at 30% below pre-Covid levels, with only 37% of workers going into the office daily. This trend is causing office vacancy rates to increase and rents to decline. The report focuses on nine major cities, including Beijing, London, New York, and Tokyo, which are projected to experience a 26% decline in office space valuation. In a more severe scenario, the decline could reach 42%.
The impact of rising interest rates and financial institutions reducing property prices could exacerbate the situation. The decrease in demand for office space has already led to falling rents, particularly in cities like San Francisco and New York, where rents fell by 28% and 22% respectively in 2022.
McKinsey suggests that cities should adapt by developing multi-use office and retail spaces to address the declining demand.