Remote work to erase $800 billion from office value globally: McKinsey

Offices in major cities globally are at a risk of losing $800 billion of value due to remote work, a report by McKinsey Global Institute said. The report also highlighted the loss landlords are facing from post-pandemic changes in employment trends.

Covid-19 pandemic that had pushed hybrid work culture has driven the need for office spaces down. The report further added that this loss in valuation represents a 26% decline compared to 2019 which can further expand to 42%.

The consultation firm futher noted that remote work is also affecting the value of retail and residential real estate as people’s new habits influence where they shop and live.

The report predicts that in a moderate scenario, demand for office space will be 13% lower by the end of the decade. Meanwhile, the attendance of employees remain lower than 30% compared to the period before pandemic and only 37% of the employees are back at office every day.

Now, lower attendance has driven down rents in real terms. U.S city San Fransisco has seen a decline of 28%, while New york has seen 18% decline. Meanwhile, European centers such as Paris, London and Munich have been more resilient.