Since the pandemic emptied out America’s downtowns and central business districts, the whole world of work has been waiting for years for the other shoe to drop. Office vacancy rates are at nearly 1.5 times the amount than at the end of 2019—and there may be as much as one billion square feet of unused U.S. office space by the end of the decade, according to a report early this year by real estate firm Cushman & Wakefield. New York University and Columbia University researchers have estimated a $49 billion wipeout in New York City commercial property values by 2029, as part of a nationwide $500 billion “Office real estate apocalypse.” A huge chunk of this crackup just fell to earth in New Jersey Bankruptcy Court on Monday night.
In pre-pandemic times, shared office space seemed like a great idea—even world-changing in the eyes of Adam Neumann, the founder and former chief executive of WeWork. But the seismic shift to a remote work environment changed office demand as we once knew it. Moody’s Analytics calls the office vacancy rate of 19.2% this quarter “perilously close” to the 19.3% record-high vacancy rate in 1986 and 1991, and that was before most of New York’s offices fell into Chapter 11 with WeWork’s filing.
