Remote Work Guts Downtowns, Will Cost Cities $453 Billion

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More than half the downtown office space in U.S. cities remains unoccupied after the COVID-19 pandemic, Business Insider reported.

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Although 95% of downtown offices were occupied before the pandemic, that number now is about 47% more than 2½ years after coronavirus prompted lockdowns and mask/vaccine mandates, Business Insider reported.

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As for the value of office real estate, a study led by New York University professor Arpit Gupta characterized it as an "apocalypse" and estimated that $453 billion in real-estate value would be lost across U.S. cities, a decline in lease revenue of 17 percentage points from January 2020 to May 2022.

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The result of unoccupied office space has been fewer people and public-transit use, and more shuttered businesses in downtown areas.

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San Francisco has faced office-vacancy rates of 34% to 40% in some parts, while in New York about 50% of workers are back in the office.

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Even in cities such as Austin, Texas, and Dallas, where more workers have returned, occupancy rates are still only 60% of pre-pandemic days.

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Public-transportation ridership remains stuck at about 70% of pre-pandemic levels.

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The National Bureau of Economic Research predicted that 30% of workdays would be worked from home by the end of this year, a large increase from before the pandemic.

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The impact will hurt U.S. cities as reduced tax revenue and sales receipts for small businesses affect city budgets.

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The value of commercial real estate in New York City declined by 45% in 2020, and research suggests it will remain 39% below pre-pandemic levels, Business Insider reported.

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