But landlords can’t very well lease all empty retail stores to Louis Vuitton and Apple. Some pundits point out that the most expensive offices are still doing okay and that others could be saved by introducing new amenities and services. And while we wrestle with the effects of distributed work, artificial intelligence could drive office demand even lower. With a third of all office leases expiring by 2026, we can expect higher vacancies, significantly lower rents, or both. Attendance in the 10 largest business districts is still below 50 percent of its pre-COVID level, as white-collar employees spend an estimated 28 percent of their workdays at home.ĭerek Thompson: The biggest problem with remote work Actual office use points to a further decrease in demand. Most office leases were signed before the pandemic and have yet to come up for renewal.

These figures understate the severity of the crisis because they only cover spaces that are no longer leased. In San Francisco, Dallas, and Houston, vacancy rates are as high as 25 percent. office vacancy topped 20 percent for the first time in decades. But this crisis, like all crises, also represents an opportunity to reconsider many of our assumptions about work and cities.ĭuring the first three months of 2023, U.S. In some cases, they will be catastrophic. But offices are struggling perhaps more than most casual observers realize, and the consequences for landlords, banks, municipal governments, and even individual portfolios will be far-reaching. Post-pandemic, kids are back in school, retirees are back on cruise ships, and physical stores are doing better than expected. The JPMorgan Chase CEO expected that “sometime in September, October,” the company’s office would “look just like it did before.” Two years later, his company is slashing its Manhattan footprint by a fifth. “I’m about to cancel all my Zoom meetings.” It was May 2021, and Jamie Dimon had had enough.

Office building inside