Large Bank Supervision Forum 2023
Office & Remote Work: Kastle Back to Work Barometer
City-by-City Views of America’s Office Use
The paradigm shift of Remote Work continues to impact how workers are returning to the office. TEXAS has the highest percentages: Austin at 57.6%, Houston at 61.0%, and The weakest percentages are: San Jose at 41% Philadelphia @ 42%
OFFICE CRE: Office is the Property Type facing the MOST Challenges
Of all the property types, office buildings may wrestle with the pandemic’s damaging consequences the longest . During the throes of the pandemic, companies that remained in business were compelled to adapt and learn how to effectively put their employees to work from home. This widespread sentiment has persisted. In fact, nearly 40 percent of workers would rather quit their jobs than return to the office full-time, and more than half would take a pay cut of 5 percent or more to retain their workplace flexibility, according to a recent survey by Owl Labs. Challenge unfair assessments Altogether, reduced office space demand, weakened cash flows, higher building expenses and rising interest rates do not bode well for the U.S. office sector. Landlords are being forced to offer concessions such as free rent or are paying for extensive interior buildouts to attract tenants. This large shift in lease renewal rates, occupancies, expenses and capitalization rates have produced the equivalent of the four horsemen of the apocalypse for office building valuations , driving property tax appeals and raising a distinct possibility that many office buildings will become stranded assets. Experience indicates these changes can result in a 10 percent to 30 percent drop in market value from pre-pandemic levels .
Work ‐ from ‐ Home Trend Leads to Property Tax Turmoil in Office Sector – REBusinessOnline
Made with FlippingBook - Online Brochure Maker