Working from home has become commonplace in the banking industry. Over the long term, the consequences of this development are enormous, and negative for commercial real estate.
The topic of home office has disappeared from headlines surprisingly quickly, with the practice becoming commonplace even among conservative banks. Other trends are now attracting attention.
It's long been common practice for employees to work remotely, for at least two and often even three days (graphic below).
(Source: McKinsey Global Institute)
It's interesting to note the baby boomer generation is least likely to work from home (chart below).
(Source: McKinsey Global Institute)
Over the long term, the consequences of this development are enormous, as the study «Empty spaces and hybrid places» from McKinsey shows. The physical presence in the workplace is 30 percent lower today than it was before Corona, leading one to the conclusion that demand for office space is falling and vacancy rates are rising rapidly.
Using nine major cities worldwide as examples, McKinsey has calculated the consequences of the continuing trend toward home offices for real estate valuations. They conclude that by 2030 office properties will suffer a loss in value of the magnitude of $800 billion.
Declining Demand
(Source: McKinsey Global Institute)
The greatest decline in demand for office space is in San Francisco, with 20 percent in the moderate scenario and as much as 38 percent in the negative cohort (chart above). Given numerous media reports on the decline in the quality of life in the city and the simultaneous rise in poverty and crime, this is hardly surprising.
