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Work from Home and the Office Real Estate Apocalypse

Author

Listed:
  • Arpit Gupta
  • Vrinda Mittal
  • Stijn Van Nieuwerburgh

Abstract

We show remote work led to large drops in lease revenues, occupancy, and market rents in the commercial office sector. We revalue New York City office buildings, taking into account both the cash flow and discount rate implications of these shocks, and find a 46 percent decline in long-run value. For all US office markets combined, we find a $556.8 billion value destruction. Higher-quality buildings were buffered against these trends due to a flight to quality, while lower-quality offices are at risk of becoming a stranded asset. These valuation changes have repercussions for financial stability and local public finances.

Suggested Citation

  • Arpit Gupta & Vrinda Mittal & Stijn Van Nieuwerburgh, 2026. "Work from Home and the Office Real Estate Apocalypse," American Economic Review, American Economic Association, vol. 116(2), pages 674-709, February.
    • Handle: RePEc:aea:aecrev:v:116:y:2026:i:2:p:674-709
    DOI: 10.1257/aer.20231619
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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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