A recent economic report acknowledged that permanent changes in work habits due to the coronavirus pandemic are hurting the value of commercial real estate.
According to the report, issued by the McKinsey Global Institute, remote work risks wiping out $800 billion from the value of office buildings in major cities around the world by 2030, as the post-pandemic trend has raised office vacancy rates and lowered rents, according to a report. to networkCNN“.
The network indicated that HSBC Bank announced plans last month to cut the size of its global headquarters in half, and to abandon its majestic tower in the “Canary Wharf” commercial area in London, in favor of a much smaller building near the city center.
The study included Beijing, Houston, London, New York, Paris, Munich, San Francisco, Shanghai and Tokyo.
Valuation losses, estimated at nearly $800 billion in those cities, represent a 26% decrease from 2019 levels.
In a more severe scenario, the value of office space could drop by up to 42%.
“The impact on value could be stronger if interest rates rise further than that,” McKinsey added. “Similarly, the effect could be stronger if distressed financial institutions decided to reduce the price of real estate they finance or own faster.”
There are fears that a downturn in commercial real estate could lead to losses for banks that finance many of the industry’s deals in the US, where lending comes mostly from small and medium-sized banks, and credit conditions have already been tightened.
McKinsey found that declining demand for office space led to lower rental demand from landlords, with US cities suffering the sharpest declines. In San Francisco and New York last year, required rents were down 28% and 22%, respectively, compared to 2019, once inflation is factored in.
In a moderate scenario, demand for office space could be 13% lower by the end of the decade than it was in 2019.
2023-07-15 03:16:03
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