Before creating an uproar, I don’t advocate a return to five days a week in the office or pre-pandemic work environments. We’ve learned a lot from our remote-work days, and many of those efficiencies will endure well into the future. But at Allison+Partners, we’ve embraced a hybrid model that works well for us, and I advocate we move away from the remote work concept and push toward more flexibility – a work model where people can build schedules that suit their individual lifestyles.
However, we’ve also had to come to terms with the cost remote work has taken on cities around the world. San Francisco is a prime example. My family has worked in the city since the 1850s. While there have been many difficult times over that stretch, the COVID-19 pandemic has been one of the worst. As I walk around the city today, I notice so many small businesses have disappeared. Family-run restaurants, coffee shops and other businesses dependent on workers coming into the city have shuttered. Unable to provide their products or services from home, they had no option but to close for good.
The level of homelessness and crime in the region has also skyrocketed due to the abandonment of the city’s financial districts. And San Francisco isn’t alone – this economic tragedy now plays out in cities throughout the U.S. and world. As companies gradually return to the office in some form, this should slowly start to improve.
What we don’t yet have a handle on is the impact of a falling commercial real estate market and how that will impact the overall economy during a time of great fragility. Not our problem? Guess again.
Building ownership is weaved into many IRAs, 401(k)s and pension funds. Bloomberg reported on a study from Columbia University and New York University that predicts lower tenant demand because of remote work could cut 28%, or $456 billion, off the value of office space across the U.S. About 10% of that would be in New York City alone.
These falling building values mean significant reduction in property tax revenue for cities, which will further erode government services in the cities most desperate for them. The New York Times reported its namesake city could face a fiscal crisis due to a potential $10 billion budget shortfall partially driven by the drop in commercial office occupancy.
Small businesses and nonprofits the business community supports are the most likely to suffer from the slow return to some level of normalcy.
Yes, the benefits of remote work have been well-documented, and many will continue with this model. But we must also examine the potential negative impact. All businesses have a responsibility to help to rebuild the communities where we live and work – even a hybrid approach will help.
Workers returning to the office even two to three days will provide an economic stimulus to local businesses and will help stabilize commercial real estate to an extent. A great deal of work must still be done to evolve the in-office work experience. That will take time, and we will see over the next five years what the new office will look like. In the meantime, we can throw a lifeline to businesses and communities devasted by the pandemic and remote work.Category: Corporate