close video Office space is a very bifurcated marketplace: Bruce Mosler
Bruce Mosler, Global Brokerage Chairman at Cushman and Wakefield, joined Varney & Co. to discuss the impact remote work has had on the evaluation of office buildings.
The business districts in a number of America’s major cities like New York and San Francisco are facing an "urban doom loop" as the workforce shifts away from office work in the wake of the COVID-19 pandemic – a trend that has economists raising alarm about the fiscal impacts.
The growing popularity of remote work has decreased the number of workers heading to the office on a daily basis and made it easier than ever for workers to live in suburban and rural areas without needing to commute. That workforce migration poses challenges for businesses reliant on sales and traffic from bustling downtowns, and risks triggering a fiscal doom loop in which cities see tax revenue dwindle and respond by raising taxes or reducing services, further exacerbating conditions for the remaining residents and businesses.
TEXAS DEVELOPER SAYS AUSTIN'S HISTORIC SIXTH STREET IN ‘DEATH SPIRAL’
A National Bureau of Economic Research working paper entitled "Work From Home and the Office Real Estate Apocalypse" warns that major U.S. cities could be on the brink of slipping into such a downward fiscal spiral.
The economists who wrote the paper – Arpti Gupta of New York University’s Stern School of Business, and Columbia Business School’s Vrinda Mittal and Stijn Van Niuwerburgh – noted that office occupancy in major U.S. office markets plummeted from 95% in February 2020 to 10% at the end of March 2020 due to the pandemic. As the economy has reopened, occupancy hasn’t fully recovered and had only reached 47% of its pre-pandemic level in mid-September 2022.
AT&T, WESTFIELD MALL, NORDSTROM LEAD SAN FRANCISCO DOWNTOWN EXODUS
The value of New York City’s office space declined by over $500 billion due to the pandemic. (Photo by Gary Hershorn/Getty Images / Getty Images)
The slow bounce back of workers heading into the office has caused businesses to reassess their office leases, opting for shorter leases in 2020 and 2021 as the pandemic continued to cause economic dislocation.
Although the economists noted the trend is reversing back to companies signing longer leases for office space in 2022 as prior long-term leases and shorter, pandemic-era leases are renewed ahead of their expiration, the pandemic precipitated a 45% decline in New York City office values in 2020 and 39% over the long run due to shorter lease terms and cheaper rents being offered to retain or attract tenants.
AMERICA’S DOWNTOWN AREAS SLOWLY SPRINGING BACK TO LIFE, RESEARCH ON CELL PHONE ACTIVITY REVEALS
New York City’s vacancy rate for office buildings is over 22% this year about double its long-term average. ((Photo by Gary Hershorn/Getty Images) / Getty Images)
The economists found that the total decline in New York City’s commercial office value might be $518.7 billion in the short run and $453.6 billion in the long run.
Vacancies remain an ongoing problem in cities like New York, where the city’s budget analysts are projecting that the office vacancy rate – which hit a record of 22.7% this year after averaging about 11% for decades – will remain above 20% through 2026.
SAN FRANCISCO ‘DOOM LOOP’ THREATENS TO GUT DOWNTOWN ECONOMY AS EMPLOYEES WORK FROM HOME
San Francisco’s office buildings reportedly had a vacancy rate around 30% this year. (REUTERS/Carlos Barria / Reuters Photos)
San Francisco is facing a similar plight, as commercial real estate services firm CBRE found that the city’s offices have a vacancy rate of nearly 30%, an amount more than seven times its pre-pandemic level.
At one San Francisco high-rise office building located at 350 California Street, the vacancy rate is about 75% and as a result, its value has fallen from about $300 million in 2019 to about $60 million to $67.5 million today – a decline of about 80% in value.
Britain’s most notorious gangster and the detective who pursued him have been involved in a bizarre confrontation…at a charity lunch.
Former Detective Superintendent Ian Brown was at a Kent golf club and about to give a talk on the infamous £26m Brink’s-Mat gold robbery when he was summoned from the stage by officials.
Mr Brown, who appeared on the award-winning Sky News StoryCast podcast The Hunt For The Brink’s-Mat Gold in 2019, said: “I go outside and they say ‘he’s here’ and I say ‘who’s here’ and they say that table over there in the corner, that’s Kenny Noye with a baseball cap pulled down over his head.”
Noye stabbed to death an undercover policeman during the Brink’s-Mat investigation, but was acquitted of murder, though he was jailed for handling the stolen gold.
Mr Brown, 86, said: “I went over to him and said ‘thanks for coming, nice of you to pop in’, but I don’t believe you’ve turned up with your sons and grandkids to listen to me telling how you killed a police officer.
“And he said ‘I want to make sure you don’t say I’ve been dealing drugs’ and I said ‘I’ve never said that Kenny’.”
The retired detective told Noye he wasn’t going to change his presentation just because he was there.
“He said ‘mate, I wouldn’t expect you to and I’ll come up [on stage] if you want me to’.
“Can you think how he’s turned up with his family to listen to somebody talking about you killing the police? Now, you put logic on that.”
The bizarre story emerged when I rang Mr Brown after I’d been told about the meeting.
Image: A Sky News podcast told the story of the Brink’s-Mat heist in 2019
I also wanted to ask him about the recent BBC hit drama series The Gold which retold the story of the Brink’s-Mat heist at Heathrow Airport in 1983.
“It was an absolute shambles, far too much dramatic licence and the real story was so much better,” said the ex-detective, whose job had been to follow the trail of the 6,800 gold bars to the US and the Caribbean.
He said he chatted to one of the show’s writers for a long time in a phone call but then heard no more.
“They invented people, changed a bit here and there and made it politically correct in so many ways. I’m just very sad that that is what people will believe.
“And I couldn’t work out who my character was supposed to be. I could have been one of the female cops.”
He also criticised the portrayal of Noye, now 78, as a likeable jack-the-lad character when the truth about the double killer with a volatile temper was quite different.
LOS ANGELES — The Los Angeles Dodgers suffered their worst loss ever in Dodger Stadium, an 18-1 blowout at the hands of the Houston Astros on Friday night in the series opener of a matchup between division leaders.
The 17-run loss marked the Dodgers’ largest margin of defeat at home since the team moved to Dodger Stadium in 1962, and the franchise’s worst home loss since July 3, 1947, when Brooklyn lost 19-2 to the New York Giants.
Jose Altuve homered twice while reaching base five times and driving in five runs for the Astros, who held the defending World Series champion Dodgers to six hits including Will Smith‘s solo homer.
“That was one you want to flush as soon as possible,” Dodgers manager Dave Roberts said. “I don’t think there were many positives from this night.”
Dodgers fans relentlessly booed Altuve throughout his at-bats, chanting, “Cheater! Cheater!” He’s one of two players, along with Lance McCullers Jr., remaining from Houston’s 2017 team that beat the Dodgers in the World Series. It later came out that the Astros were stealing signs with the help of video and relaying pitches to batters by banging on a trash can.
The AL West-leading Astros scored 10 runs in the sixth, highlighted by Victor Caratini‘s grand slam and Altuve’s three-run shot. It was the most runs given up in an inning by the Dodgers since April 23, 1999, when they allowed 11 to St. Louis.
McCullers (2-3) allowed one run and four hits in six innings of his second start since returning from a sprained right foot. He struck out four.
Isaac Paredes hit his first career leadoff homer on the first pitch of the game from rookie Ben Casparius. Altuve doubled and scored on Christian Walker‘s RBI single for a 2-0 lead.
Jake Meyers doubled leading off the third and scored on Altuve’s 14th homer. Rookie Cam Smith doubled and scored on Walker’s 417-foot shot halfway up the left-field pavilion to cap four straight hits given up by Casparius and extend Houston’s lead to 6-1.
“I don’t think Ben was good tonight,” Roberts said. “It seemed like they were on everything he threw up there.”
The Astros broke it open in the sixth. Smith had a bases-loaded RBI single, reliever Noah Davis hit Walker with two strikes on him to force in a run and Caratini hit his slam with no outs. Meyers added an RBI single, and Altuve hit his second homer of the night.
Casparius allowed six runs and nine hits in three innings and struck out three.
SEATTLE — Cal Raleigh hit his 34th and 35th home runs to set a career high and match Ken Griffey Jr.’s Seattle record for homers before the All-Star break, helping the Mariners beat the Pittsburgh Pirates6-0 on Friday.
Raleigh, the major league leader in home runs, turned on a fastball from Bailey Falter (6-4) in the first inning and walloped it well past the wall in left. The exit velocity on the two-run shot was logged at 115.2 mph, per Statcast, making it the hardest-hit ball of his career.
Raleigh topped his previous career high for homers, set last season, in the sixth with a solo shot that chased Falter. The Mariners mustered only one other hit off the left-hander, but it was also a home run courtesy of Randy Arozarena in the fourth inning.
Raleigh’s 35 homers are tied for the fifth most in MLB history before the All-Star break (since 1933), matching Griffey in 1998 and Luis Gonzalez in 2001. Barry Bonds holds the record with 39 at the break in 2001.
Raleigh said he was honored to tie Griffey, whom he called the face of the Mariners.
“To be mentioned with that name, somebody that’s just iconic, a legend, first-ballot Hall of Famer, I’m just blessed,” Raleigh said. “Trying to do the right thing and trying to keep it rolling. If I can try to be like that guy, it’s a good guy to look up to.”
Raleigh is on pace to hit 65 home runs this season, which would break New York Yankees star Aaron Judge‘s American League record of 62, set in 2022.
Manager Dan Wilson, who was a teammate of Griffey Jr.’s in 1998, tried to put Raleigh’s fast start to 2025 in perspective.
“It’s remarkable. It feels like he hits a home run every game, that’s what it feels like,” Wilson said. “And I can remember feeling it as a player, that [Griffey] just felt like he hit a home run every day. Again, that’s the consistency that [Raleigh] has shown. It hasn’t been a streak where he has hit a bunch of home runs in a short amount of time. It’s been kind of 10 per month.”
A switch-hitter, Raleigh has more home runs as a left-handed hitter and as a right-handed hitter than anyone else on the Mariners: He has 21 from the left side and 14 from the right. Arozarena ranks second on Seattle with 13 homers this season.
The Mariners play eight more games before the All-Star break.
The Associated Press and ESPN Research contributed to this report.