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Cities Feel the Weight of Depressed Real Estate

Mar 21, 2024
One of the ramifications of remote work and fewer people in office buildings may be the impact that it will have on the coffers of local governments.

One of the ramifications of remote work and fewer people in office buildings may be the impact that it will have on the coffers of local governments. 

Reports the New York Times:

  • In San Francisco, a 20-story office tower that sold for $146 million a decade ago was listed in December for just $80 million.
  • In Chicago, a 200,000-square-foot-office building in the city’s Clybourn Corridor that sold in 2004 for nearly $90 million was purchased last month for $20 million, a 78 percent markdown.
  • And in Washington, a 12-story building that mixes office and retail space three blocks from the White House that sold for $100 million in 2018 recently went for just $36 million. 

It’s not just impacting the owners of the properties. 

"Cities are also starting to bear the brunt, as municipal budgets that rely on taxes associated with valuable commercial property are now facing shortfalls and contemplating cutbacks as lower assessments of property values reduce tax bills,” the article reported…"The situation is reminiscent of the turmoil that the commercial real estate sector experienced during the 2008 financial crisis, when credit dried up. This time, however, the changes in how and where people work suggests that a deeper structural shift in the market could be setting in — at least until interest rates fall.”

Cities Economic Outlook
David Harrison