Some business leaders have begun to predict trouble in the commercial real estate market due to a failure to implement “return to office” strategies. This coming shock, according to some, is the result of employee reticence to return to a daily commute after a prolonged period working from home. As a result, many companies now face the possibility of a decline in the value of commercial real estate that may substantially harm their bottom line.
What Are They Predicting?
The CEO of IWG, Mark Dixon, said that he predicts a major “shock” in the commercial real estate market to the failure of companies to compel workers to return to the office. This will potentially lead many companies to rethink their current commercial holdings, potentially leading them to sell off what they have for smaller spaces. This, in turn, could lead the value of commercial real estate to decline dramatically over a relatively short period of time.
Why Might This Happen?
The major rationale for this potential decline is rooted in the COVID-19 pandemic. When the pandemic was at its worst, many companies started implementing work from home (WFH) policies that allowed many people to perform their jobs from the comfort of their own homes. While the pandemic has passed, workers are generally reluctant to be pulled back into the office when they do not need to be, leaving many office buildings largely empty.
What Would Be the Effect of This Decline?
With many companies now saddled with commercial office buildings that they do not really need, there is a fear that they will begin offloading their property in large numbers. This would flood the market with large amounts of commercial real estate, driving the price down even as more companies move to WFH policies. For companies that may have invested a great deal into commercial real estate, this could be a financial disaster.
How Could This Affect You?
If you are a regular worker who is just working from home, you are probably happy to never see the inside of the office again. For many business owners, however, this massive decline in the value of commercial real estate could significantly harm their bottom line, as the value of their property declines. Others, however, may see an opportunity in the sudden availability of free office space, who may choose to purchase that space for their own endeavors.
If you are an attorney assisting a client with a real estate transaction, you should contact the title insurers at Habitat Abstract. Our experienced staff will assist you with obtaining a title insurance policy that protects your clients and prevents unforeseen issues related to a defective title. Contact us at 1-888-99-TITLE (1-888-998-4853) or visit our contact page for more information.
