The Economist had an analysis when the blockade and social distancing measures were enacted to prevent the COVID-19 pandemic, most of the offices around the world were left empty. Now that the pandemic has dragged on into its third year, the “fate” of these buildings remains unclear. Can office buildings continue to attract investment and talent, or will new work models dominate?
The pandemic has sparked fierce debate about the future of the world’s commercial and financial centers. Financial hubs such as Manhattan (USA), London (UK), Marunouchi (Tokyo, Japan) and La Défense (Paris, France) have to bear the brunt of the trend. work at home. According to data from the EY audit group and the Urban Land Institute, before the pandemic, the 21 largest financial centers in the world were home to 4.5 million people. This is also the headquarters of about 20% of Fortune Global 500 companies – an annual ranking of the top 500 companies and corporations worldwide by sales.
The trend of working from home has led to a sharp drop in office rental demand, with office vacancy rates in central areas increasing faster than anywhere else. At the global level, the percentage of offices that are not occupied has increased from 8% before COVID-19 to 12%. In London, 18% of offices were vacant, while in New York and San Francisco, the proportions were 16% and 20% respectively.
Mr. Omotayo Okusanya – Analyst, Mizuho Americas Real Estate Investment Fund said: “In my opinion, the problem is how many people use the office at the same time. There are many companies using the form of office sharing, where the first floor of the building is rented out as a retail store”.
But as new variants of the virus appeared one after another, the plans of many companies to return employees to the offices were repeatedly delayed. Therefore, many companies have thought of solutions to change the business model and field.
“One example is Alexandria real estate, now they’ve moved into biotechnology and applied science. And in that area, you have to do a lot of work in the laboratory. Because so, they still need office space. They can’t work remotely, so I think the demand for office space will still increase sharply,” said Mr. Omotayo Okusanya.
According to a survey of investors with more than $50 billion in assets conducted by US real estate firm CBRE, investors are more interested in markets like Phoenix and Denver than New York and Chicago. The UK’s real estate, housing and commercial consultancy Knight Frank said that the largest commercial and financial centers will continue to attract large investments. The London offices are forecast to receive around $81 billion in foreign investment over the next few years.
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