Even as businesses fight to get workers back into the workspace and out of the remote work space, workers are resisting, having had a taste of the good life, of working from home without having to worry about commuting everyday back and forth between work and home. Now, the office spaces that the workers have abandoned are becoming empty, unused, and the value of the properties is set to plummet, along with property tax revenues for the already overburdened cities.
The Washington Post is reporting the potential real estate apocalypse, with the reporter, Rachel Siegal, writing, “All across the country, downtowns, office spaces and shopping centers are at risk of becoming ground zero for a new economic hazard: the urban doom loop. The fear is that a commercial real estate apocalypse could spiral out and slow commerce, wrecking local tax revenue in the process.”
The consequences are already being felt in cities like Charlotte, NC; Washington, D.C.; Atlanta, GA; and more. In those cities office loan repayment delinquencies are spiraling upward to unprecedented numbers, meaning the cities will also be losing property tax revenues.
Another side effect of the Covid-19 lockdowns was the selling of retail properties by families who could no longer afford to meet mortgage payments. This triggered a buy-off that bloated the price of housing, a bloat that billionaire developers like Blackrock were willing to spend. Now, that sell-off is mostly complete and bought properties still remain unsold, even unoccupied.
Goldman Sachs issued a report in January that suggests other major cities, including New York City, face a 2008-scaled housing collapse.
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