Work From Home and the Office Real Estate Apocalypse: Insights from Arpit Gupta, Vrinda Mitta, and Stijn Van Nieuwerburgh Using CompStak Data

At CompStak, we are proud to see our data contributing to groundbreaking academic research, particularly in the dynamic field of commercial real estate (CRE).

“Work From Home and the Office Real Estate Apocalypse” by Arpit Gupta, Vrinda Mittal, and Stijn Van Nieuwerburgh, explores the seismic shifts in office space demand, driven by the widespread adoption of remote work.

The full abstract of the paper can be found below, offering a glimpse into the depth of research that leverages the precision and accuracy of CompStak data to assess market changes.

“We study the impact of remote work on the commercial office sector. We document large shifts in lease revenues, office occupancy, lease renewal rates, lease durations, and market rents as firms shifted to remote work in the wake of the Covid-19 pandemic. We show that the pandemic has had large effects on both current and expected future cash flows for office buildings. Remote
work also changes the risk premium on office real estate. We revalue the stock of New York City commercial office buildings taking into account pandemic-induced cash flow and discount rate effects. We find a 45% decline in office values in 2020 and 39% in the longer-run, the latter representing a $453 billion value destruction. Higher quality office buildings were somewhat buffered against these trends due to a flight to quality, while lower quality office buildings see much more dramatic swings. These valuation changes have repercussions for local public finances and financial sector stability.”

Download the full paper here.