Remote work hits city centers harder than sleepy suburbs

  • Suburban offices are faring better than downtown ones due to remote work
  • Downtown-office valuations have halved from their peak in early 2022, while suburban offices dropped by only 18%
  • City centers were emptier for eight consecutive quarters during the pandemic
  • Institutional investors are more likely to walk away from downtown properties
  • Suburban offices owned by smaller landlords may be more willing to work with lenders on distressed loans
  • Investors have undervalued suburban offices, but they are a safer bet

During the pandemic, downtown offices faced more significant challenges due to mass public transport avoidance and long commutes. Suburban offices have seen a smaller impact on occupancy rates. Institutional investors are walking away from downtown properties, while smaller landlords in the suburbs are more willing to work with lenders on distressed loans. As a result, suburban offices are becoming a safer bet for investments.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about the current state of suburban offices compared to downtown offices after the Covid-19 pandemic. It discusses the differences in valuations, loan performance, and ownership structures between the two types of properties, as well as potential solutions for downtown office spaces. The article also includes relevant data from sources such as MSCI Real Assets, Moody’s analysis, and Colliers real-estate consulting firm.
Noise Level: 7
Noise Justification: The article provides relevant information about the impact of remote work on downtown and suburban offices, comparing their performance during the pandemic and discussing the reasons behind it. However, it contains some repetitive information and could benefit from more in-depth analysis or exploration of potential long-term trends or consequences.
Public Companies: Piedmont Office Realty (unknown)
Key People: Alex Killick (Managing Director at CWCapital Asset Management)

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the impact of the COVID-19 pandemic on office valuations and the property market, specifically the difference between suburban and downtown offices. It mentions that suburban offices are faring better than city-center towers due to remote work trends, and how this affects lenders, investors, and property values.
Financial Rating Justification: The article discusses financial topics such as office valuations, loan performance, and the impact on different types of properties in the real estate market. It also mentions the difference in performance between suburban and downtown offices, which can have an effect on financial markets and companies involved in the property sector.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.

Reported publicly: www.wsj.com