(Bloomberg)—New York office buildings are facing a potential $50 billion wipeout of value thanks in part to remote work.

The values of those properties declined nearly 45% in 2020 and are forecast to remain roughly 39% below pre-pandemic levels due to the persistence of flexible work policies that gained traction during the crisis, according to a new study from the National Bureau of Economic Research.

As the Covid-19 pandemic shuttered office buildings and forced people to switch to a remote work environment, many offices sat vacant and still do, even as companies try to entice employees to return. Roughly 46% of workers in the New York metro area were back at their desks in the week ended Sept. 21, according to card-swipe data from Kastle Systems.

The authors of the study, which included researchers from New York and Columbia universities, found that higher-quality buildings are more insulated from the trends, as more tenants seek out better space for their remaining office footprints.

“Lower quality office buildings see much more dramatic swings,” the researchers said in the report. Overall, “these valuation changes have repercussions for local public finances and financial-sector stability.”

To contact the author of this story: Lizzie Kane in New York at [email protected]

© 2022 Bloomberg L.P.

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