The ongoing negative economic impact of remote work was featured in the Wall Street Journal this week—supported by a private sector study showing more uncertainty lay ahead as office markets adjust to post-pandemic hybrid arrangements for employees. (WSJ, Jan. 24 and CommercialEdge, Jan. 19)
Threats to Local Tax Bases
- Real Estate Roundtable Chair John Fish and President & CEO Jeff DeBoer wrote to President Biden last month about the consequences of federal agencies’ promotion of permanent remote work—and how these actions are harming cities, local tax bases, and small businesses. (Roundtable letter, Dec. 12, 2022)
- The Roundtable letter also expressed support for legislation that could help facilitate “the increased conversion of underutilized office and other commercial real estate to much-needed housing.”
- The WSJ article this week cited The Roundtable’s letter as well as District of Columbia Mayor Muriel Bowser's recent calls for President Biden to get more federal workers back to the workplace—and convert underutilized commercial real estate spaces into affordable housing. (Roundtable Weekly, Jan. 6 and ABC News, Jan. 2)
- City officials in New York, Washington, Chicago, Houston, San Francisco, and Boston have also encouraged city workers to return to their downtown offices. (WSJ, Jan. 24)
- Yardi’s CommercialEdge issued its National Office Report this month showing that the U.S. office market closed 2022 with a consistent rise in vacancies & declining sales. The national analysis shows that some firms have become more forceful in bringing workers back into the office, while many have fully committed to hybrid and remote work policies. The report also notes that tenants will likely embrace smaller office footprints in premium locations.
- CommercialEdge stated, “With offices vacant and housing in short supply across the county, converting offices seems like a logical solution.” Yet without tax incentives and other financial resources from state and local governments, many office conversion projects may not be a priority in a high-interest-rate environment, according to the report.
- A VTS Office Demand Index (VODI) report shows that, while there is momentum in return-to-office trends, it “seems unlikely” that most employers will revert to pre-pandemic physical workplace arrangements. (GlobeSt, Jan. 26)
- The real estate industry’s perspective on the major repercussions of remote work, including its threat to municipal tax bases throughout the country, were also the focus of recent articles in GlobeSt on Jan. 26 and Jan. 23.
Return-to-office policies by the federal government and cities throughout the nation—and solutions to ease hybrid work’s damaging consequences—will continue to be a focus of The Roundtable’s policy agenda in 2023.
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