When an early draft of “Work from Home and the Office Real Estate Apocalypse,” co-authored by Stijn Van Nieuwerburgh, the Earle W. Kazis and Benjamin Schore Professor of Real Estate at Columbia Business School, began circulating in 2022, it quickly became one of the most talked-about papers in real estate and urban economics. The research introduced readers to the idea of an "urban doom loop" — a vicious cycle in which falling office values reduce tax revenues, forcing cities to cut services or raise taxes, making downtowns less attractive and putting even more pressure on commercial real estate.
The paper — co-authored by Arpit Gupta of NYU and Vrinda Mittal of the University of North Carolina — generated widespread media attention, including coverage in The New York Times and on 60 Minutes, and helped shape the public conversation around the future of cities. Four years later, many of its central predictions have largely played out.
"Office buildings are defaulting on their mortgages, with staggering losses, literally every day,” Van Nieuwerburgh says. “As I predicted four years ago, this is a slow-moving train wreck.”
Predicting a new office market
Published this year, the paper combines lease-level data from more than 100 U.S. office markets with a new asset-pricing model to estimate how the rise of remote and hybrid work is reshaping commercial real estate.
The researchers found that between the end of 2019 and the end of 2023, annual lease revenue declined more than 15% nationwide as companies leased less space and paid lower rents. Firms embracing remote or hybrid work reduced their office footprints the most, while cities and industries with greater exposure to work-from-home policies experienced steeper declines in occupancy and rents.
Because office leases typically last for years, the researchers argued that the full impact would emerge only gradually as leases expired and companies downsized. Their model estimated that New York City's office stock would ultimately lose about 47% of its value, with nationwide losses approaching $557 billion.
An opportunity amid the disruption
Looking back today, Van Nieuwerburgh believes the paper's central thesis has held up. As long-term office mortgages mature in a weaker leasing and higher-interest-rate environment, distressed buildings are increasingly unable to refinance, leading to a steady stream of foreclosures and discounted sales. Meanwhile, the hoped-for return to pre-pandemic office attendance never fully materialized.
The market has also evolved as much as the researchers anticipated. Trophy office buildings continue to command high rents, while aging offices face rising vacancies and costly deferred maintenance.
Yet Van Nieuwerburgh sees adaptation as well as disruption. Some obsolete offices will be demolished, others are being converted into housing, and still others repositioned as lower-cost office space for smaller firms. According to Van Nieuwerburgh, the urban doom loop remains a risk, particularly for cities that rely heavily on commercial property taxes. But rather than signaling the end of cities, he sees the current moment as another chapter in their long history of reinvention, with downtowns gradually shifting away from being defined primarily by work and toward a new balance of living, entertainment, and employment.
"We still need a lot of office space," he says. "But we don't need as much office space as we used to."
