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One of the Most Overlooked Reasons for Returning to the Office Just Got a Lot More Dire Attendance at office buildings in major cities from San Francisco to New York remains below pre-pandemic levels.

By Amanda Breen Edited by Jessica Thomas

Shannon Fagan | Getty Images

When we talk about employees returning to in-person work, the conversation often turns to alleged benefits like increased productivity and improved communication.

But the health of commercial real estate and the economy are also critical considerations. In a recent report, Morgan Stanley analysts predicted the situation's about to get worse, with commercial property prices tumbling as much as 40% — rivaling the dip during the 2008 financial crisis.

Related: Should You Take Out a Loan for Commercial Real Estate?

Three years into the pandemic, attendance at office buildings in major cities including New York, Boston, Atlanta and San Francisco remain low, and many companies choose to move to smaller spaces when leases are up for renewal, The New York Times reported.

At the end of March, San Francisco Mayor London Breed's office said it anticipated a $780 million budget shortfall in the next two fiscal years through 2024 as a result of higher interest rates and widespread remote work that "makes office space an unattractive investment."

Not only are trillions of dollars of commercial mortgage debt on track to mature in the next several years — likely amid even higher interest rates — but there's also the concern about how under-utilized office buildings will continue to impact the rest of the economy, MarketWatch reported.

Related: 5 Ways Cryptocurrency Will Change the World of Commercial Real Estate

"These kinds of challenges can hurt not only the real estate industry but also entire business communities related to it," Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, wrote.

Amanda Breen

Entrepreneur Staff

Senior Features Writer

Amanda Breen is a senior features writer at She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

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