When the pandemic began, most analysts predicted that commercial real estate would be one of the hardest hit industries. The exodus from urban centres and the collapse of high street retailers left property companies reeling. Another cloud hung over office real estate, as staff switched to working from home and anchor tenants threatened to move out of longtime bases in New York and London, Hong Kong and Shanghai. The only question was: would office workers come back, and if so when?While there has been a slow return to office work, the data so far shows that spaces are not back to anything close to their pre-pandemic normal: US office occupancy was still at only 43 per cent as of April 2022, according to the property management firm, CBRE. This may be a long-term trend. Just over half of respondents to a recent survey by the law firm DLA Piper predicted a permanent increase in the number of workers who spend less than 50 per cent of their time working in office buildings.

In addition to the disruption caused by remote working, commercial property is now facing stronger financial headwinds, as central banks around the world raise interest rates to try to tame soaring inflation. Rising rates and recessionary fears are now cooling sales and valuations of London office property, despite a strong first half-year.

Leasing volumes and office construction have slowed in New York. Rents are underperforming in big cities compared with suburbs. Wall Street has begun to take note, with commercial real estate lending tightening. One apocalyptic prediction by an academic study forecast a decline of 28 per cent in New York City’s office property over the next decade — the latter representing $500bn in potential value destruction.