So much of property value is tied to peripheral factors, such as building occupancy. There is probably no asset class more impacted by this than occupancy in office buildings. Over the past several months, we have dedicated a fair amount of our discussion to this phenomenon, and how it in turn impacts building values. For the most part, the story has been the same: low occupancy is leading contentious negotiations between building owners and assessment departments at the municipal level based upon alternative opinions on building value.
Thus far, we have presented items suggesting a long-term shift toward remote work which will permanently impact building values, i.e. create a downward shift. Undoubtedly, there is significant evidence supporting this trend, but conversely, there is also evidence trickling in suggesting something entirely different: workers are quietly expressing a desire to return to the office. If this happens, dire predictions concerning the precipitous decline in building values could in fact be neutralized.
Various bits of information through news items have been suggesting as much since the WHO declared the pandemic was over, but this piece by the BBC provides the reason why this is happening. When the pandemic was first declared, employees were told to go home and wait until employers issued the all-clear to return to the office. These employees also included new graduates, firmly in the Gen Z generational cohort, many of whom had never worked in traditional office environments. To them, working at home provided the type of flexibility they had always envisioned for their dream job.
But then something happened. When the impacts of the health emergency waned, employers began the slow march back to the office, and when workers were encouraged/nudged to return, they did so reluctantly, as they had become accustomed to these new work patterns. The ongoing narrative we continue to hear is that if employers mandate such a return to the office, workers will leave and seek positions in companies allowing them to maintain their flexibility, but the BBC piece provides examples of workers, including those young people from Gen Z who many have always assumed will turn their back on traditional work, are discovering the benefits associated with a central office model. Frankly, they’re liking what they see.
Turns out that face time is an intangible never fully considered in the calculus of work patterns. It allows workers to quickly resolve problems and forge strong relationships, and coming into the office allows workers to segment work life from home life. Of course, in the article, there are many other dimensions that are discussed in greater detail, but the key takeaway, in our estimation of course, is that this won’t be the last published item where this phenomenon is being flushed out.
So how does this impact our ongoing discussion about property values? Well, given the fact we have provided perspective from the other end of the pendulum swing, it will inevitably contribute to the uncertainty and chaos marking the current period of assessment uncertainty we are living through. Ultimately, we will get a more definitive read on property assessments, but during this period where so many variables are at play including technology, shifting demographics, and the lure of central business districts, it is important to be cognizant of the need to give structure and purpose to the way property tax appeals are handled (assuming appeal activity will continue its upward trend).
Itamlink is the perfect solution that considers so many variables in one platform and streamlines the process in ways that were previously unimaginable. Don’t believe it? Contact us to book a demo and find out for yourself that in an uncertain world where property values are in a state of flux, there is a software built that can save you significant amounts of money.
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