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CBD areas in major cities throughout the world saw a huge reduction in the flow of commuters going to and from offices. The Covid-19 pandemic sparked an extraordinary exodus of workers from office buildings, to become what was meant to be a short term solution of a “work from home” workforce. After a year, employers and employees have both embraced the advantages of remote work. The lower office costs for employers and the greater flexibility for employees, especially those with families, has been an extremely attractive option. More and more companies have pushed back dates for returning to offices and have made work from home a permanent policy for at least some positions. The odds of a full return to office scenario as per pre Covid-19 are extremely remote, probably a zero chance of happening.
The work from home scenario will vastly reduce the demand and will have a huge impact on office space rentals. This in turn is likely to have a serious impact on property values as well as a slow down on new building projects. According to the latest figures the vacant office rentals are at a record high in a number of major western cities. Is this the only impact? Certainly not, there are a number of areas already affected and many more will be in the near future. Let’s start with, restaurants, takeaway shops, bars, all of these have and will continue to be adversely affected. This will in turn, see a number of closures and more vacant spaces. The value of the remaining establishments will drop dramatically due to the lower turnover and the reduced profit. The demand for staff in these establishments has and will continue to be reduced significantly. One area that hardly rates a mention is council services for the CBD. Less people equate to less garbage, reduced demand for public transport etc, etc... The list is almost endless. The unfortunate certainty is that a large number of people will lose their employment.
Even if vaccinations are able to eliminate or dramatically reduce its impact on our society, the long-term effect of Covid-19 is going to felt for many years to come.