Aug 10, 2024 3 min read

To be sure, real estate anywhere in New York City will drain some pennies from your bank account, and that was the case a little less than 20 years ago when a 23-story office building in Manhattan on West 50th Street sold for $332 million.

That was a pretty standard price then for a structure built in the 1960s. It was, at that time, the home of Sports Illustrated and filled with other businesses.

The same office building sold in an online auction last month for less. Much, much less.

According to The New York Times, it sold for just $8.5 million. As the newspaper stressed in a headline, that amounts to a 97.5% discount. The building itself is sound, if a little long in the tooth compared to other properties. But the Times noted that the building now has an occupancy rate of just 35%, as remote and hybrid work has taken hold in the four years since the COVID-19 pandemic caused everyone to hunker down in their homes.

The story in the Times was published at about the same time the Pittsburgh Post-Gazette reported on a study that found 60% of the office workforce that was present in Pittsburgh’s downtown before the pandemic had returned to their desks. But the fact that 40% have not is still a pretty substantial number and very evident if you have ventured to downtown Pittsburgh on any weekday over the last few years. The once-familiar bustle and energy is no longer present, even if it is much easier to find a parking space.

As has happened in New York and elsewhere, remote and hybrid work has led to a drop in prices for commercial real estate and some frantic calls for office workers to come back. In 2022, in fact, an editorial in the Post-Gazette bore the headline, “Return to the office, for Downtown Pittsburgh’s sake.”

Obviously, no one relishes the idea of any downtown being full of empty storefronts and depopulated streets. But asking employees to return to the office for the sake of supporting a downtown’s business environment and the owners of its real estate is, well, asking a lot. If someone is doing their job just as well at their computer in their abode in Peters, or Bethel Park, or Cranberry Township, why should they have to get on the road, gnash their teeth in traffic, put additional pollutants in the air and endure all the other hassles of commuting when they can accomplish just as much from their home office. In fact, they might even be able to get more done once all the time and headaches of driving to and from work are taken off the schedule.

Many observers believe that hybrid and remote work was bound to become more prevalent even if COVID-19 had not happened, but the pandemic made the shift less gradual and more immediate. It seems likely downtowns and the people in charge of them are facing years of work and hard thinking about how they can be reinvented.

Pittsburgh itself pulled it off in the years after the collapse of the steel industry, when it went from being dreary to an inviting cultural hub. It looks like a new generation of thinkers and leaders will have to get to the drawing board.