In New Zealand, we typically see remote work as an overarching benefit for our regions because of the employment opportunities it offers, but in the US there are growing concerns that remote work could spark a regional banking crisis.
In the US, remote working has taken off in a way that has caused companies across the nation to reconsider their office footprints.
Data presented to me from mobile phone monitoring suggests that visitation to offices across hundreds of downtown areas throughout the US is still 30 to 40% below pre-Covid levels.
Less visitation to offices in central business districts is also having wide-reaching effects on retail and hospitality expenditure in some downtown areas in the US.
Over the next couple of years, US$1.3 trillion of commercial real estate debt is due for repayment in the US. However, this comes at a challenging time for commercial property – with vacancy rates at record highs, and commercial property values falling sharply. This situation poses a highly risk situation for regional banks in the US, some of whom are highly exposed to commercial real estate.