Office market adjustment to alternative workplace strategies

Abstract

Regional CGE models have been a valuable tool for regional development and regional policy analysis and can have valuable applications in real estate analysis as well. This paper describes the Colorado Real Estate (CO-RE) Computable General Equilibrium (CGE) model and its application to the analysis of the impacts of alternative workplace strategies (AWS) such as office hoteling on regional property markets and the regional economy. AWS, modeled as a productivity-enhancing “technological” improvement that reduces firms’ office space requirements, is shown to spur investment in non-office sectors through a positive impact on local economic growth. The impact on local government finances may be negative due to falling office property values. The impact of a sudden, permanent drop in underlying demand for office space by office-using sectors includes dramatic if sluggish decreases in rents and increases in office vacancy.

Keywords

• office market
• real estate
• computable general equilibrium
• remote work
• alternative workplace strategies