The state of New York City’s commercial real estate industry was forever changed by the COVID-19 pandemic. The growing trend of remote and hybrid work has severely reduced office space occupancy, to about 40 percent of pre-pandemic levels, according to commercial real estate leasing data. Reduced occupancy has in turn led to commercial real estate values decreasing by as much as 50 percent in some areas of the city.

It’s this lack of occupancy and devaluation of real estate that forms part of the theory behind the “urban doom loop,” a bleak phenomena coined by Columbia Business School’s Stijn Van Nieuwerburgh, the Earle W. Kazis and Benjamin Schore professor of real estate.

The cycle works like so: As remote work continues to lower commercial real estate values, the city will collect less revenue from real estate taxes. As revenue decreases, municipal services are cut, leading those with the means to do so to move out, further reducing sales and income tax