The researchers who last year predicted $500B in value would be wiped from office buildings nationwide because of remote work gave a chilling update for real estate investors this week: They underestimated the damage.

Academics from New York University and Columbia University published a report last summer predicting that New York City office values would drop 28% by 2029, representing value destruction of $49B. In an update released this month, the authors now project an average value drop of 43.9% from 2019 to 2029.

In just a three-year period between 2019 and 2022, office buildings nationally have lost roughly $506.3B in value, according to the researchers. Office buildings lost $69.6B in New York, $32.7B in San Francisco and $5.1B for Charlotte, they wrote.

“The primary reason for the change is that we now estimate a more persistent work from home regime than before,” Arpit Gupta, an associate professor of finance at New York University's Stern School of Business and one of the co-authors of the report, wrote in an email. “We also show estimates for the work from home rates across cities, many other cities in the country feature less remote work than New York City.”

While apartment rents in the city have climbed to record highs as the city recovers its residents, office usage has failed to follow suit. Office occupancy in New York remains below 50%, according to Kastle Systems data, and landlords are feeling the pain as a result.

SL Green, the city's largest office landlord, is facing a credit downgrade, while Vornado has said it will stop paying dividends to owners of its common shares for the rest of 2023 as it seeks to shore up its finances.

Large employers like JPMorgan Chase and Amazon have in recent months put in place return-to-office mandates, and a recent CBRE U.S. office occupiers survey found 65% of the companies now require employees to return to the office at least some of the time.

But that has not affected investors’ views, with the biggest publicly traded office landlords experiencing significant slides in their stock prices and an increase in short sellers.

“The key takeaway from our analysis is that remote work is shaping up to massively disrupt the value of commercial office real estate in the short and medium term,” the authors wrote in the report. “This conclusion is consistent with our finding that firms appear to demand substantially less office space when they adopt hybrid and remote work practices, and that such practices appear to be persistent.”