> People want to live close to work, and without sufficient housing in cities, commercial real estate in big cities was very likely to suffer in the long term.

> People want to live close to work, and without sufficient housing in cities, commercial real estate in big cities was very likely to suffer in the long term. Your logic doesn't really follow. Assume that you can't develop cities any more and growth is stifled - this isn't really happening nationally - it is in some cities - but let's assume it's happening nationally anyway. Office values would still go up (nominally), as long as the city itself doesn't lose its ability to generate income in real terms. Office values are going down because 1) interest rates went up, 2) the demand for office space went down (no indication this was going to happen before the pandemic). And that's really it. The majority of high paid workers live near cities. In most cities, there isn't just one nice suburb where all the workers live. The workers are spread out all over the metro (including - mainly - in the city itself), and downtown is the only convenient place. You can't easily just open small offices in the suburbs because its unlikely the entire team is in that suburb. They're probably spread out across the city. You either go to the office (in the city) or you don't (less demand for office space). Or you work at a boutique company where everyone lives in some suburb randomly (outlier). Karen From The Suburb has always wanted everyone in the company to commute to an office park in her suburb so its convenient for her. It's not going to happen now unless Karen From The Suburb becomes CEO. We'll either RTO to offices in the city, or we'll keep working from home. The future isn't more office parks in Calabasas and Marin and East Hampton.