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...

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.

Trading in both firms triggered multiple volatility halts after PacWest fell as much as 42% while Western Alliance plunged 27%. The KBW Regional Banking Index dropped as much as 7%, the most since the crisis that engulfed Silicon Valley Bank in March. 

Charles Schwab Corp., a brokerage with a banking arm that's come under pressure in the recent rout, sank 5.3%. Comerica Inc. and Zions Bancorp. each fell more than 10%.

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Part of what's driving bank shares down is the fact that many regional bank investors assumed the Federal Deposit Insurance Corp. would announce a change to deposit insurance alongside its announcements about the First Republic receivership process, said Gary Tenner, an analyst at DA Davidson. The level of uninsured deposits at Silicon Valley Bank and Signature played a key role in the bank runs that led to their downfall.

First Republic, whose assets were battered by the rise in interest rates, had struggled to stay alive after two other lenders collapsed last month, spooking depositors and investors.

First Republic was taken over by the Federal Deposit Insurance Corporation and immediately sold to JPMorgan. The deal was announced hours before U.S. markets are set to open, and after a scramble by officials over the weekend.

Later on Monday, 84 First Republic branches in eight states will reopen as JPMorgan branches.

JPMorgan will "assume all of the deposits and substantially all of the assets of First Republic Bank," the F.D.I.C. said in a statement. The regulator estimated that its insurance fund would have to pay out about $13 billion to cover First Republic's losses. JPMorgan also said that the F.D.I.C. would provide it with $50 billion in financing.