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There is no downside.

The value of commercial real estate dictates, at least in NYC, how much tax revenue can be collected. This could be a major blow to state budgets (which can be good I guess if it forces states to reduce wasteful spending)

Is that how it works?

I thought it was the other way around: states/municipalities made their budgets and spread the property tax liability around according to the property value in proportion to the sum total value of all property.

So, if all property values went down by the same percent, taxes would stay the same.

Maybe this differs by state?

Except to large commercial landlords, who...actually, there is no downside.

The only downside I can see are restaurants/shops that work with those office employees. Some might not survive. In fact, even if offices are converted 100% into housing, the turnover of people is gonna be smaller. Anyway, rent should also decrease for those after a bit.

That's a good point, but then, it's not as if these businesses are going to benefit from buildings standing empty either. Also, the hypothetical future residents of these buildings are going to need somewhere to get their food, toiletries, etc.

Aren't a lot of pension funds and such heavily invested in real estate?

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