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Rosenthal paper on commercial real estate, urban spatial structure, and COVID-19 published in JUE

Jun 24, 2021

Are City Centers Losing Their Appeal? Commercial Real Estate, Urban Spatial Structure, and COVID-19

Stuart S. Rosenthal, William C. Strange & Joaquin A. Urrego

Journal of Urban Economics, June 2021

Stuart Rosenthal

Stuart Rosenthal

This paper estimates the value firms place on access to city centers and how this has changed with COVID-19. Pre-COVID, across 89 U.S. urban areas, commercial rent on newly executed long-term leases declines 2.3 percent per mile from the city center and increases 8.4 percent with a doubling of zipcode employment density. These relationships are stronger for large, dense “transit cities” that rely heavily on subway and light rail. Post-COVID, the commercial rent gradient falls by roughly 15 percent in transit cities, and the premium for proximity to transit stops also falls. The authors do not see a corresponding decline in the commercial rent gradient in more car-oriented cities, but for all cities the rent premium associated with employment density declines sharply following the COVID-19 shock.