Rosenthal paper on commercial real estate, urban spatial structure, and COVID-19 published in JUE
Jun 24, 2021
Stuart S. Rosenthal, William C. Strange & Joaquin A. Urrego
Journal of Urban Economics, June 2021
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.
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