Commercial Real Estate Market at a Crossroads: The Impact of COVID-19 and the Implications to Future Cities

Abstract

This paper aims to examine the responses of commercial real estate markets to COVID-19 and the implications for post-pandemic cities. Using data of Florida’s metropolitan areas in a fixed effect regression model, we find that sales volumes of retail properties decline instantly under the shock of COVID-19 but are followed by a strong recovery after one quarter. Meanwhile, COVID-19 depresses the growth rate of rent for office property, but the impact is short-term, and the office rental market bounces back to about 70 percent one quarter later. In comparison, industrial properties witness a rise in the growth rate of sales and rent price. Results indicate that urban planners may consider adjusting the amount of lands allocated to different usages to meet the evolving demands of urban space in the post-pandemic era.