JUE insight: Are city centers losing their appeal? Commercial real estate, urban spatial structure, and COVID-19

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

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

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% per mile from the city center and increases 8.4% 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% in transit cities, and the premium for proximity to transit stops also falls. We 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.

Original languageEnglish (US)
Article number103381
JournalJournal of Urban Economics
Volume127
DOIs
StatePublished - Jan 2022

Keywords

  • Agglomeration
  • COVID-19
  • Commercial real estate
  • Urban spatial structure

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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