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

By Stuart S. Rosenthal, W. Strange, J. Urrego. Journal of Urban Economics, 2021

132 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Marketing

View Paper: https://www.semanticscholar.org/paper/213c9fdfccd1989084d95bee0dc66aa5735cdf8d