Managing risk in commercial property development projects during the COVID-19 pandemic: Evidence from China

The COVID-19 pandemic is the biggest global health crisis in years. China is the first market primarily affected by the COVID-19 pandemic, with unprecedented lockdown measures bringing real estate and other economic activities to a standstill. This study has two objectives: (1) to identify the risks critical to the risk management of commercial real estate (CRE) development projects based on the project life cycle stages and (2) to identify the stages most affected by the COVID-19 pandemic and the risk factors at different stages. Three rounds of the Delphi study were conducted with nine experts involved in the construction project. The findings indicate that the construction, lease and sale phases are prone to significant risks. Additionally, the analytic hierarchy process (AHP) identified ‘health and safety risk' as the most critical risk factor during the construction phase and ‘marketing and payback risk' as the most critical risk factor during the lease and sale phase. This study enhanced the effectiveness of risk management practices for implementing CRE development projects in China.

Real Estate Insights The continuing uncertainty of property investment markets – an outlook for the UK in 2023

PurposeThe aim of this Real Estate Insight is to comment upon the outlook for real estate investment in the United Kingdom (UK) at the beginning of 2023 in light of global inflation brought about by the pent-up post-pandemic demand push for goods and services and the exacerbation of the Ukraine/Russia conflict.Design/methodology/approachThis Real Estate Insight will comment upon changes in the investor's view of the UK economy and the relative attractiveness of the different property sectors and the shift in thinking post-pandemic.FindingsThis paper will consider a number of scenarios and possibilities flowing from the current uncertainties in the property market and the wider economy.Practical implicationsAs with all property investment, the value and performance of the property assets is interlinked with the use and demand of different property types. Understanding the supply and demand drivers provides investors with a reasoned conjecture of how the property market may perform going forward.Originality/valueThis is a review of the UK market in relation to post-COVID-19 changes to supply and demand at both an operational and investment level.

How do institutional investors react to local shocks during a crisis? A test using the COVID-19 pandemic

We examine how institutional investors reacted to geographically dispersed local shocks during the early stages of the COVID-19 pandemic. A sample of real estate investment trusts (REITs) enables us to link two layers of geography: the locations of the assets in which the REITs were invested and the headquarters locations of institutional investors who owned REIT shares. We find that the institutional ownership of firms with an economic interest in the investors' home markets declined more if those markets were heavily affected by the pandemic. In addition, the ownership responses to the COVID-19 shock were larger in those markets in which REITs had larger portfolio allocations and in markets that were home to the investors. Importantly, we find that nonpassive and short-term investors may have overreacted to the local shocks because their REIT portfolios subsequently underperformed relative to passive and long-term investors. Our study highlights the importance of geography in the formation of investors' expectations during market crises. © 2023 American Real Estate and Urban Economics Association.

Influence of the global environment on capital flows in the London Office market

PurposeThe London office market is a major destination of international real estate capital and arguably the epicentre of international real estate investment over the past decade. However, the increase in global uncertainties in recent years due to socio-economic and political trends highlights the need for more insights into the behaviour of international real estate capital flows. The purpose of this study is to evaluate the influence of the global and domestic environment on international real estate investment activities within the London office market over the period 2007–2017.Design/methodology/approachThis study adopts an auto-regressive distributed lag approach using the real capital analytics (RCA) international real estate investment data. The RCA data analyses quarterly cross-border investment transactions within the central London office market for the period 2007–2017.FindingsThe study provides insights on the critical differences in the influence of the domestic and global environment on cross-border investment activities in this office market, specifically highlighting the significance of the influence of the global environment in the long run. In the short run, the influence of factors reflective of both the domestic and international environment are important indicating that international capital flows into the London office market is contextualised by the interaction of different factors.Originality/valueThe authors provide a holistic study of the influence of both the domestic and international environment on cross-border investment activities in the London office market, providing more insights on the behaviour of global real estate capital flows.

I'D RATHER HAVE A FLY IN MY SOUP! MUTTERINGS OF MS. ZIZI IN PANDEMIC TIMES

Dilemma: In scenarios of great uncertainty due to the COVID-19 pandemic, is it still feasible to maintain the tradition of purely face-to-face sales, or is it time to join the delivery system? And is that enough? Educational objective: This case aims to provide students with experience of situations consistent with the organizational reality and the development of decision-making abilities, focusing on the dilemma of whether or not to implement an alternative service system, given the operating restrictions imposed by the COVID-19 pandemic. Contextualization: COVID-19 caused sweeping changes in the daily life of Brazilian enterprises, including the Eating Out sector (known in Portuguese as Alimentação For a do Lar - AFL). Ms. Zizi and her son Pedro, owners of a homemade food restaurant in the municipality of Goiânia, needed to reinvent themselves during the pandemic period, in order to avoid the losing, laying offstaff, and closing the establishment. Main topic: Decision-making in times of pandemic. Audience: Students at undergraduate level in business administration, in the disciplines of marketing, entrepreneurship and strategic planning. Originality/value: Students will play the role of managers and will be asked to make decisions about a series of issues that arise in the daily lives of companies in times of crisis. The study focuses on basic concepts of the Marketing Mix, Porter's Five Forces, Decision-Making theory and Analysis of the Competition, seeking to outline strategies to deal with contingences in times of pandemic, and increase the value proposition of the Gastrô Mineiro restaurant. Dilema: Em cenários de grandes incertezas decorrentes da pandemia, ainda é viável manter a tradição de apostar somente no atendimento presencial ou é hora de aderir ao sistema de delivery? Somente isso é suficiente? Objetivo educacional: Este caso de ensino propicia aos discentes vivências de situações condizentes com a realidade organizacional e o desenvolvimento da capacidade de tomada de decisão, ao analisar o dilema de implantação ou não de um sistema alternativo de atendimento, dadas as medidas restritivas de funcionamento decorrentes da pandemia da COVID-19. Contextualização: O advento da COVID-19 ocasionou mudanças drásticas no cotidiano dos empreendimentos brasileiros, inclusive no setor de Alimentação Fora do Lar (AFL). Dona Zizi e seu filho Pedro, donos de um restaurante de comida caseira no município de Goiânia, precisaram reinventar o formato do atendimento ao cliente no período pandêmico, com o intuito de evitar a perda da clientela, a demissão em massa de colaboradores e o fechamento do estabelecimento. Tea principal: Tomada de decisão em tempos de pandemia. Público: O caso pode ser aplicado a estudantes dos cursos de graduação em administração, nas disciplinas de marketing, empreendedorismo e planejamento estratégico. Originalidade/valor: Os discentes irão assumir o papel do gestor e tomar decisões sobre um leque de inquietações e problemas que surgiram no cotidiano do Gastrô Mineiro, no período da pandemia. Este caso de ensino resgata conceitos teóricos básicos sobre o Mix de Marketing, Cinco Forças de Porter, Teoria da Decisão e Análise da Concorrência, com objetivo de traçar estratégias que atendam as contingências decorrentes da pandemia e ampliar a proposta de valor do restaurante em estudo.

Governmental Restrictions and Real Estate Investor Risk Perception by

We investigate the impact of governmental restrictions on the short-term risk perception, as proxied by the going-in cap rate, of investors in regional and neighborhood shopping centers. We use the COVID-19 pandemic as a natural experiment and proxy for the length and severity of COVID-19 restrictions with the political affiliation of state governors. Using a sample of 40 metropolitan statistical areas (MSAs) across 27 states over the period of 2018 to 2021, we find that for states with Republican governors, which proxy for shorter and fewer COVID-19 restrictions, investors in regional malls required a lower going-in cap rate in the pandemic period than for states with Democratic governors. This effect does not exist for neighborhood shopping centers, whose tenants were not as affected by COVID-19 restrictions. Robustness checks suggest that our findings can be explained with mask mandates as one type of governmental restrictions, and that COVID-19 related restrictions do not impact the long-term risk perception of retail real estate investors. We furthermore find that the political attitudes of an MSA have an impact on investor risk perception. © 2023, The Author(s).

Pluto~Charon Inc., or Where the Orbits of Right-of-Use Assets and Impaired Value Collide: Certified Public Accountant

According to recent articles from assorted periodicals, the Manhattan office market was at a risk of oversupply before the pandemic. [...]of COVID, additional commercial space became abruptly available, and there was over 20 million square feet of NYC sublet space actively looking for tenants. [...]although the current reduction in usage of office space would not automatically cause an impairment charge, for small organizations like PCI, it is imperative to seriously consider this collision of ROU and impairment when preparing their financial statements.

The role of coworking spaces in the changing landscape of future workplace agility: linking boundary organization theory and organizational development models

PurposeThis study aims to illustrate the potential of coworking spaces as one way to achieve optimal workplace arrangements and corporate real estate (CRE) agility, especially for large organizations. The authors suggest understanding coworking spaces from the boundary organization theory and organizational growth model.Design/methodology/approachThis study takes a threefold theoretical approach: conducting a literature review and identifying the gaps in coworking studies for large organizations, applying the organizational boundary theory in tandem with organizational growth models in the context of coworking spaces as a part of the workplace ecology and identifying future research agendas for coworking studies.FindingsThis study proposes a conceptual framework of how coworking spaces can be viewed and used as a boundary object throughout the organizational growth phases. Besides, four major future research areas are proposed: case studies and/or empirical evidence of coworking spaces as CRE buffer zones and boundary objects for organizations, coworking space design and different formats of boundary object-infused collaboration, coworking space design and management for its own agility and flexibility and how coworking affects employees' performance, health and well-being and professional training/mentoring.Practical implicationsFor large organizations, there is a clear pressure to rethink CRE to increase workplace agility, flexibility and resilience, much accelerated with the recent COVID-19 pandemic. Understanding the effective use of coworking spaces as a part of CRE portfolios will help enhance corporates' state and ability to reassess, realign and replan their CRE portfolios.Originality/valueMany existing studies about coworking spaces are based on observations and self-reported justification at an individual level. Whether and how coworking can benefit companies at an organizational level is largely unstudied and worth more attention. This study illustrates a new theoretical understanding of how coworking spaces can be a part of CRE portfolios and bring potential benefits of inter and intraorganizational collaboration throughout the phases of organizational growth.

Content validation of value-adding indicators for corporate real estate management: insights from a developing country

PurposeThe purpose of this study is to test the content validity of value-adding indicators derived from a comprehensive review of literature and expert interviews within the context of the nascent corporate real estate management (CREM) practices in Ghana.Design/methodology/approachA questionnaire survey was conducted on a panel of experts to assess the content relevance and clarity of the value-adding indicators. The individual content validity (I-CVI) index as well as the average scale content validity index (S-CVI) were computed. Preliminary interviews were analyzed using summative content analysis.FindingsThe I-CVI for relevance and clarity ranged from 0.33 to 1.00, whereas the average S-CVI was > 0.80. Critical analysis of the results by corrections, eliminations due to lower I-CVI scores and suggestions from the experts resulted in a final list of 50 indicators grouped under 10 domains. The results from the content validity confirm the applicability of the value-adding indicators in literature within the Ghanaian context. The study provides detailed sustainability indicators while introducing a new value-adding parameter that relates to CREM preparedness for pandemics such as the Covid-19.Research limitations/implicationsFurther psychometric assessment such as construct validity, inter- and intra-examiner reliability and internal consistency of the indicators is recommended.Practical implicationsThe indicators developed through the content validation can assist in the design and review of measures for the assessment of added value by corporate real estate managers and researchers.Originality/valueThe paper presents the first attempt to test and develop added value indicators within the context of a developing country by taking a systematic content validation procedure.

Working from home and corporate real estate

We examine how corporate real estate market participants adjust to the take-off of teleworking. We develop an index for the exposure of counties to teleworking in France by combining teleworking capacity with incentives and frictions to its deployment. We find that the valuation of offices declined more in areas more exposed to telecommuting, a pattern that we do not observe for retail assets. In addition, we show that telecommuting increases vacancy, decreases construction, while transaction volumes are not affected. It implies that the drop in price is due to a shift in demand for space. In addition, our result suggests that market participants are expecting the shift to teleworking to durably affect the demand for office space.

Face-to-face interactions, tenant resilience, and commercial real estate performance

We study the impact of face-to-face (FTF) interactions on commercial real estate (CRE) performance. By linking tenants, properties, and CRE firms, we construct three novel FTF measures that capture tenant remote working, internal communication between coworkers, and external contact with customers. Using the COVID-19 pandemic as an exogenous shock to the FTF economy, we find that firms holding properties with tenants that are more resilient to social distancing perform better. These FTF effects weaken over the long term, however. As investors are capable of compiling valuable information at granular levels regarding how tenants operate, our findings support market efficiency and shed light on postpandemic CRE performance. © 2022 American Real Estate and Urban Economics Association.

Pandemic Proof Property Companies

Using a sample of 163 U.S. based equity real estate investment trusts (REITs), this paper explores the consequences of COVID-19 on securitized commercial property markets. More specifically, we first map the geographic location of each firm’s investment property holdings to gauge the degree of exposure of each REIT’s asset base to the pandemic. We next demonstrate these firm level exposure metrics are directly related to the negative returns encountered by REITs in the early months of the pandemic and explore what firm specific characteristics and attributes (notably financial flexibility and financing constraints) may moderate this relation and enhance the resiliency of their equity returns. Finally, we examine the impact of the Federal Reserve’s late-March intervention designed to address and soften the economic fallout of the pandemic and ensure the liquidity and stability of capital markets. After this intervention, previously observed relations and patterns between firm specific COVID-exposure levels and operating characteristics fail to retain their prior signs and significance. In sum, the magnitude of the government’s response to the economic challenges brought about by the coronavirus pandemic is shown to outweigh the importance of firm specific factors in predicting the resiliency of REIT returns during this crisis period.

Work from home: bane or blessing? Implications for corporate real estate strategies

Technological progress and developments in the economy and society are constantly changing the way we work. The ongoing COVID-19 pandemic is accelerating the move towards multilocal working: knowledge workers worldwide have been forced to gain experience of working from home. Based on this experience, they are now in a position to weigh up different places of work and articulate desires for the distribution of working time between home workplace, third places and office.Previous studies have shown that working from home can have positive effects for corporates in the form of productivity increases. However, it has so far remained open which employees exactly are successful at different workplaces. The aim of the study is to identify clusters with their own workplace distribution based on personal, work-related and real estate characteristics, and to investigate whether the desire for specific workplace distribution promises success.Identification of the subgroups is done by conducting a hierarchical cluster analysis that includes previously identified personal, work-related and real estate characteristics. The evaluation and interpretation of the cluster solution is based on the desired workplace distribution and identified work success variables. Data from a survey of 2000 German and US knowledge workers is taken into account.The results of the survey suggest that knowledge workers in Germany and the US have developed a good sense of the workplace in which they can work successfully. At the same time, the decision-makers in the corporates have to decide carefully who should work at which workplace with a view to the corporate’s success. It is also clear that as work becomes more multilocational, real estate resources must play an important role in creating a corporate culture and identity.Alternate :Technischer Fortschritt sowie Entwicklungen in Wirtschaft und Gesellschaft verändern die Art des Arbeitens fortlaufend. Die anhaltende Covid-19-Pandemie beschleunigt die Entwicklung hin zu multilokalem Arbeiten: Wissensarbeiter weltweit waren dazu gezwungen, Erfahrung mit dem „Work from Home“ zu sammeln. Diese sind nun in der Lage, aufgrund dieser Erfahrungen über die verschiedenen Arbeitsorte abzuwägen und Wünsche an die Verteilung der Arbeitszeit auf Homeoffice, dritte Orte und Büro zu artikulieren.Vorangegangene Studien zeigten, dass die Arbeit von zu Hause für Unternehmen positive Auswirkungen in Form von Produktivitätssteigerungen haben kann. Dabei blieb bisher offen, welche Mitarbeiter genau an den verschiedenen Arbeitsorten erfolgreich sind. Ziel der Studie ist es, aufgrund persönlicher, arbeitsbezogener und immobilienbezogener Merkmale Cluster mit eigener Arbeitsortverteilung zu identifizieren und zu untersuchen, ob der Wunsch nach der spezifischen Arbeitsortverteilung Erfolg verspricht.Die Identifikation der Subgruppen erfolgt anhand der Durchführung einer hierarchischen Clusteranalyse unter Einbezug zuvor identifizierter persönlicher, arbeitsbezogener und immobiliarer Eigenschaften. Die Bewertung und Interpretation der Clusterlösung erfolgt anhand der gewünschten Arbeitsortverteilung und identifizierter Arbeitserfolgsvariablen. Dabei finden Daten aus einer Umfrage unter 2000 deutschen und US-amerikanischen Wissensarbeitern Berücksichtigung.Die Ergebnisse der Untersuchung legen nahe, dass Wissensarbeiter in Deutschland und den USA ein gutes Gespür dafür entwickelt haben, an welchem Arbeitsort sie erfolgreich arbeiten können. Zugleich müssen die Entscheider in den Unternehmen im Hinblick auf den Unternehmenserfolg mit Bedacht entscheiden, wer an welchem Arbeitsort tätig sein soll. Außerdem wird deutlich, dass die immobiliaren Ressourcen bei zunehmender Multilokalität der Arbeit eine wichtige Rolle beim Schaffen einer Unternehmenskultur und -identität einnehmen müssen.

CREM perspective on home office—a consideration of the workplace and its mechanisms of action

The effect between the workplace and work success is a black box whose mechanisms have so far received little theoretical substantiation. In the explanation of the importance of corporate real estate and its management for the success of companies, the influence of real estate on the work productivity of employees through the physical workplace is shown. However, the overall picture has not yet been fully elaborated and the fragmentary knowledge is only partially suitable for attributing organizational outcomes to the characteristics of the physical working environment. Without sufficient empirical data and a solid theoretical foundation for physical working environment studies, it is not possible to draw conclusions with sufficient certainty about the impact of working environments on organizational outcomes.The fact that millions of people worldwide are working from home for the first time during the COVID-19 pandemic provides an unprecedented opportunity to explore the impact of the home office environment on business success.This study aims to contribute to filling this research gap by further investigating the impact of the physical working environment at home on productivity by building on the Environmental Demands–Resources model. Therefore, the research goal is to determine which of the four included demands and resources (isolation, family–work interference, equipment/facilities, and building) have an impact on employee burnout and satisfaction, and how this impact affects employee productivity. Partial least squares structural equation modeling is used to analyze a German survey sample (n = 429).The results suggest that the four included workplace characteristics have significant influence, with equipment/facilities and building increasing satisfaction and isolation and family–work interference increasing burnout. Equipment/facilities is identified as the most important factor affecting productivity in the home office.Through this study, a contribution is made to establish a more inclusive and integrative framework for physical working environment research. In addition, the results show that workspace characteristics have an impact on productivity. Far beyond the pandemic, the impact of changes in workspace design on employee perceptions and organizational performance will be important to corporate real estate management practice.Alternate :Die Wirkung zwischen Arbeitsplatz und Arbeitserfolg ist eine Blackbox, deren Mechanismen bisher wenig theoretisch untermauert wurden. Bei der Erläuterung der Bedeutung von Unternehmensimmobilien und deren Management für den Erfolg von Unternehmen wird der Einfluss von Immobilien auf die Arbeitsproduktivität von Mitarbeitern durch den physischen Arbeitsplatz aufgezeigt. Allerdings ist das Gesamtbild noch nicht vollständig ausgearbeitet, und das fragmentarische Wissen ist nur bedingt geeignet, organisatorische Ergebnisse auf die Merkmale der physischen Arbeitsumgebung zurückzuführen. Ohne ausreichende empirische Daten und eine solide theoretische Grundlage für Studien zur physischen Arbeitsumgebung ist es nicht möglich, mit ausreichender Sicherheit Schlussfolgerungen über die Auswirkungen der Arbeitsumgebung auf organisatorische Ergebnisse zu ziehen. Die Tatsache, dass Millionen von Menschen weltweit während der COVID-19 Pandemie zum ersten Mal von zu Hause aus arbeiten, bietet eine noch nie dagewesene Gelegenheit zur Erforschung der Auswirkungen des Home Office auf den Unternehmenserfolg.Der Literatur über die physische Arbeitsumgebung fehlt eine theoretische Fundierung, um organisatorische Ergebnisse auf die Merkmale der physischen Arbeitsumgebung zurückzuführen. Die vorliegende Studie soll dazu beitragen, diese Forschungslücke zu schließen, indem sie aufbauend auf dem Environmental Demands-Resources-Modell die Auswirkungen der physischen Arbeitsumgebung zu Hause auf die Produktivität untersucht. Ziel der Studie ist es einen Beitrag dazu zu leisten die Wirkungsmechanismen des Arbeitsorts auf den Arbeitserfolg empirisch zu erkläre . Dazu werden vier Anforderungen und Ressourcen des Heimarbeitsplatzes auf ihren Einfluss auf Burnout und Zufriedenheit der Mitarbeiter und deren Einfluss auf die Produktivität der Mitarbeiter überprüft. Zur Analyse einer deutschen Umfragestichprobe (n = 429) wird die Strukturgleichungsmodellierung verwendet.Die Ergebnisse belegen, dass die vier einbezogenen Arbeitsplatzmerkmale einen signifikanten Einfluss haben, wobei die Ausstattung/Einrichtungen und das Gebäude die Zufriedenheit erhöhen und die Isolation und die Überlagerung von Familie und Arbeit Burnout erhöhen. Ausstattung/Einrichtung wird als wichtigster Faktor identifiziert, der die Produktivität im Home Office beeinflusst.Mit dieser Studie wird ein Beitrag zur Erklärung der theoretischen Wirkungsmechanismen zwischen Arbeitsort und Arbeitserfolg geleistet. Die Ergebnisse zeigen, dass die vier untersuchten Merkmale des Arbeitsplatzes zuhause einen Einfluss auf die Produktivität der Mitarbeiter haben. Somit wird deutlich, dass physische und sozialpsychologische Faktoren des Heimarbeitsplatzes den Arbeitserfolg maßgeblich mitbestimmen.

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

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.

Supply Chain Disruption

is Senior Vice President at Cushman & Wakefield Iowa Commercial Advisors. Basic economics, as we've learned, is the creation of equilibrium between supply and demand to create economic harmony. Since humans first started trading, those with goods and services in demand adjusted their business to produce more to support growing demand. According to recent research, 88% of contractors report moderate to high levels of difficulty finding workers and 35% have turned down work due to labor shortages.

Why do they go to the peripheries? Studying the relations between the real estate market and coworking spaces in the peripheral areas of Germany

Purpose>The study was designed to investigate the bidirectional causation between the real estate market characteristics (residential property prices/rents (including PTR), office rents) and the rise of coworking spaces (CSs) in the peripheral areas of Germany.Design/methodology/approach>Based on the desk research, the authors constructed their own database of 1,201 CSs. The authors gathered data on the residential and office prices and rents on a district level. To identify real market differences between districts with and without CSs, the authors applied the t-test for independent samples.Findings>The second-highest number of CSs were found to operate in the office market peripheries. This phenomenon should be explained by a search for lower office rents, which CSs seek. Most CSs in the peripheral areas of Germany were only recently established in tourist-oriented regions in the south and north of Germany. In this paper, the authors confirmed that the strength of peripheral CSs lies in the hybridity of their operations: for the majority of CSs, running a CS is a non-core business. The authors argue that the role of CSs is rather limited in attracting real estate investors and boosting the real estate market in the peripheral areas of Germany.Practical implications>The research shows that peripheral locations are attracting CSs to significant extent. The study shows that CSs can be part of corporate real estate or workplace strategies. As the majority of peripheral CSs are located in tourism areas, the subletting of vacant spaces could be a lucrative business model for hotels, particularly in the times of pandemics. Therefore, further research should focus on the role of tourist areas in the implementation of CSs model.Originality/value>The focus of this study (CSs in peripheral areas) is original. Additionally, applying the real estate perspective to study the location of CSs is novel as well.

Guest editorial: Co-working spaces after COVID-19. The differences between sharing office spaces in urban cores and peripheral locations

[...]looking to the future, the sector will also see several new trends take root like the competition between different localities, operators prioritising offers that enhance wellbeing during working hours to satisfy the revived attention for this matter and consequent growth in demand, or companies turning to co-working spaces – or “flex” spaces – to optimise their operations within some specific or riskier sectors of the business that require a more innovative approach and working environment. [...]we consider – at least for traditional investors in commercial real estate – the growth of a real estate market for peripheral co-working spaces as a less likely scenario in the post-pandemic, unless a social value element is also attached to this type of investments. [...]the development of models such as “neighbourhood co-working”, “near working” or “commuter co-working” could represent an opportunity for those who choose to live in suburban areas.

ESG, operational efficiency and operational performance: evidence from Real Estate Investment Trusts

Purpose>The purpose of the paper is to examine the relationship between the Environmental, Social and Governance (ESG) performance of Real Estate Investment Trusts (REITs) and their operational efficiency and performance.Design/methodology/approach>The authors use S&P Global (formerly SNL Real Estate) for the study analyses and examine all publicly traded REITs based in the United States over the 2019–2020 sample period. The authors regress the measures of REIT operational efficiency and operational performance on REIT ESG scores while controlling for REIT characteristics and use an ordinary least squares (OLS) estimation model with heteroscedasticity-robust standard errors. The authors also run additional regressions to examine the implications of operational efficiency on the relationship between ESG and operational performance.Findings>The authors find that REITs that perform well on the ESG scale have higher operational efficiency. In addition, the authors find that REITs with better ESG scores are associated with better operational performance. Finally, the authors find that the positive association between ESG scores and operational performance is stronger in REITs with higher operational efficiency.Practical implications>First, the adoption of ESG adds value to the REIT in terms of increased operational performance and efficiency. Second, the value addition of ESG to an REIT is driven by the better operational efficiency of some REITs over the others. Therefore, the authors’ findings suggest that REITs that currently score poorly on ESG performance would first need to focus on all the possible avenues to improve economies of scale and hence operational efficiency. This approach would help ensure that when those REITs adopt ESG initiatives, they get the most bang for their buck.Originality/value>To the best of the authors’ knowledge, this is the first study that relates operational efficiency and operational performance of REITs to their ESG scores.

Editorial: The aftermath of two consecutive crises: Volatility and property market mechanisms

A conceptual paper covers an exciting view of how the mortgage market would react when a new player with different credit criteria (LTV and interest rates) enters;it advances a theoretical explanation to recover mortgage coverage in those property markets most affected by the GFC. By analysing four measures of market linkages (correlation, spillover, connectedness and causality), this paper demonstrates that portfolio diversification with corporate equity and public real estate increases in the long term and permits future market risk prediction. [...]Hoesli and Malle analyse the effects of the COVID-19 pandemic on commercial real estate prices.