COVID-19 Losses to the Real Estate Market: An Equity Analysis

ABSTRACT

This is the first paper to estimate the dollar impact of COVID-19 on the aggregate value of United States commercial real estate. With the compounding effects of telecommuting, social distancing, restrictions on commerce, and business closures, few sectors have been as hard hit by the COVID-19 pandemic as commercial real estate. Analyzing traded REITs provides statistical estimates of the decline in United States commercial real estate values. Applying MacroRisk.com's commercial stock valuation models which use key economic factors to value equities, we evaluate the impact of economic changes on commercial real estate values. We find that real estate markets would have likely realized substantially greater declines but for the extreme monetary and fiscal policy pursued during the early months of the pandemic.