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Commercial Real Estate in Crisis: Evidence from Transaction-Level Data
Author:
Mr. Adrian Alter
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https://orcid.org/0000-0003-4752-4808
,
Elizabeth M. Mahoney https://isni.org/isni/0000000404811396 International Monetary Fund

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, and
Cristian Badarinza
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Series:
IMF Working Papers
Volume/Issue:
Volume 2023: Issue 015
Language:
English
Publication Date:
27 Jan 2023
DOI:
https://doi.org/10.5089/9798400231070.001
ISBN:
9798400231070
ISSN:
1018-5941
Pages:
46
Keywords:
Non-residential Real Estate; Financial Conditions; Liquidity; Big Data; level data; CRE price; household indebtedness; CRE market; CRE transaction; COVID-19; Real estate prices; Global financial crisis of 2008-2009; Global; Middle East and Central Asia
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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During the past two decades, the commercial real estate (CRE) market has been impacted by major disruptions, including the global financial crisis and the Covid-19 pandemic. Using granular data from the U.S., we document how these crises have unfolded and elaborate on the role of heterogeneity and underlying shocks. Both a set of reduced-form approaches and a structural framework suggest a prominent role for demand-side local factors in the short run, along with significant shifts in preferences during crisis episodes. However, valuations become more closely linked to macro-financial factors over the long term. A one-standard deviation tightening in financial conditions is associated with a drop of about 3% in CRE prices in the following quarter, with a stronger impact on the retail sector and milder effects in states where household indebtedness is lower.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund