Recent Drops in Market Liquidity May Foreshadow Major Drops in US Commercial Real Estate Markets

The study quantifies liquidity impacts measured by the Demand-Supply Gap in terms of asset pricing implications for US private commercial real estate markets of the COVID-19 crisis. So far (using data up to April 2020), New York is hardest hit among the eight metros examined, with a predicted average price drop between 19 and 30 percent, reflecting a drop in liquidity already three-quarters of the total liquidity drop that occurred in the entire Global Financial Crisis of 2008-09. Among property sectors nationwide, retail is hit hardest with 14 to 19 percent predicted price drop and liquidity down already almost 60 percent as much as it dropped in the entire GFC.

Keywords: Liquidity, Commercial Real Estate, COVID-19, COVID, Coronavirus

JEL Classification: R30, G12

Suggested Citation: Suggested Citation

van Dijk, Dorinth and Kinsella Thompson, Anne and Geltner, David, Recent Drops in Market Liquidity May Foreshadow Major Drops in US Commercial Real Estate Markets (May 18, 2020). MIT Center for Real Estate Research Paper No. 2, Available at SSRN: https://ssrn.com/abstract=3604606 or http://dx.doi.org/10.2139/ssrn.3604606