Face-to-face Interactions, Tenant Resilience, and Commercial Real Estate Performance

50 Pages Posted: 8 Dec 2020

See all articles by Chongyu Wang

Chongyu Wang

Concordia University; University of Florida

Tingyu Zhou

Florida State University

Date Written: December 7, 2020


The COVID-19 pandemic has introduced an exogenous shock to the face-to-face (FTF) economy and the use of commercial space. By exploiting a new dataset that links tenants, commercial properties, and stakeholders (including equity holders and lenders) in these properties, we examine whether and how the dependence of commercial tenants’ business operations on FTF interactions affect commercial real estate performance during the pandemic. We construct three novel FTF measures at both the property and firm levels to capture remote working by tenants, internal communication between coworkers, and external contact with customers. We find that firms holding properties with tenants that are less resilient to social distancing experienced greater declines in abnormal returns in response to COVID spread (growth in the number of cases), more negative market reactions around lockdown and reopening announcements, and lower analyst earnings expectations. Evidence based on property-level mortgage spreads of collateralized loans is consistent with these findings. Our findings are unlikely to be explained by variation in a building’s property type or in a property-owning firm’s property-type focus.

Keywords: Commercial Real Estate, Face-to-Face Interactions, Tenant Resilience, Social Distancing, COVID-19 Pandemic

JEL Classification: G01, G11, G12, G14, R30

Suggested Citation

Wang, Chongyu and Zhou, Tingyu, Face-to-face Interactions, Tenant Resilience, and Commercial Real Estate Performance (December 7, 2020). Available at SSRN: https://ssrn.com/abstract=3743818 or http://dx.doi.org/10.2139/ssrn.3743818

Chongyu Wang (Contact Author)

Concordia University ( email )

1450 Guy Street
Montreal, Quebec H3G 1A1

University of Florida ( email )

P.O. Box 117168
Gainesville, FL 32611
United States

Tingyu Zhou

Florida State University ( email )

821 Academic Way
Tallahassee, FL 32306
United States

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