Temperature Extremes and Commercial Real Estate

67 Pages Posted: 8 Nov 2021 Last revised: 29 Feb 2024

See all articles by Dragana Cvijanovic

Dragana Cvijanovic

Cornell SC Johnson College of Business

Alex Van de Minne

University of Connecticut - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: February 28, 2024

Abstract

Combining granular data on temperatures across the continental US with micro-level commercial real estate (CRE) data from 1980 to 2020, we study the impact of exposure to extreme temperatures on investment performance of CRE at the individual asset level. We find that exposure to extreme temperatures over the holding period significantly reduces average realized total and asset returns in CRE, as well as sale prices, with no significant effect on income returns. Our results are driven by the recent extreme temperature events’ impact on sale prices. Heterogeneous treatment analysis by property sector also lends support to consumer demand channel.

Keywords: ccommercial real estate, temperature extremes, climate change

JEL Classification: R30, F64, C21

Suggested Citation

Cvijanovic, Dragana and Van de Minne, Alex, Temperature Extremes and Commercial Real Estate (February 28, 2024). Available at SSRN: https://ssrn.com/abstract=3956714 or http://dx.doi.org/10.2139/ssrn.3956714

Dragana Cvijanovic (Contact Author)

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Alex Van de Minne

University of Connecticut - School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
156
Abstract Views
683
Rank
104,569
PlumX Metrics