Face-to-face interactions, tenant resilience, and commercial real estate performance

We study the impact of face-to-face (FTF) interactions on commercial real estate (CRE) performance. By linking tenants, properties, and CRE firms, we construct three novel FTF measures that capture tenant remote working, internal communication between coworkers, and external contact with customers. Using the COVID-19 pandemic as an exogenous shock to the FTF economy, we find that firms holding properties with tenants that are more resilient to social distancing perform better. These FTF effects weaken over the long term, however. As investors are capable of compiling valuable information at granular levels regarding how tenants operate, our findings support market efficiency and shed light on postpandemic CRE performance.

Automated summary

This study investigates the impact of face-to-face interactions on commercial real estate performance and develops three novel measures to capture different aspects of these interactions. The results show that firms holding properties with tenants resilient to social distancing perform better during the COVID-19 pandemic, although this effect weakens over time. The findings suggest that investors can gather valuable information about tenant operations, supporting market efficiency and providing insights into post-pandemic CRE performance.