Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307479 
Year of Publication: 
2023
Citation: 
[Journal:] The Journal of Real Estate Finance and Economics [ISSN:] 1573-045X [Publisher:] Springer US [Place:] New York, NY [Year:] 2023 [Pages:] 1-19
Publisher: 
Springer US, New York, NY
Abstract: 
We investigate the impact of governmental restrictions on the short-term risk perception, as proxied by the going-in cap rate, of investors in regional and neighborhood shopping centers. We use the COVID-19 pandemic as a natural experiment and proxy for the length and severity of COVID-19 restrictions with the political affiliation of state governors. Using a sample of 40 metropolitan statistical areas (MSAs) across 27 states over the period of 2018 to 2021, we find that for states with Republican governors, which proxy for shorter and fewer COVID-19 restrictions, investors in regional malls required a lower going-in cap rate in the pandemic period than for states with Democratic governors. This effect does not exist for neighborhood shopping centers, whose tenants were not as affected by COVID-19 restrictions. Robustness checks suggest that our findings can be explained with mask mandates as one type of governmental restrictions, and that COVID-19 related restrictions do not impact the long-term risk perception of retail real estate investors. We furthermore find that the political attitudes of an MSA have an impact on investor risk perception.
Subjects: 
Commercial Real Estate Investment
Risk Perception
Government Risk
COVID
Political Attitudes
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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