Climate change and commercial real estate: Evidence from Hurricane Sandy

Jawad M. Addoum, Piet Eichholtz, Eva Steiner, Erkan Yönder

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


We study how professional investors capitalize flood risk in commercial real estate (CRE) markets after hurricane Sandy. We show that New York CRE exposed to flood risk trades at a large, persistent discount. CRE in Boston, which mostly escaped direct hurricane-related damage, also exhibits persistent price penalties. These price effects are driven by asset-level capitalization rates, not building occupancy. Results from a placebo test using real estate prices in Chicago show that our inferences are not driven by coincidental, unrelated price trends for waterfront real estate assets. Our results are consistent with professional investors responding to a persistent shift in the salience of flood risk post-Sandy, even in locations spared by the disaster.

Original languageEnglish (US)
Pages (from-to)687-713
Number of pages27
JournalReal Estate Economics
Issue number3
StatePublished - May 2024

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


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