Human Mobility and Commercial Real Estate: Evidence from REIT Operating Performance
Prof. Desmond Tsang
Associate Professor,
Co-Director, Centre for Hospitality and Real Estate Research
The Chinese University of Hong Kong
Date: 7 March 2025 (Friday)
Time: 10:30 to 12:00
Venue: E22-2010
Host: Dr. Xiaoling CHU, Research Assistant Professor
Abstract
The pandemic caused a structural shift in the ways we work and live. Particularly, remote work practices changed in a more permanent manner. This study reveals how human mobility change, which potentially has become a significant factor affecting the real estate market since the pandemic, affects commercial real estate performance. We first use a machine learning model (LASSO) to determine the local factors that best predict human mobility change. We next analyse the impact of mobility change based on local factors on the operating performance of U.S. REITs. Our findings demonstrate that REITs with more exposure to mobility reduction report lower rental revenue, lower net operating income (NOI), and lower adjusted funds from operations (AFFO). We find that the mobility reduction effect is most apparent in the office and retail sectors. We further demonstrate human mobility shock affects REIT pricing amid the pandemic, as the sensitivity of AFFO to human mobility has led to negative reactions in the stock market, particularly for office properties.
Speaker
Prof. Desmond Tsang is an Associate Professor of Real Estate at the School of Hotel and Tourism Management at CUHK Business School. He also serves as a Co-Director of the Centre for Hospitality and Real Estate Research. He obtained his PhD from University of California at Berkeley majoring in real estate and accounting. His research in real estate specialises in Real Estate Investment Trusts (REITs), Firm Location, and Chinese Real Estate Market. His research interests in accounting include Corporate Governance, Earnings Management, and Financial Reporting Fraud. Professor Tsang has published in top journals such as Management Science, Review of Accounting Studies, Real Estate Economics, Journal of Real Estate Research and Journal of Real Estate Finance and Economics. Professor Tsang teaches real estate at the undergraduate, masters, and doctoral levels at CUHK. Professor Tsang has provided extensive services to the academic profession and the industry. He was the president of both the Asian Real Estate Society (AsRES) and the Global Chinese Real Estate Congress (GCREC) for the term 2022-2023. He has hosted the AsRES-GCREC Joint International Real Estate Conference in 2023 and the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV) Research Conference in 2024.
All are welcome!
