Date of Award

6-2014

Document Type

Open Access

Degree Name

Bachelor of Arts

Department

Economics

First Advisor

Song Younghwan

Language

English

Keywords

catastophic events, regression, absorption, vacancy

Abstract

Two rare and uncontrollable events that recently took place in Manhattan were the attacks on the World Trade Center and Hurricane Sandy. Both of these catastrophic events affected the commercial real estate market in Manhattan in several ways. Using quarterly time-series data between 1996 and 2013 collected from Brookfield Office Properties, this paper utilizes regression analysis to investigate the effects of these events on vacancy rate, absorption rate and rent in Manhattan. The regression analyses control for location and building type such as Midtown, Downtown and Classes A,B,C, as well as economic factors such as unemployment rate and the S&P index. The regression results show that rent decreased in Downtown after 9/11 by 22% compared to Midtown. Rent showed a similar relationship with Sandy. Absorption rate also significantly decreased in Downtown by 4.98% after 9/11 compared to Midtown. Vacancy rate showed no significant effects from these two events.

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