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Hurricane‐induced risk contagion in commercial real estate: Evidence from Hurricane Sandy

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  • Lu Fang
  • Lingxiao Li
  • David Scofield
  • Abdullah Yavas

Abstract

This study examines how hurricane‐induced destruction affects the prices of nearby undamaged commercial real estate properties, using Hurricane Sandy as a natural experiment. Using Real Capital Analytics transaction records spatially merged with Federal Emergency Management Agency building‐level damage data, we empirically employ a difference‐in‐differences and event study framework to identify price spillover effects across property types. Results show that negative spillover effects are only concentrated in the office sector, where undamaged properties located near severely Sandy‐damaged sites experienced price declines of 8%–15% that persisted for up to 4 years. These findings suggest the declines reflect a capitalization of heightened spatial contagion risk—a forward‐looking investor reassessment of interconnected physical and market vulnerabilities.

Suggested Citation

  • Lu Fang & Lingxiao Li & David Scofield & Abdullah Yavas, 2026. "Hurricane‐induced risk contagion in commercial real estate: Evidence from Hurricane Sandy," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 54(4), pages 917-1007, July.
    • Handle: RePEc:bla:reesec:v:54:y:2026:i:4:p:917-1007
    DOI: 10.1111/1540-6229.70034
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