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Abstract
The editors of the special real estate issue introduce the articles contained in the issue and relate them to the concept of resiliency in real estate investments. COVID-19 had a major impact on returns to real estate. However, the resilience of property returns to COVID-19 varied significantly by location, by sector, and even across individual assets of the same property type in the same city. Resilient investments are those able to withstand the effect of not only acute disruptions in the market but also chronic longer-term threats. For real estate, these threats include pandemics, climate change, changing demographics, changes in tenant preferences, changes in technology, and even factors that are unknown and unpredictable at the moment but that may become important in the future. As some of these threats may not be insurable and may not be diversifiable, much of the work of risk management in creating resilient real estate portfolios will need to be at the property level. A number of approaches can be implemented to increase resilience at a property, but flexibility in building design may be among the most important.
Key Findings
▪ COVID-19 had a major impact on returns to real estate. However, the resilience of property returns to COVID-19 varied significantly by location, by sector, and even across individual assets of the same property type in the same city.
▪ Resilient assets are those able to withstand the effects of not only acute disruptions in the market but also chronic longer-term threats.
▪ Traditional risk management often relied on diversification and insurance to control risks, but some long-term threats may not be insurable and may be nondiversifiable. Much of the work to create resilient real estate portfolios must be at the asset level, creating properties that can withstand long-term changes through their design.
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