CRE Redevelopment Options and the Use of Mortgage Financing

David Glancy, Robert Kurtzman and Lara Loewenstein

No 24-15, Working Papers from Federal Reserve Bank of Cleveland

Abstract: A significant share of commercial real estate (CRE) investment properties—about half by our estimates—are purchased without a mortgage. Using comprehensive microdata on transactions in the US CRE market, we analyze which types of properties are purchased without a mortgage, highlighting the important role of renovation or redevelopment options. We show that mortgage-financed properties are less likely to be subsequently redeveloped, and that owners anticipate these redevelopment frictions and avoid mortgage financing for properties with greater redevelopment options. These effects were even stronger during the COVID-19 pandemic, when uncertainty increased redevelopment option values.

Keywords: commercial real estate; cash buyers; redevelopment (search for similar items in EconPapers)
JEL-codes: G21 G22 G23 R33 (search for similar items in EconPapers)
Pages: 51
Date: 2024-07-10
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.26509/frbc-wp-202415 Persistent Link (text/html)
https://www.clevelandfed.org/-/media/project/cleve ... pers/2024/wp2415.pdf Full Text (application/pdf)

Related works:
Working Paper: CRE Redevelopment Options and the Use of Mortgage Financing (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:98526

Ordering information: This working paper can be ordered from

DOI: 10.26509/frbc-wp-202415

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().