Post-COVID Office Real Estate: The Effect of Working From Home and Mass Transit Reliance on Office REIT Valuations

Utilization of office real estate is at a tremendous inflection point. The COVID-19 pandemic has led to a plethora of new trends in human behavior, including the rise of working from home (WFH) and reluctance to utilize mass transit. Through a study of REIT returns, this thesis explores the relationship between these largely COVID-induced exposures and how the market views REITs that are invested in office real estate across the United States. The study finds that REITs that are more exposed to more WFH-oriented industries and cities have actually performed better during the pandemic, contradicting the initial hypothesis. However, REITs that are more exposed to cities that rely on mass transit have performed worse during the pandemic. Both findings are statistically significant, suggesting that REIT returns have in fact been affected by exposures to these variables, only in a way that was not expected.