COVID-19, Growth of Virtual Meeting Technology, and Sector REITs Performance

We examine how sector-specific characteristics moderate the performance of commercial real estate investment trusts (REITs) in response to two major shocks: the COVID-19 pandemic and the growth of virtual meeting technologies. Using panel data covering multiple REIT sectors from 2007 to 2023, we document substantial cross-sectional heterogeneity in return dynamics. Office REITs have experienced the most persistent underperformance following the onset of the pandemic, with the adoption of virtual technology further exacerbating these losses. In contrast, industrial and specialized REITs demonstrate relative resilience, reflecting lower dependence on in-person interaction. While REITs are generally characterized by moderate leverage, differences in asset use, tenant demand, and space substitutability appear more important in explaining variations in REIT returns. Our results underscore the limitations of broad real estate classifications and emphasize the importance of sector-level fundamentals in shaping investment outcomes during periods of structural change.