Are Mass Shootings a Risk Factor? Evidence From Commercial Property Markets

ABSTRACT This paper provides a systematic analysis of the economic consequences of a unique and tragic form of adverse local shock: mass shootings. Using commercial real estate (CRE) performance as a proxy for urban vibrancy, we trace the effects of these shocks from short‐term market reaction to long‐term property performance. Leveraging data on both lease transactions and real estate firms, we employ stacked difference‐in‐differences and event study methods. We find that mass shootings damage the fundamentals of the local CRE market, causing significant declines in lease rents, terms, and leased area. These localized shocks are quickly priced in by the financial markets, as evidenced by sharp drops in the valuations of exposed real estate firms. These effects are mirrored by a deterioration in local business activity, evidenced by declines in employment, business establishments, and property sales. Over the longer term, the extent to which a CRE portfolio is exposed to mass shootings is negatively associated with its operational performance and value, an effect particularly pronounced for retail‐focused and geographically concentrated firms. Our findings contribute to the literature on regional and local resilience by quantifying the economic costs of mass violence and highlighting the importance of incorporating localized social risks for investors and urban planners.