NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is Terrorism Eroding Agglomeration Economies in Central Business Districts? Lessons from the Office Real Estate Market in Downtown Chicago

Alberto Abadie, Sofia Dermisi

NBER Working Paper No. 12678
Issued in November 2006
NBER Program(s):   LS   AP

The attacks of September 11, 2001, and more recently the Madrid and London downtown train bombings, have raised concerns over both the safety of downtowns and the continuous efforts by terrorists to attack areas of such high density and significance. This article employs building-level data on vacancy rates to investigate the impact of an increased perception of terrorist risk after 9/11 on the office real estate market in downtown Chicago. Chicago provides the perfect laboratory to investigate the effects of an increase in the perceived level of terrorist risk in a major financial district. Unlike in New York, the 9/11 attacks did not restrict directly the available office space in downtown Chicago. Moreover, the 9/11 attacks induced a large increase in the perception of terrorist risk in the Chicago Central Business District, which includes the tallest building in the U.S. (the Sears Tower) and other landmark buildings which are potential targets of large-scale terrorist attacks. Our results show that, following the 9/11 attacks, vacancy rates experienced a much more pronounced increase in the three most distinctive Chicago landmark buildings (the Sears Tower, the Aon Center and the Hancock Center) and their vicinities than in other areas of the city of Chicago. Our results suggest that economic activity in Central Business Districts can be greatly affected by changes in the perceived level of terrorism.

download in pdf format
   (584 K)

email paper

A non-technical summary of this paper is available in the June 2007 NBER digest.  You can sign up to receive the NBER Digest by email.

This paper is available as PDF (584 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12678

Published: Abadie, Alberto & Dermisi, Sofia, 2008. "Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago," Journal of Urban Economics, Elsevier, vol. 64(2), pages 451-463, September. citation courtesy of

Users who downloaded this paper also downloaded these:
Glaeser and Sacerdote w5430 Why Is There More Crime in Cities?
Abadie, Diamond, and Hainmueller w12831 Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California's Tobacco Control Program
Giavazzi and Giovannini w16228 Central Banks and the Financial System
Glaeser and Shapiro w8696 Cities and Warfare: The Impact of Terrorism on Urban Form
Kaplow and Shapiro w12867 Antitrust
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us