Corporate Relocation and Housing Market Spillover

Abstract

This study investigates the spillover effect of corporate headquarters relocation on the local housing market. Using a comprehensive database to identify corporate relocation events in the U.S. from 1994 to 2017, we show that moving a corporate headquarters into a district is significantly associated with housing price appreciation in the district. The growth in housing prices for districts with a corporate headquarters relocation is 10% higher than in those without. Moreover, housing prices increase in the year before the relocation, which suggests the presence of a speculation and expectation effect. Housing prices increase further until 2 years after the relocation, which demonstrates the prolonged impact of corporate relocation on the housing market. The cumulative effect over the period results in more than 30% higher growth in housing prices for districts with a corporate relocation. Further, we find a significant spatial spillover effect of corporate relocation on nearby districts’ housing markets up to 15 miles. We next examine the channels through which corporate relocation affects housing prices, including the relocating firm’s employee base, firm activity, and agglomeration economies. Lastly, we observe a marginally negative effect as a result of a headquarters moving out of a district. Overall, our study indicates that corporate relocation exhibits significant positive spillover on the local housing market.