Fear of terrorism = higher vacancy rates in tall buildings?

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Fear of terrorism contributed to higher vacancy rates in and around tall office buildings in Chicago after the 9/11 attacks, according to a recent working paper.

The study examined vacancy rates of office space from 1996 to 2006 in Chicago’s central business district. Chicago was selected because it has three landmark buildings: the Sears Tower (the tallest building in the United States), the Aon Center (the third tallest), and the Hancock Tower (the fourth tallest).

Controlling for all sorts of variables, the researchers (Alberto Abadie of Harvard University and Sofia Dermisi of Roosevelt University) compared office space in the three landmark buildings and in buildings within a 0.3-mile-radius “shadow area” of those buildings, with office space in the central business district that was more than 0.3 miles from those buildings.

In the five years before 9/11, the vacancy rates in the shadow areas and non-shadow areas tracked one another closely. After 9/11, however, vacancy rates in the shadow areas increased significantly more than those in the non-shadow areas. The finding suggests that fear of terrorism contributed to higher vacancy rates in and around tall landmark buildings.

For those of you who work in cities with skyscrapers, do you think people still have reservations about working in tall buildings? (In June 2006, seven men were arrested for allegedly plotting to destroy the Sears Tower.) Could a higher perceived risk of terrorism really be causing firms to shy away from high-rises?