Using Hurricane Sandy (‘Sandy’) as a natural experiment, this study investigates whether the occurrence of a major hurricane affects the way flood risk is capitalized in commercial real estate prices. We draw from a detailed property-level commercial real estate transaction data set covering the four major commercial property types – office, retail, industrial, and multifamily. In order to explore various price channels, we investigate both hurricane affected areas and unaffected areas. Rresults vary significantly across property types. In the office submarket, we find a significant price discount for properties located in high flood risk areas directly affected by the hurricane. However, this impact lasted for only two years, and was not found in the hurricane unaffected areas. In the apartment submarket, we document a significant price discount associated with flood risk prior to the hurricane. However, following the hurricane we observe a significant apartment price appreciation across the NYC metropolitan area. Such an impact was not found in hurricane unaffected areas. One possible explanation for this finding is the substitution effect whereby the hurricane leads some households to move from single-family homes to apartments. For retail and industrial properties, we do not find any evidence that Sandy significantly affected prices in hurricane-affected  or unaffected areas.