Investor Rationality: An Analysis of NCREIF Commercial Property Data
The concept of a peak in value or a "100% location" is so well established in real estate that there is no reference to the term in recent real estate principles and appraisal texts. However, the land value section in appraisals of a regional shopping center did not apply the concept when adjusting comparables for location, which resulted in a substantial underestimation of site value. A regression model that included a distance variable to control for location produced a value estimate that was more than double the values in the appraisals. The empirical results illustrate that the subject site represented a distinct peak in land value as well as reemphasizing the importance of making careful location adjustments in situations where there is a distinct peak in land value.
Volume (Year): 27 (2005)
Issue (Month): 4 ()
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- Quigley, John M., 2002.
"Real Estate Prices and Economic Cycles,"
Berkeley Program on Housing and Urban Policy, Working Paper Series
qt58c6v2kx, Berkeley Program on Housing and Urban Policy.
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- Hendershott, Patric H., 1996. "Rental Adjustment and Valuation in Overbuilt Markets: Evidence from the Sydney Office Market," Journal of Urban Economics, Elsevier, vol. 39(1), pages 51-67, January.
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