In this paper, we examine energy storage, peak load minimization, and demand response and how the... more In this paper, we examine energy storage, peak load minimization, and demand response and how these new technologies are allowing commercial building owners to capitalize these value streams by implementing new technologies. The use of smart grids in commercial buildings can reduce total carbon emissions, placing building owners in an advantageous position should a carbon tax ever be imposed on emissions. Owners of commercial buildings should seriously consider smart microgrids that combine energy production, storage, and the ability to isolate and insulate the building from the grid should a power disruption occur. Smart and micro grids add positive value to commercial buildings because they provide (1) peak load management (shaving costs), (2) integrate renewable energy (reducing emissions and costs), and provide (3) instant back-up power on demand giving the building added reliability, safety, and the ability to continue operating under otherwise challenging circumstances.
Marque and iconic architects get to design museums and other great public buildings often with ge... more Marque and iconic architects get to design museums and other great public buildings often with generous budgets and few design constraints. In the private sector design constraints are significant. Since there are not enough unlimited public projects to fulfill the ambitions of most well-known architects most must also work in the private sector. Here private sector office rents are used as one market measurement to help determine the benefits of using signature architects along with controls for several other design features. One could directly ask about the design quality of each building, but from what set of judges? This paper reveals an investigation into the economics of design examined in the private sector using commercial office properties. Top ranked design firms do seem to add to the marginal rent achievable in the office market, on average at plus 7% in this national US based study, even when we include a number of design related controls. At the same time the potential ...
The neighborhood impact of subprime lending, predatory lending and foreclosure has been estimated... more The neighborhood impact of subprime lending, predatory lending and foreclosure has been estimated at two to ten percent of home value. Further, as some neighborhoods see a concentration of foreclosures, the number of distressed properties in close proximity to a given property also has an impact on home value. Empirical evidence suggests that home values decline by one percent on average for each nearby distressed home. Extrapolated across the national housing stock, this translates into a 1 to 10% (or $5,000 average) spillover effect. We discuss current research in this area and identify gaps in the literature in the wake of the subprime mortgage crisis.
We confirm existing findings of significant premiums for waterfront proximity, more so for oceans... more We confirm existing findings of significant premiums for waterfront proximity, more so for oceans, bays, and large lakes than rivers. We then expand research on housing price trends immediately before and after major storms in directly affected markets. Our findings support a consensus view that single-family home prices rebound quickly to prior macro trends after major storms, with little persistent negative impact on value. In addition, using elevation as a proxy for flood risks associated with sea level rise, we find inconsistent evidence that the market perceives flood risk and discounts property prices accordingly. The absence of a permanent market reaction may change as the market is exposed to increases in insurance premiums or other direct pricing of the risks. Our results suggest either a short-term horizon for buyers of coastal properties at risk, or a moral hazard problem whereby residential owners are dependent upon and subsidized by government and mispriced flood risk i...
Executive Summary: In this study and call for further research, we provide some comparison data o... more Executive Summary: In this study and call for further research, we provide some comparison data on Energy Star and LEED-certified buildings vs. non-Energy Star or nonâLeed-certified office property from the entire United States using the CoStar database. These results are promising for the benefits of investment in sustainable real estate, energy savings and for the green movement now sweeping our society. The payoff from wise green investment is easy to justify even if itâs based on purely profit motivations.
Executive Summary: In this study and call for further research we provide some comparison data on... more Executive Summary: In this study and call for further research we provide some comparison data on energy star and LEED certified buildings versus non-energy star or Non-Leed certified office property from the entire US using CoStar data base. These results are promising for the benefits of investment in sustainable real estate, energy savings and for the green movement now sweeping our society. The payoff from wise green investment is easy to justify even if based on purely profit motivations.
It is commonly understood that residential real estate brokerage fees in the US tend to run 6% or... more It is commonly understood that residential real estate brokerage fees in the US tend to run 6% or 7% within local markets for existing property resales. Exceptions to these historically uniform going rates are starting to appear, and utilization of the internet will provide new efficiencies that should lead to lower commission rates in the future. One possible indication of where the long term commission rates may head, should price competition increase, is provided by a review of commission rates around the world. This study is a first attempt to gather such data and begin the process of global comparisons. Most industrialized country brokerage rates are significantly below those of the US, although there are clearly differences in the services provided, red tape, and liabilities, as well as information access. An exploratory model attempts to explain variations in fees around the world and deepen our understanding of possible equilibriums for US firms should price competition incr...
The US residential brokerage industry has seen real commission rates and agent incomes rise over ... more The US residential brokerage industry has seen real commission rates and agent incomes rise over the past several decades while percentage commission charges remained relatively stable within local markets. Access to the Multiple Listing Services (MLS) and strong industry interdependency helped to maintain this system. Yet, new open MLS listing services are starting to encourage commission price competition and break down some of the market information monopoly once held by the local trade associations. This has opened the door to a potential revolution in the residential brokerage industry that will likely lead to a more efficient industry with fewer agents doing more transactions and providing a variety of ala carte services to consumers. International commission rates and agent productivity provide some evidence of the transformation that might occur over the next few decades as new consumer options evolve. International commission rates also provide further evidence that fees in...
Property condition has a significant influence on property value, yet is not a widely used variab... more Property condition has a significant influence on property value, yet is not a widely used variable in pricing models. Using approximately 322,433 residential sales from over 1,300 different U.S. counties over 2012â2015, we find that price spreads for quality differences tend to be lower when market conditions are strong. However, when market conditions weaken, the price changes are relatively larger on the highest quality property condition segment. Lastly, we find that the marginal benefit of including property condition when age is known is worthwhile if the subject property is unusual for the neighborhood. Based on these results, valuation models might be improved slightly with additional information on property condition, especially if a property is in much better or worse condition than is typical for the comparable sales in the neighborhood.
Healthier space need not be new space. In fact, some new buildings are extremely unhealthy as che... more Healthier space need not be new space. In fact, some new buildings are extremely unhealthy as chemicals leach out into the air from glues, carpets, concrete, and paint. There is no reason this must be the case. The cost to provide healthier environments is modest compared to the benefits. Healthier buildings reduce sick time and increase productivity, making it easier to recruit and retain employees. The results provided here are based on a survey of over 500 tenants who have moved into either LEED or ENERGY STAR-labeled buildings managed by CB Richard Ellis (CBRE). It is part of a much larger study that includes details on operating expenses, leasing, and management available from the authors or www.josre.org.
There seems to be a market for doom and gloom writing and reporting. Extreme views grab attention... more There seems to be a market for doom and gloom writing and reporting. Extreme views grab attention and this will never change, but our concern is that we are entering a period of contagion effects where psychology impacts the downward housing slide as much as fundamentals. And this raises a more important problem: Who is telling the truth? How accurate is the data that is being used to make these gloomy predictions? Unfortunately the consumer of real estate information is left to struggle with misinformation, exaggerations or even outright falsehoods. The housing market as discussed in the media is almost like the rhetoric of a President campaign where context is often lost.
In this paper, we examine energy storage, peak load minimization, and demand response and how the... more In this paper, we examine energy storage, peak load minimization, and demand response and how these new technologies are allowing commercial building owners to capitalize these value streams by implementing new technologies. The use of smart grids in commercial buildings can reduce total carbon emissions, placing building owners in an advantageous position should a carbon tax ever be imposed on emissions. Owners of commercial buildings should seriously consider smart microgrids that combine energy production, storage, and the ability to isolate and insulate the building from the grid should a power disruption occur. Smart and micro grids add positive value to commercial buildings because they provide (1) peak load management (shaving costs), (2) integrate renewable energy (reducing emissions and costs), and provide (3) instant back-up power on demand giving the building added reliability, safety, and the ability to continue operating under otherwise challenging circumstances.
Marque and iconic architects get to design museums and other great public buildings often with ge... more Marque and iconic architects get to design museums and other great public buildings often with generous budgets and few design constraints. In the private sector design constraints are significant. Since there are not enough unlimited public projects to fulfill the ambitions of most well-known architects most must also work in the private sector. Here private sector office rents are used as one market measurement to help determine the benefits of using signature architects along with controls for several other design features. One could directly ask about the design quality of each building, but from what set of judges? This paper reveals an investigation into the economics of design examined in the private sector using commercial office properties. Top ranked design firms do seem to add to the marginal rent achievable in the office market, on average at plus 7% in this national US based study, even when we include a number of design related controls. At the same time the potential ...
The neighborhood impact of subprime lending, predatory lending and foreclosure has been estimated... more The neighborhood impact of subprime lending, predatory lending and foreclosure has been estimated at two to ten percent of home value. Further, as some neighborhoods see a concentration of foreclosures, the number of distressed properties in close proximity to a given property also has an impact on home value. Empirical evidence suggests that home values decline by one percent on average for each nearby distressed home. Extrapolated across the national housing stock, this translates into a 1 to 10% (or $5,000 average) spillover effect. We discuss current research in this area and identify gaps in the literature in the wake of the subprime mortgage crisis.
We confirm existing findings of significant premiums for waterfront proximity, more so for oceans... more We confirm existing findings of significant premiums for waterfront proximity, more so for oceans, bays, and large lakes than rivers. We then expand research on housing price trends immediately before and after major storms in directly affected markets. Our findings support a consensus view that single-family home prices rebound quickly to prior macro trends after major storms, with little persistent negative impact on value. In addition, using elevation as a proxy for flood risks associated with sea level rise, we find inconsistent evidence that the market perceives flood risk and discounts property prices accordingly. The absence of a permanent market reaction may change as the market is exposed to increases in insurance premiums or other direct pricing of the risks. Our results suggest either a short-term horizon for buyers of coastal properties at risk, or a moral hazard problem whereby residential owners are dependent upon and subsidized by government and mispriced flood risk i...
Executive Summary: In this study and call for further research, we provide some comparison data o... more Executive Summary: In this study and call for further research, we provide some comparison data on Energy Star and LEED-certified buildings vs. non-Energy Star or nonâLeed-certified office property from the entire United States using the CoStar database. These results are promising for the benefits of investment in sustainable real estate, energy savings and for the green movement now sweeping our society. The payoff from wise green investment is easy to justify even if itâs based on purely profit motivations.
Executive Summary: In this study and call for further research we provide some comparison data on... more Executive Summary: In this study and call for further research we provide some comparison data on energy star and LEED certified buildings versus non-energy star or Non-Leed certified office property from the entire US using CoStar data base. These results are promising for the benefits of investment in sustainable real estate, energy savings and for the green movement now sweeping our society. The payoff from wise green investment is easy to justify even if based on purely profit motivations.
It is commonly understood that residential real estate brokerage fees in the US tend to run 6% or... more It is commonly understood that residential real estate brokerage fees in the US tend to run 6% or 7% within local markets for existing property resales. Exceptions to these historically uniform going rates are starting to appear, and utilization of the internet will provide new efficiencies that should lead to lower commission rates in the future. One possible indication of where the long term commission rates may head, should price competition increase, is provided by a review of commission rates around the world. This study is a first attempt to gather such data and begin the process of global comparisons. Most industrialized country brokerage rates are significantly below those of the US, although there are clearly differences in the services provided, red tape, and liabilities, as well as information access. An exploratory model attempts to explain variations in fees around the world and deepen our understanding of possible equilibriums for US firms should price competition incr...
The US residential brokerage industry has seen real commission rates and agent incomes rise over ... more The US residential brokerage industry has seen real commission rates and agent incomes rise over the past several decades while percentage commission charges remained relatively stable within local markets. Access to the Multiple Listing Services (MLS) and strong industry interdependency helped to maintain this system. Yet, new open MLS listing services are starting to encourage commission price competition and break down some of the market information monopoly once held by the local trade associations. This has opened the door to a potential revolution in the residential brokerage industry that will likely lead to a more efficient industry with fewer agents doing more transactions and providing a variety of ala carte services to consumers. International commission rates and agent productivity provide some evidence of the transformation that might occur over the next few decades as new consumer options evolve. International commission rates also provide further evidence that fees in...
Property condition has a significant influence on property value, yet is not a widely used variab... more Property condition has a significant influence on property value, yet is not a widely used variable in pricing models. Using approximately 322,433 residential sales from over 1,300 different U.S. counties over 2012â2015, we find that price spreads for quality differences tend to be lower when market conditions are strong. However, when market conditions weaken, the price changes are relatively larger on the highest quality property condition segment. Lastly, we find that the marginal benefit of including property condition when age is known is worthwhile if the subject property is unusual for the neighborhood. Based on these results, valuation models might be improved slightly with additional information on property condition, especially if a property is in much better or worse condition than is typical for the comparable sales in the neighborhood.
Healthier space need not be new space. In fact, some new buildings are extremely unhealthy as che... more Healthier space need not be new space. In fact, some new buildings are extremely unhealthy as chemicals leach out into the air from glues, carpets, concrete, and paint. There is no reason this must be the case. The cost to provide healthier environments is modest compared to the benefits. Healthier buildings reduce sick time and increase productivity, making it easier to recruit and retain employees. The results provided here are based on a survey of over 500 tenants who have moved into either LEED or ENERGY STAR-labeled buildings managed by CB Richard Ellis (CBRE). It is part of a much larger study that includes details on operating expenses, leasing, and management available from the authors or www.josre.org.
There seems to be a market for doom and gloom writing and reporting. Extreme views grab attention... more There seems to be a market for doom and gloom writing and reporting. Extreme views grab attention and this will never change, but our concern is that we are entering a period of contagion effects where psychology impacts the downward housing slide as much as fundamentals. And this raises a more important problem: Who is telling the truth? How accurate is the data that is being used to make these gloomy predictions? Unfortunately the consumer of real estate information is left to struggle with misinformation, exaggerations or even outright falsehoods. The housing market as discussed in the media is almost like the rhetoric of a President campaign where context is often lost.
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