Economies of Scale for Real Estate Investment Trusts

Martina Bers and Thomas M. Springer ()
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Martina Bers: Department of Finance and Real Estate Florida Atlantic University 777 Glades Road Boca Raton, Florida 33431, http://www.collegeofbusiness.fau.edu/
Thomas M. Springer: Department of Finance and Real Estate Florida Atlantic University 777 Glades Road Boca Raton, Florida 33431, http://www.collegeofbusiness.fau.edu/

Journal of Real Estate Research, 1997, vol. 14, issue 3, pages 275-290

Abstract: Using the translog cost function to estimate economies of scale for a sample of Real Estate Investment Trusts for the years 1992-1994, we find significant evidence that economies of scale exist for REITs for all years examined. The results show that measurement of scale economies is sensitive to the model used for the measurement. Individual characteristics of the REIT, such as type of management and degree of leverage, affect the magnitude of the scale economy. Additional variables accounting for property type diversification and geographic influences have little additional impact on the measured scale economies. Finally, the measured economies of scale for REITs vary considerably over time.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1997
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