Investor Rationality: An Analysis of NCREIF Commercial Property Data

Patric Hendershott and Bryan D. MacGregor ()
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Bryan D. MacGregor: Centre for Property Research, University of Aberdeen Business School, Edward Wright Building, ABERDEEN AB24 3QY

Journal of Real Estate Research, 2005, vol. 27, issue 4, 445-475

Abstract: 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.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (7)

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Journal Article: Investor Rationality: An Analysis of NCREIF Commercial Property Data (2005)
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