Network Formation and Effects: Observations from U.S. Commercial Real Estate Markets

David Scofield and Jia Xie ()
Additional contact information
David Scofield: Ryerson University
Jia Xie: California State University

The Journal of Real Estate Finance and Economics, 2023, vol. 66, issue 2, No 9, 487-504

Abstract: Abstract We explore how trading networks among commercial real estate brokerage firms are formed, and the effects of network structure on centrality, assortativity and power in the six largest commercial real estate markets in the United State. Fitting the dynamic network formation model developed by Jackson and Rogers American Economic Review, 97(3), 890-915, (2007) to U.S. commercial real estate transaction data (2003–2016), we calculate the importance of network search relative to random search for commercial real estate brokerage firms. We observe that in general approximately 67% of trades of commercial properties are made through network searches. Network search is more important during the global financial crisis (2008–2010). The trading networks also show geographic heterogeneity as network search is most important in Chicago (79.7%), but relatively less important in Boston and Los Angeles (56.2% and 58.2%). Finally, brokerage firms with many trading partners are more likely to trade with those with fewer partners (negative assortativity) creating conditions for power asymmetry between firms.

Keywords: Commercial real estate; Brokerage; Network; Random and network- based search; Power and dependence (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11146-021-09831-7 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:66:y:2023:i:2:d:10.1007_s11146-021-09831-7

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2

DOI: 10.1007/s11146-021-09831-7

Access Statistics for this article

The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().