Date of Award

2013

Degree Type

Dissertation

Department

Monte Ahuja College of Business

First Advisor

Reichert, Alan

Subject Headings

Commercial real estate -- United States -- Econometric models, Sustainable development -- United States -- Econometric models, Commercial Real Estate Econometrics Sustainability

Abstract

This dissertation consists of three papers, all using CoStar Group, Inc. Commercial Real Estate (CRE) data. The rst two papers explore Sustainable Real Estate (Energy STAR and LEED building) rental premiums. The third paper develops and tests a new method for the empirical testing of CRE. Paper number one, Managing Well by Managing Good, is the rst paper to argue against the existence of sustainable real estate premiums. It demonstrates that some of the Sustainable Real Estate rent premiums previously shown in the literature are neither theoretically nor empirically supported. In addition to presenting theoretical arguments against the premiums, the dissertation shows that, when properly controlling for geography through xed eects and accounting for potentially missing variables, Energy Star buildings and Dual Energy Star/LEED buildings show no empirical support for market rental premiums. It provides evidence that Energy Star certication may be a signal of superior management, rather than an independent premium. Through market by market analysis of green building eects, it shows that possible market premiums are highly localized, and not national phenomena. The second paper, Size Does Matter, is amongst the only papers to argue for value weighting real estate portfolio in regressions. It also demonstrates clear dierences in the potential sustainability premiums across dierent size categories of buildings. It provides evidence that the premiums in the extant literature may have been driven by the smaller subset of buildings, and that larger buildings demonstrated neither rent nor sales premiums. This paper also proposes that value weighting real estate portfolio estimations provides important information as to the economic impact of CRE building attributes in the hedonic regressions. The third paper, A New Paradigm, denes a new econometric method for assessing normal and abnormal returns for CRE. The matching method uses appraisal based grid comparisons coupled with hedonic coecient adjustments. This m

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