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dc.contributor.authorMcDonald, J.
dc.date.accessioned2016-06-03T15:08:06Z
dc.date.available2017-06-04T09:30:07Z
dc.date.issued2015-04
dc.identifier.bibliographicCitationMcDonald, J. Capitalisation rates for commercial real estate investment decisions. Journal of Property Investment & Finance. 2015. 33(3): 242-255. DOI: 10.1108/jpif-09-2014-0058.en_US
dc.identifier.issn1463-578X
dc.identifier.urihttp://hdl.handle.net/10027/20677
dc.description© Emerald Group Publishing Limiteden_US
dc.description.abstractPurpose – The purpose of this paper is to present a basic model of commercial real estate valuation in which the capitalization rate is the critical variable, and to present empirical results for a study of office building capitalization rates. Design/methodology/approach – The model is derived from standard economic and financial theories. The empirical study uses data from the sale of office buildings in 37 downtown markets for 2012. The empirical results are related to concepts of asset market efficiency. Findings – The empirical results show that capitalization rates depend on features of the office buildings, vacancy rate, and recent change in the office building market as captured by the vacancy rate. In other words, investors are using variables implied by standard economic and financial theory and basic economic data from the recent past to determine the capitalization rate. Practical implications – The empirical results show how investors determine capitalization rates for office buildings, so potential investors can gauge the state of a property market. Originality/value – The paper shows that changes in capitalization rates are predictable; investors use past data to adjust their capitalization rates. Furthermore, if an investor does not agree that current trends will continue, then the investment decision should be determined accordingly. For example, if an investor thinks that the future will not be as robust as the recent past, then other investors will bid more than the investor thinks is reasonable. However, if the investor sees a future that is brighter than the recent past, it is time to buy.en_US
dc.language.isoen_USen_US
dc.publisherEmeralden_US
dc.subjectCapitalization ratesen_US
dc.subjectEfficient marketsen_US
dc.subjectInvestment decisionsen_US
dc.subjectOffice building marketsen_US
dc.subjectQ theoryen_US
dc.subjectValuationen_US
dc.titleCapitalization Rates for Commercial Real Estate Investment Decisionsen_US
dc.typeArticleen_US


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