Mark J. Eppli

Valuing New Urbanism: The Case of Kentlands

This study assesses the impact of new urbanism on single-family home prices. Specifically, we use Duany and Plater-Zyberks traditional neighborhood development (TND) of Kentlands and surrounding conventional subdivisions to estimate the premium, if any, that single-family homeowners are willing to pay to reside in a community with new urbanist features. Using data on 2,061 single-family home transactions and several hedonic price models, the empirical evidence reveals that consumers are willing to pay a premium to locate in Kentlands. Copyright American Real Estate and Urban Economics Association.

An Empirical Examination of Traditional Neighborhood Development

This study analyzes the impact of the new urbanism on single-family home prices. Specifically, we explore the price differential that homebuyers pay for houses in new urbanist developments relative to houses in conventional suburban developments. Using data on over 5,000 single-family home sales from 1994 to 1997 in three different neighborhoods, hedonic regression results reveal that consumers pay more for homes in new urbanist communities than those in conventional suburban developments. Further analyses indicate that the price premium is not attributable to differences in improvement age and other housing characteristics. Copyright 2001 by the American Real Estate and Urban Ecopnomics Assocaition.

Speed of Adjustment in Commercial Real Estate Markets

The 1980s were less than favorable to the U.S. real estate industry. Vast amounts of overbuilding occurred in most areas and in most property types. Commercial vacancy rates increased dramatically and rents fell both in nominal and real terms. Untoward events (tax laws changes, deregulation of financial institutions, and a real estate depression in many areas of the country) virtually halted speculative development and caused a freefall in real estate prices. Real estate credit markets were crippled by the decade-long crisis in the SL 6; 21]. Adjustment speeds are important for understanding future effects of real estate price changes and for interpreting recent events. The higher the adjustment speed, the greater the fraction of long-run adjustment experienced so far, the smaller the adjustments still to be expected, and the lower the implied long-run demand elasticity. Adjustment speeds also have important implications for macroeconomic policy. There is reason to believe, for example, that the slow economic growth in the U.S. during the four years of the Bush administration was attributable, in large part, to the massive overbuilding that occurred in commercial property markets during the 1980s and the relatively slow process by which unemployed resources have been absorbed into productive new endeavors [16]. In what follows, we propose and test a stock-adjustment model of real estate investment. The

What Moves Retail Property Returns at the Metropolitan Level

In this article the determinants of metropolitan-level appraisal-based retail property returns are examined by estimating a six-equation model of retail construction starts, retail sales, stock-market returns, commercial mortgage rates, inflation, and the logarithm of stock-market volatility. Residuals from these equations are then used to explain actual movements in retail real estate returns. Our empirical procedure looks at both unadjusted and unsmoothed appraisal-based retail real estate returns. The general finding is that unsmoothed appraisal-based retail real estate returns lag significantly behind market conditions. Furthermore, the results suggest that very little of the variation in metropolitan-level appraisal-based retail real estate returns can be explained by macroeconomic news events.

Changing Economic Perspectives on the Theory of Retail Location

This chapter examines the evolution of retail location theory over time. Changes in the theory of retail location are explained in part by consumers’ willingness to drive past a well-located shopping center in order to patronize a shopping center with a preferred selection of merchandise or a desirable anchor tenant. In terms of measuring the significance of merchandise selection and anchor tenant image, the chapter documents that retail clustering and anchor tenant image have a dramatic effect on nonanchor tenant sales.

Graaskamp and Intangible Property Valuation in Regional Shopping Centers

In his teaching, research, and courtroom testimony James A. Graaskamp plied his institutional economics background to attribute shopping center income to tangible real property and intangible franchise property. Attributing shopping center value to its tangible and intangible components is not only necessary for appraisal purposes but is imperative for real property taxation, asset depreciation, and UBIT taxation issues. In this research we test for the existence of intangible property value by estimating nonanchor tenant sales per square foot. Using department store fashion image as a proxy for franchise intangible property value, we find that department store fashion image positively and significantly affects nonanchor tenant sales per square foot. We also find that department store image is particularly important in predicting sales of apparel retailers.