This study focuses on the Chicago CBD office market, an important market at the local, regional, national and international levels. The purpose of this study is to develop a hedonic regression model that explains the variation in office rent per square foot. Five functional forms (linear, reciprocal, logarithmic, semi-log and log-linear) of the model are considered. A generally log-linear model is determined to be the best model based on a series of Box-Cox/Box-Tidwell type transformations and likelihood ratio tests. The regression results reveal that the model has very high explanatory power. The methodology of this study differs substantially from that of previous studies on this topic. Perhaps most importantly, the unit of analysis is the office unit rather than the building. This choice suggested the use of specific lease terms for actual transactions and location of the unit within the building as new variables. Finally, the modeling of location of the building within the CBD was found to be a critical step. Copyright American Real Estate and Urban Economics Association.

Within the market data approach to real estate appraisal, two basic types of analysis generally are used: (1) regression analysis; and (2) adjustment grid methods. The focus of this paper is on the adjustment grid methods. Three such methods are identified in the appraisal literature, but their analytical foundations are not clearly presented. The primary objective of this paper is to clarify the analytical foundations of each method. In addition, various ways to estimate the adjustment factors needed to apply the grid methods and a weighting scheme for reconciliation of indicated values are presented. Also, the possible advantage of grid-based over purely regression-based predictions is identified. Copyright American Real Estate and Urban Economics Association.

Methods for the estimation of depreciation within the cost approach to appraisal of single-family residential property have been the focus of very few empirical studies. The purpose of this study is to generate empirical evidence related to one such method, specifically the age-life method. Within the context of a hedonic price model, functional form of the model and the design of the age variable are chosen so that we can test for alternative paths of depreciation with just one model. The alternative paths can be concave, convex or straight-line. Contrary to the evidence presented in several previous studies, the empirical evidence presented in this paper supports a path of depreciation for single-family houses that is concave (i.e., initially less rapid than straight-line). Of the standard paths of depreciation often suggested, the reverse sum of the years digits path most closely approximates the path indicated as appropriate by this study, particularly in the early years of the life of a house. If appraisers are looking for an approximation of the path of depreciation for single-family residences, it would appear that the reverse sum of the years digits path is much more appropriate than the straight-line path that is often assumed. Copyright American Real Estate and Urban Economics Association.

No abstract

No abstract