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    Determining the Rental Rate on Commercial Real Estate Leases

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    12614123_Leasing01dNZFC.pdf (173.3Kb)
    Author
    Boyle, G.
    Quigley, N.
    Guthrie, G.
    Date
    2008
    Permanent Link
    http://hdl.handle.net/10092/2395

    Although the theoretical framework for determining equilibrium rental rates on commercial land is well-established, applying this framework in practice is difficult because of its dependence on unobservable parameters such as land growth and discount rates. We show how this problem can be overcome by a straightforward application of nonlinear regression methods to actual market transactions involving leased commercial land. This approach avoids the need to invoke ad-hoc parameter values, automatically incorporates any land liquidity premium into rental rates, and ensures that rental, growth, and discount rates are all estimated within a single analytically-consistent framework.

    Subjects
    leasing
     
    land
     
    rental rates
     
    maximum-likelihood
     
    Fields of Research::340000 Economics::340400 Econometrics
    Collections
    • Business and Law: Conference Contributions [222]
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    http://library.canterbury.ac.nz/ir/rights.shtml

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