News Brief: CoStar Study Wins Top Academic Honor from American Real Estate Society – Real Estate Matters
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News Brief: CoStar Study Wins Top Academic Honor from American Real Estate Society

$11,000,000,000,000

How does one comprehend the above figure? It is a very large number with many zero’s, in fact, it’s so large even a fancy BAII+ financial calculator has to express the number as a exponent of the 10th power (11 * e^12). The name for this sum can vary depending on which country you are in, and unfortunately since the US and Britain saw fit to simply swap the names around, a trillion is 10^12 in the US, and in old english it is considered a billion (a trillion in the old system is 10^18, or a quintillion in the US). Since the definition of this figure does little to aide in the quantification of this figure, it is necessary to use tangible comparisons. 11 trillion dollar bills stacked on top of each other would be 737,000 miles high, in relation the moon is approximately 240,000 miles. Besides the United States and the European Union, 11 trillion dollars surpasses the GDP of every other nation in the world (according to the CIA fact book).

The attempt at quantifying this figure was done in the hopes of imparting the sheer magnitude of this number as well as the mind-boggling size of it, constructing a model that represents data and economic factors that are able to compute the necessary macro and micro forces affecting this figure is simply amazing. This is precisely what researchers at CoStar did in their comprehensive study of the United States commercial real estate market, with their findings and analysis published in the Journal of Real Estate Portfolio Management (JREPM). While this is undoubtably a very exciting study, there has never been a comprehensive valuation of the entire countries real estate, the data collected is far from novel. Having the ability to quantify and value one of the largest asset classes in the world (the only one larger that comes to mind is the US stock exchange at 16 trillion) will allow investors, developers, the government, and anyone else involved in commercial real estate a powerful new model for analyzing the macro effects of economic shifts on the entirety of the asset class. In recognition for their outstanding work, the authors received the best paper of 2010 by The American Real Estate Society (ARES).

The press release from CoStar is below, including a link to read the paper as published in the JREPM.

From CoStar-

$11 Trillion. No, that’s not the interest on our national debt, it’s actually the value of all commercial real estate in the U.S., based on a recent study authored by CoStar Group executives and published in the Journal of Real Estate Portfolio Management (JREPM). The award-winning study, “Slicing, Dicing, and Scoping the Size of the U.S. Commercial Real Estate Market,” is believed to be the first analysis to document the full size and scope of the commercial real estate market using direct measurement of commercial property. The study, which used additional tests used to size the hospitality and multi-family markets, provides a much more accurate and precise determination of market size than previous commonly cited estimates.

The American Real Estate Society (ARES), an association of real estate thought leaders whose members include leading global academic and professional researchers, selected the study to receive the Journal’s “Best Paper Award” for 2010.

“Before this study, we had limited means of assessing the size of the commercial real estate market as a whole, and could only estimate the full size and value of this increasingly important asset class. For the first time, we now have the means to use direct measurement to produce a much more accurate and precise valuation, which is critical for investors as well as researchers. At 11 trillion dollars, U.S. commercial real estate approaches the size of the U.S. stock market at 16 trillion dollars. I am excited at the prospect for further analysis on commercial property afforded by CoStar’s research database. In addition to benchmarking commercial real estate as a major asset class, the direct measurement calculations used in the study also provided an important framework for analyzing the investment potential of commercial real estate within different markets and by different commercial property types.”

{As} noted {by} Dr. Glenn R. Mueller, professor at the Burns School of Real Estate and Construction Management at the University of Denver, and one of the Journal’s editors.

Andrew Florance, CoStar Group’s Founder and CEO; Dr. Ruijue Peng, Chief Research Officer for Property and Portfolio Research, a CoStar subsidiary; Jay Spivey, Senior Director of Analytics for CoStar Group; and Dr. Norm Miller, Professor at the University of San Diego’s Burnham-Moores Center for Real Estate, authored the study. The winning paper was published in Volume 16, Number 2 edition of JREPM. Its selection as “Best Paper” was made by the more than 1,000 members of ARES and presented at the group’s 2011 annual meeting held, April 13 -16, 2011 in Seattle, WA.

“We’re extremely pleased to receive this outstanding recognition from the leading sponsor of academic research in real estate,” said Andrew C. Florance, CoStar Group’s founder and CEO. “In quantifying the vast majority of commercial real estate information, CoStar is bringing greater transparency to the market, enabling investors and others to make decisions more effectively, and ultimately supporting greater levels of investment in this important asset class.” This is the second research paper authored by CoStar executives that has won a “Best Paper Award” from ARES. Florance, Spivey, and the University of San Diego’s Miller previously won the award for a study they produced entitled, “Does Green Pay Off?” which was published in the Journal of Real Estate Portfolio.


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