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Commercial Buildings Capital Consumption and the United States National Accounts

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  • Sheharyar Bokhari
  • David Geltner

Abstract

Commercial buildings are a major asset class, over 30 percent of the value of the stock of all produced assets according to the BEA. Yet, US commercial buildings depreciation has not been comprehensively studied since the highly influential work of Hulten and Wykoff almost 40 years ago. This paper's major contributions include: (i) More flexible and precise estimation of the net depreciation value/age profile, allowing much finer characterization of the building life cycle; (ii) Explicit quantification of the land value component of commercial property value, enabling net depreciation to be quantified as a fraction of remaining structure value; (iii) Inclusion of capital improvement expenditures, allowing estimates of “gross depreciation” (total capital consumption); and (iv) Implications of the paper's findings to and for the national accounts.

Suggested Citation

  • Sheharyar Bokhari & David Geltner, 2019. "Commercial Buildings Capital Consumption and the United States National Accounts," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(3), pages 561-591, September.
    • Handle: RePEc:bla:revinw:v:65:y:2019:i:3:p:561-591
    DOI: 10.1111/roiw.12357
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    Cited by:

    1. W. Erwin Diewert & Kiyohiko G. Nishimura & Chihiro Shimizu & Tsutomu Watanabe, 2020. "The System of National Accounts and Alternative Approaches to the Construction of Commercial Property Price Indexes," Advances in Japanese Business and Economics, in: Property Price Index, chapter 0, pages 181-219, Springer.
    2. Clapp, John M. & Lindenthal, Thies, 2022. "Urban land valuation with bundled good and land residual assumptions," Journal of Housing Economics, Elsevier, vol. 58(PA).
    3. Marc Francke & Alex Van De Minne, 2022. "Daily appraisal of commercial real estate a new mixed frequency approach," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(5), pages 1257-1281, September.
    4. Alan Sage & Mike Langen & Alex van de Minne, 2023. "Where is the opportunity in opportunity zones?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 338-371, March.
    5. Lopez, Luis A. & Yoshida, Jiro, 2022. "Estimating housing rent depreciation for inflation adjustments," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    6. Michiel N Daams & Philip McCann & Paolo Veneri & Richard Barkham & Dennis Schoenmaker, 2024. "Capital shocks and the great urban divide," Journal of Economic Geography, Oxford University Press, vol. 24(1), pages 1-21.

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