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The Spatial Equilibrium of Intra-Regional Rates of Return and the Implications for Real Estate Portfolio Diversification

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Abstract

This paper examines the rates of return for office buildings in four Texas cities to test for the presence of geographical patterns. The findings indicate that a geographical pattern does exist, both on an inter-city and intra-city basis. These results indicate a heightened emphasis on geographical diversification of real estate portfolios is warranted. Further research in the area of capital/real estate market segmentation in the structuring of real estate portfolios is strongly suggested.

Suggested Citation

  • Terry V. Grissom & Ko Wang & James R. Webb, 1992. "The Spatial Equilibrium of Intra-Regional Rates of Return and the Implications for Real Estate Portfolio Diversification," Journal of Real Estate Research, American Real Estate Society, vol. 7(1), pages 59-72.
    • Handle: RePEc:jre:issued:v:7:n:1:1992:p:59-72
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    References listed on IDEAS

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    1. Terry V. Grissom & David Hartzell & Crocker H. Liu, 1987. "An Approach to Industrial Real Estate Market Segmentation and Valuation Using the Arbitrage Pricing Paradigm," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 15(3), pages 199-219, September.
    2. David Hartzell & John Hekman & Mike Miles, 1986. "Diversification Categories in Investment Real Estate," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(2), pages 230-254, June.
    3. David J. Hartzell & David G. Shulma & Vice President, 1987. "Refining the Analysis of Regional Diversification for Income-Producing Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 2(2), pages 85-95.
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    Cited by:

    1. Leon G. Shilton & Janet K. Tandy, 1993. "The Information Precision of CBD Office Vacancy Rates," Journal of Real Estate Research, American Real Estate Society, vol. 8(3), pages 421-444.
    2. Mark G. Dotzour & Terry V. Grissom & Crocker H. Liu & Thomas Pearson, 1990. "Highest and Best Use: The Evolving Paradigm," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 17-32.
    3. Sofia Dermisi & John F. McDonald, 2010. "Selling Prices/sq.ft. of Office Buildings in Downtown Chicago – How Much Is It Worth to Be an Old But Class A Building?," Journal of Real Estate Research, American Real Estate Society, vol. 32(1), pages 1-22.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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