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Valuation of the Effects of Asbestos on Commercial Real Estate

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Abstract

This study develops a valuation procedure and a model for estimating the impact of the presence of asbestos-containing materials (ACMs) on real estate income property. A key aspect of the valuation procedure is that the value of a property with asbestos, and hence the value adjustment for the presence of asbestos, depends on the optimal strategy for dealing with the asbestos. Value-maximizing conditions are derived from the model for determining if and when removal should occur. Information obtained from a survey of real estate appraisers provides data for parameterizing the model for the purpose of simulating the effects of ACMs on the value of different categories of property.

Suggested Citation

  • Jeffrey D. Fisher & George H. Lentz & K.S. Maurice Tse, 1992. "Valuation of the Effects of Asbestos on Commercial Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 7(3), pages 331-350.
    • Handle: RePEc:jre:issued:v:7:n:3:1992:p:331-350
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    1. Koehn, Michael F & Macavoy, Paul W & de Silva, Harindra, 1990. "Market Responses to Asbestos in Buildings," The Journal of Real Estate Finance and Economics, Springer, vol. 3(3), pages 213-232, September.
    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. Patric H. Hendershott & David C. Ling, 1984. "Trading and the Tax Shelter Value of Depreciable Real Estate," NBER Working Papers 1267, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Dean Paxson, 2007. "Sequential American Exchange Property Options," The Journal of Real Estate Finance and Economics, Springer, vol. 34(1), pages 135-157, January.

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    JEL classification:

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

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