DOI 10.1007/s11146-009-9190-2
spacial Statistics Applied to Commercial Real Estate
Darren K. Hayunga · R. Kelley Pace
Published online: 21 may 2009
© Springer Science + Business Media, LLC 2009
Abstract Portfolio theory shows that diversi?cation place enhance the riskreturn trade-off. This study uses the absolute location of commercial in truth
domain property along with spacial statistics to address the inherent problem
of determine geographical diversi?cation based upon a set of economic and
property-speci?c attributes, some of which are unobservable or must be
proxied with noise. We ?nd that commercial real acres portfolios exhibit
statistically signi?cant spatial correlation at distances ranging from adjacent
zip codes to neighboring metropolitan areas. given(p) the common structure
Research supported by a reserve from the Real Estate Research Institute. We thank
an anonymous referee, Richard Buttimer, the editor, Jeff Fisher, David Geltner,
Marc Louargand, Glenn Mueller, Tony Sanders, C.F. Sirmans, and seminar participants
at the RERI conference, UNC-Charlotte, and UT-Arlington for their suggestions and
guidance. particular thanks to Robert White of Real Capital Analytics for data.
D. K.
Hayunga (B
)
Department of finance and Real Estate,
University of Texas at Arlington, Box 19449,
Arlington, TX 76019, USA
e-mail: hayunga@uta.edu
R. K. Pace
LREC Endowed top of Real Estate, Department of Finance,
E.J. Ourso College of Business Administration,
Louisiana State University, billy Rouge, LA 70803-6308, USA
e-mail: kelley@spatial.us
URL: www.spatial-statistics.com
104
D.K. Hayunga, R.K. Pace
of dependence found in the data series, we discuss feasible strategies for
obtaining diversi?cation within direct-investment real estate portfolios.
Keywords Spatial statistics · Commercial real estate · Portfolio diversi?cation
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