MSA Level Research Articles

Fear of Overbuilding in the Office Sector: How Real is the Risk and Can We Predict It?

After a prolonged hiatus following the boom of the 1980s, the pace of office construction has begun to increase, raising the specter of overbuilding in several metropolitan areas (MSAs). Research has shown that commercial property markets are prone to overbuilding, however, there is a dearth of research on construction cycles at the MSA level. This article examines three techniques that can be used to examine the probability of overbuilding within the office sector. Based on quarterly data from 1977-1997, this research concludes that both base employment and the Space Market Index provide the most practical methods for assessing the risk of overbuilding. There is considerable variation across MSAs in terms of the risk of overbuilding. This has important implications for real estate investors from a tactical asset allocation viewpoint.

Real Estate Income and Value Cycles: A Model of Market Dynamics

We develop a theoretical real estate cycles model linking economic fundamentals to real estate income and value. We estimate and test an econometric model specification, based on the theoretical model, using MSA level data for twenty office markets in the United States. Our major conclusion is that cities that exhibit seemingly different cyclical office market behavior may be statistically characterized by our three-parameter econometric specification. The parameters are MSA-specific amplitude, through the CAP rate, cycle duration (peak-to-peak), via the rate of partial adjustments to changing expectations about stabilized NOI and the market trend.

Dynamic and Spatial Impact of Hurricane Andrew on Florida’s Taxable Sales: An Intervention Analysis

This paper shows how intervention analysis can be used to estimate the dynamic and spatial impact of recovery from a natural disaster. Specifically, it shows how to estimate three distinct phases of recovery: immediate impact, transitory recovery impact, and negative aftershock. It also discusses the estimation of a permanent impact. The method is then used to estimate the impact on Florida’s taxable sales of the recovery from Hurricane Andrew. Estimates are provided of the immediate and total impact in five regions, and the length of the recovery is discussed. The results are compared to earlier impact studies of natural disasters on taxable sales. On the basis of studies of other hurricanes, it is found that the recovery from Hurricane Andrew has taken much longer than might be expected It is also found that, despite the magnitude of the insurance and transfer payments received by victims, the impact on taxable sales was within the normal variation of taxable sales at the state level, but significantly larger at the MSA level.

Seasonal and geographic variations of methanesulfonic acid in the arctic troposphere

Measurements in the Arctic troposphere over several years show that MSA concentrations in the atmospheric boundary layer, 0.08-6.1 parts per trillion (ppt, molar mixing ration), are lower that those over mid-latitude oceans. The seasonal cycle of MSA at Alert, Canada (82.5°N, 62.3°W), has two peaks of 6 ppt in March–April and July–August and minima of 0.3 ppt for the rest of the year. At Dye 3 (65°N, 44°W) on the Greenland Ice Sheet, a similar seasonal MSA cycle is observed although the concentrations are much lower with a maximum of 1 ppt. Around Barrow, Alaska (71.3°N, 156.8°W), MSA is between 1.0 and 25 ppt in July, higher than 1.5 ± 1.0 ppt in March–April. The mid-tropospheric MSA level of 0.6-1 ppt in the summer Arctic is much lower than about 6 ppt in the boundary layer. At Alert, the ratio of MSA to non-sea-salt (nss) SO 4 2− ranges from 0.02 to 1.13 and is about 10 times higher in summer than in spring. The summer ratios are higher than found over mid-latitude regions and, when combined with reported sulfur isotope compositions from the Arctic, suggest that on average a significant fraction (about 16–23%) of Arctic summer boundary layer sulfur is marine biogenic. The measurements show that the summer Arctic boundary layer has a significantly higher MSA/nss-SO 4 2− ratio than aloft.