Mastering the metropolis through research and thought leadership.
Working Papers

Evaluating the Decision to Own Corporate Real Estate

Working paper #636
Peter Linneman and Frank Pfirsching

The traditional decision analysis currently used by most corporations to decide whether to own or lease their operating real estate is fundamentally flawed, resulting in much more corporate-owned commercial property than is economically justified. Most firms currently lease space if the present value of future rent is less than the present value of the cost of self-ownership, net of depreciation benefits and expected property appreciation. However, the correct model for the own-versus-lease decision must compare the present value of profits the corporation expects if they lease, with the present value of expected profits if they decide to own real estate.

Download full paper · 1MB PDF


In This Section
Explore Topics

1010 Affordable Housing Amazon Amenitization Architecture Artificial Intelligence Asia Australia automation Autonomous Vehicles Borrowing Constraints Brexit California Canada Capital Business China Co-Working Environment coastal markets Colombia Commercial Brokerage Commercial Real Estate commissions Congestion consumer bias covid-19 CRE credit card market Credit Default Swaps Credit Insurance Credit Risk Transfers Culture Data Analytics Data Collection Technology Debt Market Demand Demographics Density Development Discrete Choice disruption Diversity drones e-Commerce Economic Corridors economic policy economics Equity Funds Equity Market Ethnic Factors Europe Fannie Mae financial asset management Foreclosures Foreign Policy France Freddie Mac general equilibrium Global Global Financial Crisis Globalization great depression Great Recession Hedonic Housing & Residential housing boom Housing Disease housing prices Housing Supply Identity Income Inequality India Inter-generational mobility Investing jobs labor market Lagging Regions land use regulation Language Macroeconomics malls Market Pricing megacities Microeconomics Migration Minimum Payments Mixed-Use Mobility moral hazard mortgage insurance mortgage market Mortgage Rates Mortgages Multi-family Nation Building Non-Traditional Mortgages Office Market office sector Placed Based Policies Political Risk Price Discovery Private Equity Business public health Public Schools real estate brokerage Real Estate Investment Real Estate Investment Trusts Recession Rental Retail Retirement reverse mortgages Risk Adjustment risk-shifting robotics single family housing Slums Sorting South America Spatial Regions spillover effect Sub-Prime Mortgages Sustainability Technology trade transportation United States Urban Urbanization Warehouse welfare

arrow_drop_up