Liquidity and the drivers of search, due diligence and transaction times for UK commercial real estate investments

Trading commercial real estate involves a process of exchange that is costly and which occurs over an extended and uncertain period of time. This has consequences for the performance and risk of real estate investments. Most research on transaction times has occurred for residential rather than commercial real estate. We study the time taken to transact commercial real estate assets in the UK using a sample of 578 transactions over the period 2004 to 2013. We measure average time to transact from a buyer and seller perspective, distinguishing the search and due diligence phases of the process, and we conduct econometric analysis to explain variation in due diligence times between assets. The median time for purchase of real estate from introduction to completion was 104 days and the median time for sale from marketing to completion was 135 days. There is considerable variation around these times and results suggest that some of this variation is related to market state, type and quality of asset, and type of participants involved in the transaction. Our findings shed light on the drivers of liquidity at an individual asset level and can inform models that quantify the impact of uncertain time on market on real estate investment risk.

The transaction cost economics theory of the family firm: family-based human asset specificity and the bifurcation bias

We develop a transaction cost economics theory of the family firm, building upon the concepts of family-based asset specificity, bounded rationality, and bounded reliability. We argue that the prosperity and survival of family firms depend on the absence of a dysfunctional bifurcation bias. The bifurcation bias is an expression of bounded reliability, reflected in the de facto asymmetric treatment of family vs. nonfamily assets (especially human assets). We propose that absence of bifurcation bias is critical to fostering reliability in family business functioning. Our study ends the unproductive divide between the agency and stewardship perspectives of the family firm, which offer conflicting accounts of this firm type's functioning. We show that the predictions of the agency and stewardship perspectives can be usefully reconciled when focusing on how family firms address the bifurcation bias or fail to do so.

Housing economics: a historical approach

This book develops a long-term economic perspective on macro and urban housing issues, from the Victorian era onwards. The historical perspective sheds light on modern problems, particularly concerning the key policy issues of housing supply, affordability, tenure, the distribution of migrant communities, mortgage markets and household mobility.

Environmental and ecological economics in the 21st century: an age adjusted citation analysis of the most influential articles, journals, authors and institutions

We investigate the influence of articles, authors, journals and institutions in the field of environmental and ecological economics. We depart from studies that investigated the literature until 2001 and include a time period that has witnessed an enormous increase of importance in the field. We adjust for the age effect given the huge impact of the year of an article's publication on its influence and we show that this adjustment does make a substantial difference — especially for disaggregated units of analysis with diverse age characteristics such as articles or authors. We analyse 6597 studies on environmental and ecological economics published between 2000 and 2009. We provide rankings of the influential articles, authors, journals and institutions and find that Ecological Economics, Energy Economics and the Journal of Environmental Economics and Management have the most influential articles, they publish very influential authors and their articles are cited most. The University of Maryland, Resources for the Future, the University of East Anglia and the World Bank appear to be the most influential institutions in the field of environmental and ecological economics.

Bank market concentration, relationship banking and small business liquidity

This paper examines two contrasting interpretations of how bank market concentration (Market Power Hypothesis) and banking relationships (Information Hypothesis) affect three sources of small firm liquidity (cash, lines of credit and trade credit). Supportive of a market power interpretation, we find that in a highly concentrated banking market, small firms hold less cash, have less access to lines of credit, and are more likely to be financially constrained, use greater amounts of more expensive trade credit and face higher penalties for trade credit late payment. We also find support for the information hypothesis: relationship banking improves small business liquidity, particularly in a concentrated banking market, thereby mitigating the adverse effects of bank market concentration derived from market power. Our results are robust to different cash, lines of credit and trade credit measures and to alternative empirical approaches.

Liquidity review: dimensions, causes, measures and empirical applications in real estate markets

Liquidity is a fundamentally important facet of investments, but there is no single measure that quantifies it perfectly. Instead, a range of measures are necessary to capture different dimensions of liquidity such as the breadth and depth of markets, the costs of transacting, the speed with which transactions can occur and the resilience of prices to trading activity. This article considers how different dimensions have been measured in financial markets and for various forms of real estate investment. The purpose of this exercise is to establish the range of liquidity measures that could be used for real estate investments before considering which measures and questions have been investigated so far. Most measures reviewed here are applicable to public real estate, but not all can be applied to private real estate assets or funds. Use of a broader range of liquidity measures could help real estate researchers tackle issues such as quantification of illiquidity premiums for the real estate asset class or different types of real estate, and how liquidity differences might be incorporated into portfolio allocation models.

Behavioral economics, wearable devices, and cooperative games: results from a population-based intervention to increase physical activity

Background: Health care literature supports the development of accessible interventions that integrate behavioral economics, wearable devices, principles of evidence-based behavior change, and community support. However, there are limited real-world examples of large scale, population-based, member-driven reward platforms. Subsequently, a paucity of outcome data exists and health economic effects remain largely theoretical. To complicate matters, an emerging area of research is defining the role of Superusers, the small percentage of unusually engaged digital health participants who may influence other members. Objective: The objective of this preliminary study is to analyze descriptive data from GOODcoins, a self-guided, free-to-consumer engagement and rewards platform incentivizing walking, running and cycling. Registered members accessed the GOODcoins platform through PCs, tablets or mobile devices, and had the opportunity to sync wearables to track activity. Following registration, members were encouraged to join gamified group challenges and compare their progress with that of others. As members met challenge targets, they were rewarded with GOODcoins, which could be redeemed for planet- or people-friendly products. Methods: Outcome data were obtained from the GOODcoins custom SQL database. The reporting period was December 1, 2014 to May 1, 2015. Descriptive self-report data were analyzed using MySQL and MS Excel. Results: The study period includes data from 1298 users who were connected to an exercise tracking device. Females consisted of 52.6% (n=683) of the study population, 33.7% (n=438) were between the ages of 20-29, and 24.8% (n=322) were between the ages of 30-39. 77.5% (n=1006) of connected and active members met daily-recommended physical activity guidelines of 30 minutes, with a total daily average activity of 107 minutes (95% CI 90, 124). Of all connected and active users, 96.1% (n=1248) listed walking as their primary activity. For members who exchanged GOODcoins, the mean balance was 4,000 (95% CI 3850, 4150) at time of redemption, and 50.4% (n=61) of exchanges were for fitness or outdoor products, while 4.1% (n=5) were for food-related items. Participants were most likely to complete challenges when rewards were between 201-300 GOODcoins. Conclusions: The purpose of this study is to form a baseline for future research. Overall, results indicate that challenges and incentives may be effective for connected and active members, and may play a role in achieving daily-recommended activity guidelines. Registrants were typically younger, walking was the primary activity, and rewards were mainly exchanged for fitness or outdoor products. Remaining to be determined is whether members were already physically active at time of registration and are representative of healthy adherers, or were previously inactive and were incentivized to change their behavior. As challenges are gamified, there is an opportunity to investigate the role of superusers and healthy adherers, impacts on behavioral norms, and how cooperative games and incentives can be leveraged across stratified populations. Study limitations and future research agendas are discussed.

Spatial housing economics: a survey

This introduction to the Virtual Special Issue surveys the development of spatial housing economics from its roots in neo-classical theory, through more recent developments in social interactions modelling, and touching on the role of institutions, path dependence and economic history. The survey also points to some of the more promising future directions for the subject that are beginning to appear in the literature. The survey covers elements hedonic models, spatial econometrics, neighbourhood models, housing market areas, housing supply, models of segregation, migration, housing tenure, sub-national house price modelling including the so-called ripple effect, and agent-based models. Possible future directions are set in the context of a selection of recent papers that have appeared in Urban Studies. Nevertheless, there are still important gaps in the literature that merit further attention, arising at least partly from emerging policy problems. These include more research on housing and biodiversity, the relationship between housing and civil unrest, the effects of changing age distributions - notably housing for the elderly - and the impact of different international institutional structures. Methodologically, developments in Big Data provide an exciting framework for future work.

Decomposing Consumer Wealth Effects: Evidence on the Role of Real Estate Assets Following the Wealth Cycle of 1990-2002

During the period of 1990-2002 US households experienced a dramatic wealth cycle, induced by a 369% appreciation in the value of real per capita liquid stock market assets followed by a 55% decline. However, consumer spending in real terms continued to rise throughout this period. Using data from 1990-2005, traditional life-cycle approaches to estimating macroeconomic wealth effects confront two puzzles: (i) econometric evidence of a stable cointegrating relationship among consumption, income, and wealth is weak at best; and (ii) life-cycle models that rely on aggregate measures of wealth cannot explain why consumption did not collapse when the value of stock market assets declined so dramatically. We address both puzzles by decomposing wealth according to the liquidity of household assets. We find that the significant appreciation in the value of real estate assets that occurred after the peak of the wealth cycle helped sustain consumer spending from 2001 to 2005.

Insuring cleaner oceans: the economics of oil pollution prevention

The current system of controlling oil spills involves a complex relationship of international, federal and state law, which has not proven to be very effective. The multiple layers of regulation often leave shipowners unsure of the laws facing them. Furthemore, nations have had difficulty enforcing these legal requirements. This thesis deals with the role marine insurance can play within the existing system of legislation to provide a strong preventative influence that is simple and cost-effective to enforce. In principle, insurance has two ways of enforcing higher safety standards and limiting the risk of an accident occurring. The first is through the use of insurance premiums that are based on the level of care taken by the insured. This means that a person engaging in riskier behavior faces a higher insurance premium, because their actions increase the probability of an accident occurring. The second method, available to the insurer, is collectively known as cancellation provisions or underwriting clauses. These are clauses written into an insurance contract that invalidates the agreement when certain conditions are not met by the insured The problem has been that obtaining information about the behavior of an insured party requires monitoring and that incurs a cost to the insurer. The application of these principles proves to be a more complicated matter. The modern marine insurance industry is a complicated system of multiple contracts, through different insurers, that covers the many facets of oil transportation. Their business practices have resulted in policy packages that cross the neat bounds of individual, specific insurance coverage. This paper shows that insurance can improve safety standards in three general areas -crew training, hull and equipment construction and maintenance, and routing schemes and exclusionary zones. With crew, hull and equipment, underwriting clauses can be used to ensure that minimum standards are met by the insured. Premiums can then be structured to reflect the additional care taken by the insured above and beyond these minimum standards. Routing schemes are traffic flow systems applied to congested waterways, such as the entrance to New York harbor. Using natural obstacles or manmade dividers, ships are separated into two lanes of opposing traffic, similar to a road. Exclusionary zones are marine areas designated off limits to tanker traffic either because of a sensitive ecosystem or because local knowledge is required of the region to ensure safe navigation. Underwriting clauses can be used to nullify an insurance contract when a tanker is not in compliance with established exclusionary zones or routing schemes.