Abstract
Real estate property value analysis is used for municipal taxation and budgeting. Commercial properties make up a large percentage of the property tax base in many, if not most, taxing jurisdictions. Data constraints limit the number of analyses conducted on commercial property value patterns. This study employs a fairly extensive data set to address that problem in the context of El Paso, Texas, a large metropolitan economy located on the United States border with Mexico. The sample contains data for 105,611 commercial real estate parcels. Empirical analysis is conducted using geographically weighted regression analysis. Results confirm that parameter estimation for the commercial property data in this sample should be conducted using methodologies that allow for spatial autocorrelation and heteroscedasticity.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Álvarez-Ayuso C, Condeço-Melhorado AM, Gutiérrez J, Zofío JL (2016) Integrating network analysis with the production function approach to study the spillover effects of transport infrastructure. Reg Stud 50:996–1015. https://doi.org/10.1080/00343404.2014.953472
Anselin L (1988) Spatial Econometrics: Methods and Models. Kluwer Academic Publishers, Dordrecht
Anselin L (2010) Thirty years of spatial econometrics. Pap Reg Sci 89:3–25. https://doi.org/10.1111/j.1435-5957.2010.00279.x
Anselin L, Lozano-Gracia N (2008) Errors in variables and spatial effects in hedonic house price models of ambient air quality. Empir Econ 34:5–34. https://doi.org/10.1007/s00181-007-0152-3
Arnold Cote NK, Smith WD, Fullerton TM Jr (2011) Municipal non-residential real property valuation forecast accuracy. Int J Bus Econ Perspect 6:56–77
Baltagi BH (2013) Econometric Analysis of Panel Data, 5th edn. Wiley, New York
Basu S, Thibodeau TG (1998) Analysis of spatial autocorrelation in house prices. J Real Estate Finance Econ 17:61–85. https://doi.org/10.1023/A:1007703229507
Batt WH (2001) Value capture as a policy tool in transportation economics: an exploration in public finance in the tradition of henry george. Am J Econ Sociol 60:195–228. https://doi.org/10.1111/1536-7150.00061
Bitter C, Mulligan G, Dall’erba S (2007) Incorporating spatial variation in housing attribute prices: a comparison of geographically weighted regression and the spatial expansion method. J Geogr Syst 9:7–27
Brunsdon C, Fotheringham SA, Charlton ME (1996) Geographically weighted regression: a method for exploring spatial nonstationarity. Geogr Anal 28:281–298. https://doi.org/10.1111/j.1538-4632.1996.tb00936.x
Brunsdon C, Fotheringham S, Charlton M (1998) Geographically weighted regression-modelling spatial non-stationarity. J Royal Stat Soc Ser D Stat 47:431–443
Bujanda A (2014) Using spatial analytics to streamline data workflows in transportation planning, Presentation at the 2014 Border to Border Transportation Conference. Unpublished Manuscript. http://slideplayer.com/slide/4235162/
Bujanda A, Fullerton TM Jr (2017) Impacts of transportation infrastructure on single-family property values. Appl Econ 49:5183–5199. https://doi.org/10.1080/00036846.2017.1302064
Carey J, Semmens J (2003) Impact of highways on property values—case study of the superstition freeway corridor. Transp Res Rec 1839:128–135
Chernobai E, Reibel M, Carne M (2011) Nonlinear spatial and temporal effects of highway construction on house prices. J Real Estate Finance Econ 42:348–370. https://doi.org/10.1007/s11146-009-9208-9
Combs S, (2013) Texas property tax assistance property classification guide—reports of property values. Texas comptroller of public accounts. Retrieved April 15, 2014, from http://www.window.state.tx.us/taxinfo/taxforms/96-313.pdf
Concas S (2013) Accessibility and housing price resilience. Transp Res Rec 2357:66–76. https://doi.org/10.3141/2357-08
Debrezion G, Peels E, Rietveld P (2007) The impact of railway stations on residential and commercial property value: a meta-analysis. J Real Estate Finance Econ 35:161–180. https://doi.org/10.1007/s11146-007-9032-z
Diao M, Ferreira J Jr (2010) Residential property values and the built environment. Transp Res Rec 2174:138–147. https://doi.org/10.3141/2174-18
Du H, Mulley C (2006) Relationship between transport accessibility and land value local model approach with geographically weighted regression. Transp Res Rec 1977:197–205. https://doi.org/10.3141/1977-25
Dubin RA (1988) Estimation of regression coefficients in the presence of spatially autocorrelated error terms. Rev Econ Stat 70:466–474. https://doi.org/10.2307/1926785
Efthymiou D, Antoniou C, Tyrinopoulos Y (2013) Spatially aware model for optimal site selection. Transp Res Rec 2276:146–155. https://doi.org/10.3141/2276-18
Elhorst PJ (2010) Applied spatial econometrics: raising the bar. Spat Econ Anal 5:9–29
Farber S, Yeates M (2006) A comparison of localized regression models in a hedonic house price context. Can J Reg Sci 29:405–420
Fierro KP, Fullerton TM Jr, Donjuan-Callejo EK (2009) Housing attribute preferences in a Northern Mexico Metropolitan economy. Atlant Econ J 37:159–172. https://doi.org/10.1007/s11293-009-9174-x
Fotheringham SA, Brunsdon C, Charlton M (2002) Geographically weighted regression: the analysis of spatially varying relationships. Wiley, New York
Fullerton TM Jr, Villalobos E (2011) Street widths, international ports of entry and border region housing values. J Econ Issues 45:493–510. https://doi.org/10.2753/JEI0021-3624450227
George H (1920) Progress and poverty. Library of economics and liberty, Garden City
Getis A (2007) Reflections on spatial autocorrelation. Reg Sci Urban Econ 37:491–496. https://doi.org/10.1016/j.regsciurbeco.2007.04.005
Gibson LJ, Pavlakovich-Kochi V, Wong-González P, Lim J, Wright B (2016) Sun corridor as a transborder mega-region. Stud Reg Sci 46:41–62
Golub A, Ghathakurta S, Sollapuram B (2012) Spatial and temporal effects of light rail in phoenix: from conception, planning, and construction to operation. J Plan Educ Res 32:415–429. https://doi.org/10.1177/0739456X12455523
Hall AL (2012) Estimating the impact on fuel tax revenues from a changing light vehicle fleet with increased advanced internal combustion engine vehicles and electric vehicles. University of Texas at Austin College of Engineering, Austin, TX
Hurvich CM, Simonoff JS, Tsai CL (1998) Smoothing parameter selection in nonparametric regression using and improved Akaike information criterion. J Roy Stat Soc B 60:271–293
Kestens Y, Thériault M, Des Rosier F (2006) Heterogeneity in hedonic modelling of house prices: looking at buyers’ household profiles. J Geogr Syst 8:61–96
Koenker R (1981) A note on studentizing a test for heteroscedasticity. J Econom 17:107–112. https://doi.org/10.1016/0304-4076(81)90062-2
Legg R, Bowe T (2009) Applying geographically weighted regression to a real estate problem. ArcUser, ESRI. Retrieved April 15, 2014 from http://www.esri.com/news/arcuser/0309/files/re_gwr.pdf
Levinson DM, Istrate E (2011) Access for value: financing transportation through land value capture. Brookings. Retrieved January 28, 2014, from http://www.brookings.edu/~/media/research/files/papers/2011/4/28%20transportation%20funding%20levinson%20istrate/0428_transportation_funding_levinson_istrate.pdf
Löchl M (2007) Considering spatial dependence in hedonic rent price regression. 7th swiss transport research conference. Monte Verità/Ascona
Löchl M, Axhausen KW (2010) Modeling hedonic residential rents for land use and transport simulation while considering spatial effects. J Transp Land Use 3:39–63. https://doi.org/10.1598/jtlu.v3i2.117
Lozano-Gracia N, Anselin L (2012) Is the price right?: assessing estimates of cadastral values for Bogotá, Colombia*. Reg Sci Policy Pract 4:495–508. https://doi.org/10.1111/j.1757-7802.2012.01062.x
Martinez LM, Viegas JM (2009) Effects of transportation accessibility on residential property values. Transp Res Rec 2115:127–137. https://doi.org/10.3141/2115-16
Merriman DF, Skidmore ML, Kashian RD (2011) do tax increment finance districts stimulate growth in real estate values? Real Estate Econ 39:221–250. https://doi.org/10.1111/j.1540-6229.2010.00294.x
Montero-Lorenzo JM, Larraz-Iribas B (2012) Space-time approach to commercial property prices valuation. Appl Econ 44:3705–3715. https://doi.org/10.1080/00036846.2011.581212
Mrkvicka M (2011) How a forgotten law hurts downtown development, El Paso Inc., Sep 2, 2011. Retrieved Jul 7, 2014, from http://www.elpasoinc.com/news/article_80422c87-7a1a-5e4d-b1d4-7301dec37291.html?mode=jqm
Muñoz RA, Pisani MJ, Fullerton TM Jr (2011) Exchange rate premia and discounts for retail purchases using mexican pesos in El Paso, Texas. Soc Sci J 48:612–620. https://doi.org/10.1016/j.soscij.2011.03.008
Paelinck J, Klaassen LH (1979) Spatial systems. Saxon House, Farnborough
Páez A, Long F, Farber S (2007) Moving window approaches for hedonic price estimation: an empirical comparison of modelling techniques. Urban Stud 45:1565–1581. https://doi.org/10.1177/0042098008091491
Peterson GE (2009) Unlocking land values to finance urban infrastructure. The World Bank, Washington. https://doi.org/10.1596/978-0-8213-7709-3
Rosen S (1974) Hedonic prices and implicit market: product differentiation in pure competition. J Political Econ 82:34–55
Rybeck R (2004) Using value capture to finance infrastructure and encourage compact development. Pub Works Manag Policy 8:249–260. https://doi.org/10.1177/1087724X03262828
Sánchez-Martínez GE, Munizaga M (2016) Workshop 5 report: harnessing big data. Res Transp Econ 59:236–241. https://doi.org/10.1016/j.retrec.2016.10.008
Shibayama M, Ishikawa Y (2016) Impacts of transportation infrastructure on commercial production shifts. Stud Reg Sci 45:493–505
Shin K, Washington S, Choi K (2007) Effects of transportation accessibility on residential property values application of spatial hedonic price model in Seoul, South Korea, metropolitan area. Transp Res Rec 1994:66–73. https://doi.org/10.3141/1994-09
Siethoff B, Kockelman K (2002) Property values and highway expansions: an investigation of timing, size, location, and use effects. Retrieved Jan 28, 2014, from Department of Civil Engineering, The University of Texas at Austin: http://www.ce.utexas.edu/prof/kockelman/public_html/TRB02US183propvalues.pdf
Srour IM, Kockelman KM, Dunn TP (2007) Accessibility indices—connection to residential land prices and location choices. Transp Res Rec 1805:25–34. https://doi.org/10.3141/1805-04
Vadali S (2008) Toll roads and economic development: exploring effects on property values. Ann Reg Sci 42:591–620
Vadali SR, Aldrete RM, Bujanda A (2009) Financial model to assess value capture potential of a roadway project. Transp Res Rec 2115:1–11. https://doi.org/10.3141/2115-01
Wang Y, Kockelman KM, Wang X (2012) Anticipation of land use change through use of geographically weighted regression models for discrete response. Transp Res Rec 2245:111–123. https://doi.org/10.3141/2245-14
White H (1980) A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48:817–838. https://doi.org/10.2307/1912934
Yu D, Wei Y, Wu C (2007) Modeling spatial dimensions of housing prices in milwaukee. Environ Plan B Plan Des 34:1085–1102. https://doi.org/10.1068/b32119
Zhang M, Wang L (2013) The impacts of mass transit on land development in china: the case of Beijing. Res Transp Econ 40:124–133
Zhao Z, Vardhan Das K, Larson K (2011) Tax increment financing as a value capture strategy in funding transportation. Transp Res Rec 2187:1–7. https://doi.org/10.3141/2187-01
Acknowledgements
The authors thank David Stone and Howard Johnson from the El Paso County Central Appraisal District for invaluable support in facilitating access to the data required to conduct this research. The efforts of Beatriz Mesta, who assisted with editorial data processing, are greatly appreciated. Special thanks are extended to the Texas A&M Transportation Institute where Bujanda was previously employed. Partial funding support for Fullerton was received from El Paso Water, Hunt Communities, City of El Paso Office of Management & Budget, UTEP Center for the Study of Western Hemispheric Trade, National Science Foundation Grant DRL-1740695, and UTEP Hunt Institute for Global Competitiveness. Helpful comments were provided by Adam Walke, AlDouri Raed, and two anonymous referees.
Author information
Authors and Affiliations
Corresponding author
About this article
Cite this article
Fullerton, T.M., Bujanda, A. Commercial property values in a border metropolitan economy. Asia-Pac J Reg Sci 2, 337–360 (2018). https://doi.org/10.1007/s41685-017-0065-x
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s41685-017-0065-x