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Description
This thesis takes the form of a market research report with the goal of analyzing the implications of the United Kingdom (UK) leaving the European Union (EU) (known as “Brexit”) on London’s office commercial real estate market. The ultimate goal of this report is to make a prediction, firmly grounded in quantitative and qualitative research conducted over the past several months, as to the direction of London’s commercial real estate market going forward (post-Brexit). Within the commercial real estate sector, this paper narrows its focus to the office segment of the London market.
Understanding the political landscape is crucial to formulating a reasonable prediction as to the future of the London market. Aside from research reports and articles, our main insights into the political direction of Brexit come from our recordings from meetings in March of 2017 with two high-ranking members of Parliament and one member of the House of Lords—all of whom are members of the Tory Party (the meetings being held under the condition of anonymity). The below analysis will be followed by a discussion of the economics of Brexit, primarily focusing on the economic risks and uncertainties which have emerged after the vote, and which currently exist today. Such risks include the UK losing its financial passporting rights, weakening GDP and currency value, the potential for a reduction in foreign direct investment (FDI), and the potential loss of the service sector in the city of London due to not being able to access the European Single Market.
The report will shift focus to analyzing three competing viewpoints of the direction of the London market based on recordings from interviews of stakeholders in the London real estate market. One being an executive of one of the largest REITs in the UK, another being the Global Head of Real Estate at a top asset management firm, and another being a director at a large property consulting firm. The report includes these differing “sub-theses” in order to try to make sense of the vast market uncertainties post-Brexit as well as to contrast their viewpoints with where the market is currently and with the report’s investment recommendation.
The remainder of the report will consist of the methods used for analyzing market trends including how the data was modeled in order to make the investment recommendation. The report will analyze real estate and market metrics pre-Brexit, immediately after the vote, post-Brexit, and will conclude with future projections encapsulating the investment recommendation.
Understanding the political landscape is crucial to formulating a reasonable prediction as to the future of the London market. Aside from research reports and articles, our main insights into the political direction of Brexit come from our recordings from meetings in March of 2017 with two high-ranking members of Parliament and one member of the House of Lords—all of whom are members of the Tory Party (the meetings being held under the condition of anonymity). The below analysis will be followed by a discussion of the economics of Brexit, primarily focusing on the economic risks and uncertainties which have emerged after the vote, and which currently exist today. Such risks include the UK losing its financial passporting rights, weakening GDP and currency value, the potential for a reduction in foreign direct investment (FDI), and the potential loss of the service sector in the city of London due to not being able to access the European Single Market.
The report will shift focus to analyzing three competing viewpoints of the direction of the London market based on recordings from interviews of stakeholders in the London real estate market. One being an executive of one of the largest REITs in the UK, another being the Global Head of Real Estate at a top asset management firm, and another being a director at a large property consulting firm. The report includes these differing “sub-theses” in order to try to make sense of the vast market uncertainties post-Brexit as well as to contrast their viewpoints with where the market is currently and with the report’s investment recommendation.
The remainder of the report will consist of the methods used for analyzing market trends including how the data was modeled in order to make the investment recommendation. The report will analyze real estate and market metrics pre-Brexit, immediately after the vote, post-Brexit, and will conclude with future projections encapsulating the investment recommendation.
ContributorsHorn, Jonathan (Co-author) / Sidi, Adam (Co-author) / Bonadurer, Werner (Thesis director) / McDaniel, Cara (Committee member) / Department of Finance (Contributor) / School of Politics and Global Studies (Contributor) / Economics Program in CLAS (Contributor) / Barrett, The Honors College (Contributor)
Created2017-12
Description
For this thesis, the authors would like to create a hypothetical Private Equity Real Estate Investment firm that focuses on creating value for partners by taking an opportunistic approach to acquiring under-performing urban multi-family properties with large upside potential for investing. The project will focus on both the market analysis and financial modeling associated with investment strategy and transactions. There is a substantial amount of complexity within commercial real estate and this thesis seeks to offer an accurate and comprehensive documentary of the process, while simplifying it for everyday readers. Additionally, there are a significant amount of risk factors associated with investment decisions, so the best practices from the industry documented in this manuscript are valuable tools for successful investing in the future. To gain the most profound and reliable industry knowledge, the authors leveraged the experience of dozens of industry professionals through research and personal interviews. Through careful analysis, the authors were able to ascertain the current economic position in the real estate cycle and to create a plan for future investing. Additionally, they were able to identify and evaluate a specific asset for purchase. As a result, the authors found that multifamily properties are a sound investment for the next two years and that the company should slowly start to shift directions to office and retail in 2018.
ContributorsBacon, David (Co-author) / Soto, Justin (Co-author) / Kashiwagi, Dean (Thesis director) / Kashiwagi, Jacob (Committee member) / Department of Finance (Contributor) / Department of Supply Chain Management (Contributor) / Department of Marketing (Contributor) / W. P. Carey School of Business (Contributor) / School of Accountancy (Contributor) / Barrett, The Honors College (Contributor)
Created2016-05
Description
This focuses on recent changes in Arizona eminent domain law regarding the question of whether a use be "truly public." In light of the landmark decision in Bailey v City of Mesa--often lauded as a great victory for proponents of private property rights-- a few sources will be reviewed to provide an indication of the extent redevelopment in Arizona has been affected by the decision. While the result in Bailey, precluding the City from taking the subject property may have been the correct outcome, the test to which the case now subjects any similar case involving redevelopment has made it unnecessarily difficult for political subdivisions of the state to carry out legislated redevelopment goals. The Bailey case only served to convolute the question of "public use" in the context of economic development, rather than create a workable body of law. In addition to providing a historical context and analyzing the effect of new interpretations on redevelopment generally, this paper will critique the Bailey decision in order to resolve the conflict that the decision created: that of the redevelopment goals of the state and municipalities and the authorized use of condemnation to achieve these goals with the judiciary's decision to greatly restrict the use of condemnation for the achievement of redevelopment goals. Arguably this conflict arose from a failure to fully understand the complexities of the use of the power of eminent domain for redevelopment purposes. Unaware of the need to use eminent domain in order to speed along and make possible economic redevelopment, overzealous proponents of property rights have reduced the issue to a narrow view of the state vs. the individual. Hopefully this paper can offer a more moderate and unbiased view of the use of eminent domain in light of the charge of the state and municipalities to facilitate economic growth.
ContributorsStern-Sapad, Zalman Badi (Author) / Birnbaum, Gary (Thesis director) / Braselton, James (Committee member) / Barrett, The Honors College (Contributor) / W. P. Carey School of Business (Contributor)
Created2015-05
Description
Investment real estate is unique among similar financial instruments by nature of each property's internal complexities and interaction with the external economy. Where a majority of tradable assets are static goods within a dynamic market, real estate investments are dynamic goods within a dynamic market. Furthermore, investment real estate, particularly commercial properties, not only interacts with the surrounding economy, it reflects it. Alive with tenancy, each and every commercial investment property provides a microeconomic view of businesses that make up the local economy. Management of commercial investment real estate captures this economic snapshot in a unique abundance of untapped statistical data. While analysis of such data is undeniably valuable, the efforts involved with this process are time consuming. Given this unutilized potential our team has develop proprietary software to analyze this data and communicate the results automatically though and easy to use interface. We have worked with a local real estate property management and ownership firm, Reliance Management, to develop this system through the use of their current, historical, and future data. Our team has also built a relationship with the executives of Reliance Management to review functionality and pertinence of the system we have dubbed, Reliance Dashboard.
ContributorsBurton, Daryl (Co-author) / Workman, Jack (Co-author) / LePine, Marcie (Thesis director) / Atkinson, Robert (Committee member) / Barrett, The Honors College (Contributor) / Department of Finance (Contributor) / Department of Management (Contributor) / Computer Science and Engineering Program (Contributor)
Created2015-05
Description
The business of residential real estate is booming; over 5 million homes were sold in the United States in 2017 alone, according to the National Association of REALTORS® (“Quick Real Estate Statistics,” 2018). With the recovery of the housing market after the 2008 crash, more home buyers and sellers seek out real estate agents to assist with their transactions. Despite the majority of home buyers and sellers still using agents to conduct transactions, obstacles for fostering positive relationships come in the form of poor agent ethical reputations (Pacelle, 1994), agent empathy (Snyder et al, 2011), and even agent attractiveness (S.P. Salter et al, 2012). These reasons make it all the more critical that agents stand out from competitors, raising the question of how agents can differentiate themselves from other agents. To answer this question, this thesis seeks to discover what clients and agents value the most in their relationship with each other. In this study, three real estate agents and a client or client-couple from each were interviewed about the agent’s personality, brand promise, and actions taken to convey the promise. The most important factors in developing relationships, as well as a theoretical framework for the different relationships that can be formed within the agent-client context, were derived from the interview data collected. Commercial friendship develops from the overlap of all three relationship factors identified in the study, and as previously found, correlates with client loyalty and relationship quality (Lou, Zhou & Zheng, 2011). By shaping service around such factors, agents may be able to form better relationships with their clients. An agent with a stronger relationship with their clients may be more likely to receive referrals, earn customer loyalty, and even capture the attention of a first-time home buyer without the use of referral.
ContributorsVolpe, Kaylie Ann (Author) / Gray, Nancy (Thesis director) / Eaton, Kate (Committee member) / Herberger Institute for Design and the Arts (Contributor) / Department of Marketing (Contributor) / Barrett, The Honors College (Contributor)
Created2018-12
Description
In 2014, IASB and FASB published a new revenue recognition standard that will upend the way revenue is recognized on financial statements filed with the SEC. The new standard, ASC 606 \u2014 Revenue from Contracts with Customers, is effective as of December 16, 2017 for all public US GAAP entities and effective for all IFRS entities as of January 1, 2018. All non-public US GAAP entities are required to implement the reporting standards for financial periods following December 16, 2018. The purpose of this new guidance is to shift from industry and transaction specific revenue recognition methods to a framework that enables financial statement users to understand how and when revenue is recognized. As an incoming associate within the audit industry, I decided to analyze the key differences between the new revenue recognition standard with the existing GAAP and IFRS standards. The following research explores the impact on various industries, particularly the real estate industry. ASC 606's impact will vary depending on the industry. In terms of real estate, the industry will experience a moderate impact. The new guidance will likely enable the earlier recognition of revenue in most instances, based on the five-step revenue recognition process laid out by the IASB and FASB. This publication also analyzes the 10-K's of three companies in the real estate industry; Kennedy Wilson Holdings Inc., CBRE Group Inc., and Digital Realty Trust, Inc. Through excerpts from the 10-K's of these companies, readers will gain insights into how real estate companies are preparing for the implementation of ASC 606. With this new revenue recognition standard, financial statement users will be able to better grasp the nature, timing, amount, and uncertainty of revenue recognition, thereby increasing transparency within the public accounting profession.
ContributorsThomas, Kade Anthony (Author) / Shields, David (Thesis director) / Geiger, Karen (Committee member) / School of Accountancy (Contributor) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
My Honors Thesis is about answering a central question regarding the business of real estate: "What is the return on investment of obtaining a real estate license?" I focused my research on the monetary, time, and other value factors that affect the initial cost of securing a real estate salesperson license in the State of Arizona (costs) and the amount of money a licensed salesperson makes as a result of having a salesperson license (income). Licensees make this trade-off: the cost in terms of real dollars to obtain a license, as well as the opportunity costs associated with the time to secure, start using, and begin to earn money by way of a salesperson license. To answer the central question I conducted a survey of active licensees in order to determine the value ascribed to holding a real estate salesperson license. Through my research, I concluded that there is not a single number that can be assigned to a real estate license that indicates its value, but the data collected reveals that the return on investment has the potential to be great. Upfront costs and fees necessary to obtain a license are insignificant when the commission a licensee can then make from a single transaction is enough to cover those expenses. Therefore, based on the survey results and research into the initial costs associated with obtaining a real estate license, there appears to be sufficient data to support a positive return on investment and warrant obtaining a real estate license.
ContributorsSanders, Sarah (Author) / Stapp, Mark (Thesis director) / Koblenz, Blair (Committee member) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
Commercial real estate is tied to the macro conditions of the overall economy. In particular, the paper seeks to relate commercial real estate to alternative investments such as the 10-year treasury and the S&P 500 in the stock market by examining trends over the thirty-year period of 1979-2009. There will be comprehensive analysis, interpretation, and discussion of the national cap rate, the 10-year treasury, and the S&P 500 E/P ratio during the period. By analyzing past economic events and how the 10-year, S&P 500 E/P ratio, and cap rates move, the hope is to identify patterns and leading indicators to provide better insight into future events and behavior of commercial real estate and the stock market. The main intent is to provide the reader with the tools to assess the current market. In doing so, it is then possible to relate the current market with the past and with some degree of accuracy, predict where the market is headed. With such knowledge, investors can more aptly time and allocate their funds in order to maximize their returns.
ContributorsMillstein, Ethan David (Author) / Davis, Joseph (Thesis director) / Bronska, Michael (Committee member) / Barrett, The Honors College (Contributor) / Department of Finance (Contributor) / W. P. Carey School of Business (Contributor)
Created2014-05
Description
My thesis examines the location of Minor League Baseball stadiums. From this examination, I will analyze how the location of the stadium impacts attendance levels. Specifically, I will be analyzing various micro-level factors regarding the area surrounding the stadium. The categories to be analyzed include demographics, land usage and access. To evaluate these micro-level factors, comparisons will be taken between the top-15 organizations and bottom-15 organizations in their league relative attendance levels. This comparison will provide information on potential factors that foster a relationship with successful or unsuccessful attendance levels. With the collection of data, many implications can be displayed. In order of significance of the relationship with successful attendance levels, the most impactful category was access, followed by land usage with demographics presenting the least impact on successful attendance levels. Within these categories, various factors presented different levels of connection with its impact on successful attendance levels. In addition, the various factors imposed different levels of significance at different distances surrounding the stadium. As such, it is important to take a holistic approach and consider the relationship each factor has on other factors and the role that the certain factor has on the specific community. This information provides various implications for multiple parties. Most significantly, this analysis will provide information for Minor League Baseball organizations for the optimization of the location for their stadium. Locating its stadium in the most optimal location will ensure the maximization of attendance levels, thus maximizing revenue and profit levels for the business operations of the organization. In addition, this information can also be used by the municipal government that the organization is located to assist in locating the stadium in the most optimal location. The importance of this for community is provided by the positive externalities that result from the enhanced community interaction developed by the Minor League organization. By finding the factors that influence attendance levels, parties within the organization as well as outside the organization can best access the benefits that are created from its operation.
ContributorsRubin, Levi Dartagnan Vitus (Author) / Stapp, Mark (Thesis director) / Bronska, Michael (Committee member) / Department of Finance (Contributor, Contributor) / Barrett, The Honors College (Contributor)
Created2018-12
Description
The listing price of residential rental real estate is dependent upon property specific attributes. These attributes involve data that can be tabulated as categorical and continuous predictors. The forecasting model presented in this paper is developed using publicly available, property specific information sourced from the Zillow and Trulia online real estate databases. The following fifteen predictors were tracked for forty-eight rental listings in the 85281 area code: housing type, square footage, number of baths, number of bedrooms, distance to Arizona State University’s Tempe Campus, crime level of the neighborhood, median age range of the neighborhood population, percentage of the neighborhood population that is married, median year of construction of the neighborhood, percentage of the population commuting longer than thirty minutes, percentage of neighborhood homes occupied by renters, percentage of the population commuting by transit, and the number of restaurants, grocery stores, and nightlife within a one mile radius of the property. Through regression analysis, the significant predictors of the listing price of a rental property in the 85281 area code were discerned. These predictors were used to form a forecasting model. This forecasting model explains 75.5% of the variation in listing prices of residential rental real estate in the 85281 area code.
ContributorsSchuchter, Grant (Author) / Clough, Michael (Thesis director) / Escobedo, Adolfo (Committee member) / Industrial, Systems & Operations Engineering Prgm (Contributor) / Barrett, The Honors College (Contributor)
Created2019-05