Commercial Buildings Capital Consumption and the United States National Accounts

Commercial buildings are a major asset class, over 30 percent of the value of the stock of all produced assets according to the BEA. Yet, US commercial buildings depreciation has not been comprehensively studied since the highly influential work of Hulten and Wykoff almost 40 years ago. This paper&#...

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Bibliographic Details
Published in:The Review of income and wealth 2019-09, Vol.65 (3), p.561-591
Main Authors: Bokhari, Sheharyar, Geltner, David
Format: Article
Language:English
Subjects:
Accounts
Assets
capital consumption
commercial buildings
Commercial real estate
Consumption
Depreciation
E01
Economic theory
Estimation
H25
land value
Measurement
Property values
R33
Value
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Summary:Commercial buildings are a major asset class, over 30 percent of the value of the stock of all produced assets according to the BEA. Yet, US commercial buildings depreciation has not been comprehensively studied since the highly influential work of Hulten and Wykoff almost 40 years ago. This paper's major contributions include: (i) More flexible and precise estimation of the net depreciation value/age profile, allowing much finer characterization of the building life cycle; (ii) Explicit quantification of the land value component of commercial property value, enabling net depreciation to be quantified as a fraction of remaining structure value; (iii) Inclusion of capital improvement expenditures, allowing estimates of “gross depreciation” (total capital consumption); and (iv) Implications of the paper's findings to and for the national accounts.
ISSN:0034-6586
1475-4991
DOI:10.1111/roiw.12357