Winter 1999/2000, Vol 24, No 4
Abstract: This manuscript describes in broader terms a new approach to strategic portfolio analysis for real estate and presents an application to the industrial market. The innovation of the proposed approach lies in the methodology used to estimate real estate return and risk measures, which contrary to applications presented in the real estate literature, takes into account predictable components in metropolitan-specific market behavior and can incorporate property-specific idiosyncratic characteristics. Application of this approach to industrial investment targeting demonstrates that it can help real estate investors construct portfolios of target cities with superior return and risk profile.