Commercial Buildings Capital Consumption and the United States National Accounts
50 Pages Posted: 16 Jun 2016
Date Written: June 15, 2016
Commercial buildings are a major asset class, over 30% 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) Application and implications of the paper’s findings to and for the national accounts.
Keywords: Commercial Buildings, Capital Consumption, Depreciation, Land Value
JEL Classification: E01, R33, H25
Suggested Citation: Suggested Citation