AJIBM  Vol.9 No.5 , May 2019
Analysis of the Role of Commercial Real Estate in the Economic Development of the Northeastern United States
Research on the relationship between real estate investment and economic growth has a long history in the economic development literature. This study adds to the literature by focusing on the largest segment of commercial real estate, retail establishments. Not only quantifying the economic impacts of retail establishments, but also understanding how the economic and socio-demographic characteristics of an area affect investment location decisions, contributes to the understanding of regional growth process. A 3SLS simultaneous equations model derived from is used to analyze the role of “small” and “large” retail establishments in the economic development of the Northeast region of the United States. The study concludes that growth in retail establishments indeed plays a significant role in the economic growth process in the study region. Counties’ government expenditure and housing values play a strong role in attracting retail businesses. Population density has different effects on “small” and “large” retail establishments; high population density areas are found to be attractive, particularly to “small” retail establishments, whereas “large establishments” prefer areas with low population densities.
Cite this paper: Wasihun, T. , Schaeffer, P. and Gebremedhin, T. (2019) Analysis of the Role of Commercial Real Estate in the Economic Development of the Northeastern United States. American Journal of Industrial and Business Management, 9, 1201-1218. doi: 10.4236/ajibm.2019.95081.

[1]   U.S. Census Bureau (2012) Statistical Abstract of the United States.

[2]   Bureau of Labor Statistics (2012) Employment Outlook: 2010-2020. Monthly Labor Review, 135, 1-188.

[3]   Ducatel, K. and Blomley, N. (1990) Rethinking Retail Capital. International Journal of Urban and Regional Research, 14, 207-227.

[4]   Lowe, M. and Crewe, L. (1991) Lollipop Jobs for Pin Money? Retail Employment Explored. Royal Geographical Society, 23, 344-347.

[5]   Price, J., Kent, C., Springer, E. and Al, S. (2008) The Economic Impact of Tamarack. Center for Business and Economic Research, Marshall University, Huntington.

[6]   Williams, C. (1997) Rethinking the Role of the Retail Sector in Economic Development. Service Industries Journal, 17, 205-220.

[7]   Gibson, J., Albrecht, B. and Evans, B. (2003) Is Retail Trade a Focus for Real Economic Development in the Knowledge-Based Economy? Applied Research in Economic Development, 1, 44-55.

[8]   Ling, D. and Naranjo, A. (1997) Economic Risk Factors and Commercial Real Estate Returns. Journal of Real Estate Finance and Economics, 14, 283-307.

[9]   Vias, A. (2004) Bigger Stores, More Stores, or No Stores: Paths of Retail Restructuring in Rural America. Journal of Rural Studies, 20, 303-318.

[10]   Hongyu, L., Park, Y. and Siqi, Z. (2002) The Interaction between Housing Investment and Economic Growth in China. International Real Estate Review, 5, 40-60.

[11]   Seidman, K. (2006) Inner City Commercial Revitalization: A Literature Review. MIT, Cambridge.

[12]   Colwell, F., Gujral, S. and Coley, C. (1985) The Impact of a Shopping Center on the Value of Surrounding Properties. Real Estate Issues, 10, 35-39.

[13]   Porter, M. (1997) New Strategies for Inner-City Economic Development. ReEconomic Development Quarterly, 11, 11-27.

[14]   West, D. and Orr, M. (2003) Downtown Malls as Engines of Economic Development, Community Spirit, and Political Capital. Re-Economic Development Quarterly, 17, 193-204.

[15]   Nair, R. (2011) How to Invest in Commercial Real Estate—Guidelines for Retail Investors.

[16]   Wincott, R. and Mueller, G. (1995) Market Analysis in the Appraisal Process. Appraisal Journal, 63, 27-32.

[17]   Thilmany, D., McKenney, N., Mushinski, D. and Weiler, S. (2005) Beggar-Thy-Neighbor Economic Development: A Note on the Effect of Geographic Interdependencies in Rural Retail Markets. Annals of Regional Science, 39, 593-605.

[18]   Lieser, K. and Groh, A. (2011) The Determinants of International Commercial Real Estate Investments. Journal of Real Estate Finance and Economics, 48, 611-659.

[19]   Jackson, C. (2001) A Model of Spatial Patterns across Local Retail Property Markets in Great Britain. Urban Studies, 38, 1445-1471.

[20]   Alwitt, L. and Donley, T. (1997) Retail Stores in Poor Urban Neighborhoods. Journal of Consumer Affairs, 31, 139-164.

[21]   Boon, B. (2005) The Availability and Usefulness of Real Estate Data in Eastern Asia—A User’s Perspective. In: Real Estate Indicators and Financial Stability, BIS Papers No. 21 (April), Bank for International Settlements, Basel, 91-111.

[22]   Colavolpe, A. (2010) Demystifying the Corporate Real Estate Process: The Retailer’s Perspective. Real Estate Issues, 35, 14-19.

[23]   Malizia, E. (1991) Forecasting Demand for Commercial Real Estate Based on Economic Fundamentals of U.S. Metro Markets. Journal of Real Estate Research, 6, 251-265.

[24]   Fickes, M. (2007) Trends: Strategic Thinking. Chain Store Age.

[25]   Miller, K. and Weber, B. (2014) Persistent Poverty Dynamics: Understanding Poverty Trends. Rural Policy Research Institute, Iowa City.

[26]   Chapple, K. and Jacobus, R. (2009) Retail Trade as a Route to Neighborhood Revitalization. In: Wial, H., Pindus, N. and Wolman, H., Eds., Urban and Regional Policy and Its Effects, Brookings Institution-Urban Institute, Washington DC, 19-68.

[27]   Carlino, A. and Mills, S. (1987) The Determinants of County Growth. Journal of Regional Science, 27, 39-54.

[28]   Steinnes, N. (1982) Do People Follow Jobs or Do Jobs Follow People? A Causality in Urban Economics. Urban Studies, 19, 187-192.

[29]   Deller, S., Tsai, T.-H., Marcouiller, D. and English, D. (2001) The Role of Amenities and Quality of Life in Rural Economic Growth. American Journal of Agricultural Economics, 83, 352-365.

[30]   Mojica, M.N., Gebremedhin, T. and Schaeffer, P. (2010) A County-Level Assessment of Entrepreneurship and Economic Development in Appalachia Using Simultaneous Equations. Journal of Developmental Entrepreneurship, 15, 3-18.

[31]   Bashir, S. and Gebremedhin, T.G. (2012) Entrepreneurship and Regional Economic Development. Lambert Academic Publishing, Saarbrücken.

[32]   Kahsai, M.S., Gebremedhin, T.G. and Schaeffer, P.V. (2011) Spatial Analysis of Amenity and Regional Growth in the U.S. Northeast. Review of Urban and Regional Development Studies, 23, 77-93.

[33]   Nondo, C. and Schaeffer, P.V. (2012) Economic Growth and Environmental Regulations: A Simultaneous Equation Estimation. IUP Journal of Applied Economics, 11, 28-49.

[34]   Gebremariam, G.M., Gebremedhin, T.G. and Schaeffer, P.V. (2012) County-Level Determinants of Local Public Services in Appalachia: A Multivariate Spatial Autoregressive Model Approach. Annals of Regional Science, 49, 175-190.

[35]   Gebremariam, G.M., Gebremedhin, T.G. and Schaeffer, P.V. (2011) Employment, Income, and Migration in Appalachia: A Spatial Simultaneous Equations Approach. Journal of Regional Science, 51, 102-120.

[36]   Gebremariam, G.M., Gebremedhin, T.G. and Schaeffer, P.V. (2010) Analysis of County Employment and Income Growth in Appalachia: A Spatial Simultaneous-Equations Approach. Empirical Economics, 38, 23-45.

[37]   Gebremariam, G.M., Gebremedhin, T.G., Schaeffer, P.V., Jackson, R.W. and Phipps, T.T. (2012) A Simultaneous Spatial Panel Data Model of Regional Growth Variation: An Empirical Analysis of Employment, Income, Migration and Local Public Services. Papers in Regional Science, 91, 275-298.

[38]   Deller, S. and Lledo, V. (2007) Amenities and Rural Appalachia Economic Growth. Agricultural and Resource Economics Review, 36, 1-26.

[39]   Kim, Y. and Orazem, P. (2012) Broadband Internet and Firm Entry: Evidence from Rural Iowa. Working Paper No. 12026, Iowa State University, Department of Economics, Ames.