Question
Commercial real estate Three multiple regressions, MODEL A, MODEL B, and MODEL C, were run on data from 52 commercial rental real estate properties in
Commercial real estate
Three multiple regressions, MODEL A, MODEL B, and MODEL C, were run on data from 52 commercial rental real estate properties in the San Fernando valley of Los Angeles. The regression outputs for all three re- gressions are provided in the worksheetCommercialRealEstateof the Excel workbookFinalExam Outputs. All variables in these regressions are described below.
Variables:
- DumOffice:dummy variable that is equal to 1 if more than 25% of the area (measured in square feet) is devoted to oce space and is equal to 0 otherwise
- InvDist:1/(1+ distance in minutes from the building to the nearest freeway entrance)
- InvYrs:1/(1+ the age of the building in years)
- Park:the number of on-site parking spaces
- Park ft:the number on-site parking spaces per square foot (Park/SquareFeet)
- Rent:the monthly rent expressed in dollars per square foot
- SquareFeet:the building size in square feet
- TotalRent:the monthly rent expressed in dollars (i.e.,SquareFeet?Rent)
A real estate agent relates a story about two almost identical real estate properties, with the only dierence being that one has 40% of the area devoted to oce space and the other has no oce space at all. The agent claims that the property without any oce space has a higher monthly rental rate than the one with 40% of square footage devoted to oce space. Based on the three regression models provided, should you be surprised? Explain your reasoning. (250 words max.)
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