How Tax Credits Have Affected the Rehabilitation of the Boston Office Market

28 Pages Posted: 13 Dec 2006

See all articles by James D. Shilling

James D. Shilling

DePaul University; National Bureau of Economic Research (NBER)

Kerry D. Vandell

University of California, Irvine - Paul Merage School of Business; University of California, Irvine School of Law

Ruslan Koesman

University of Wisconsin

Zhenguo Lin

University of Wisconsin

Abstract

This paper is concerned with the extent to which rehabilitation tax credits affect the conditional probability of commercial real estate rehabilitation. The analysis suggests that rehabilitation tax credits have been a significant determinant of the conditional probability of rehabilitation in the Boston office market. A significant portion of rehabilitation tax credit investment is investment that would have been invested elsewhere, about 60% to 65% in certain periods, but rising to as high as 90% in other periods. The findings indicate that the rehabilitation tax credit has a significant and substantial influence on the conditional probability of rehabilitation. The findings also reveal that the greatest amount of slippage, not too surprisingly, generally occurs when the tax credit is low and when the gain from rehabilitation before the tax credit is high.

Keywords: tax credit, rehabilitation, office market, Boston

JEL Classification: H25,H32,H81,L85,O11,O00,O12,O18,R11,R14,R33,R38

Suggested Citation

Shilling, James D. and Vandell, Kerry D. and Koesman, Ruslan and Lin, Zhenguo, How Tax Credits Have Affected the Rehabilitation of the Boston Office Market. Journal of Real Estate Research, Vol. 28, No. 4, 2006, Available at SSRN: https://ssrn.com/abstract=951271

James D. Shilling (Contact Author)

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kerry D. Vandell

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

University of California, Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

Ruslan Koesman

University of Wisconsin ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

Zhenguo Lin

University of Wisconsin ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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