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http://dx.doi.org/10.5762/KAIS.2014.15.11.6630

Empirical study of the scale economies of office buildings in Seoul  

Keum, Sang Su (Dept. of Real Estate, Semyung University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.15, no.11, 2014 , pp. 6630-6638 More about this Journal
Abstract
The concerns for higher returns among investors in Korea are increasing as local interest rates lag behind the global market. The aim of this study was to provide a basis for estimating the precise return on investment to private investors and stakeholders of office buildings by identifying the optimal scale estimation of office building space, derived from managerial expenses. The literature on the economies theories of scales were reviewed, and the average administrative costs on an appropriate scale were assessed by cross-analysis and regression analysis using the U-shaped quadratic and cubic function. The findings suggest that the average office building managerial costs are approximately 6-11% according to the region, 10-13% according to the grade, and 8-9% according to size. Corporate-owned buildings represent the highest in terms of the average managerial costs, and there is an approximately 11.5% difference when it comes to outsourcing. In addition, the elapsed year showed that approximately 5.3 years to meet the lowest U-shaped curve of the average managerial cost. The 'Total floor area' variable shows a ${\bigcap}$-shape as it continue to increase to 72,000-Pyung then decrease gradually. This study presents the fundamental proposition of efficient and practical management of cost, lease and operation for real estate management firms by utilizing LCC.
Keywords
economic of scale; office building; LCC; average management cost;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
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