Norm Miller

Recent evidence from the financial crisis of 2008 brings into question the stability of correlation assumptions and the effect this has on possible extreme outcomes. We present evidence of the unstable correlations between asset returns in recent years from several perspectives: listed real estate market and common stock market; publicly traded real estate and privately held real estate; public real estate return across property sectors; private real estate return across regions; and… Show more

Recent evidence from the financial crisis of 2008 brings into question the stability of correlation assumptions and the effect this has on possible extreme outcomes. We present evidence of the unstable correlations between asset returns in recent years from several perspectives: listed real estate market and common stock market; publicly traded real estate and privately held real estate; public real estate return across property sectors; private real estate return across regions; and residential default rates across states and regions. Our findings suggest that returns on real estate assets exhibit unusual levels of skewness and asymmetric dependence (higher correlations in downside markets). Incorporating higher-order return distribution moments in portfolio selection and diversification decisions is important to all investors concerned with fat tail risks. Optimizing portfolios from the standpoint of loss mitigation seems easy to achieve with careful geographic diversification, but deep recession loss correlations defy the longer term trends. For this reason, new hedging instruments are required to truly mitigate downside risk. Show less

My article published by the premier resource organization for the retail real estate industry is a write-up on the research done by my professor Dr. Norm Miller. In it, I discuss the downsizing trend among very large space occupants due to increased productivity, big data and a shift in work space preferences by new generations. This downsizing is occurring even as the economy is beginning to bounce back which indicates this will persist for the long term. Interesting, is how the move toward… Show more

My article published by the premier resource organization for the retail real estate industry is a write-up on the research done by my professor Dr. Norm Miller. In it, I discuss the downsizing trend among very large space occupants due to increased productivity, big data and a shift in work space preferences by new generations. This downsizing is occurring even as the economy is beginning to bounce back which indicates this will persist for the long term. Interesting, is how the move toward more productive and possibly greener space will reverberate out and affect all participants in the commercial real estate market.

Article was published in ICSC's Real Property Insights Volume 21 (2014). It's available in print & online to members as well free on the ICSC Research mobile app. Show less