CHAPTER 6
 DATA AND METHODOLOGY

 Data

 Property sales data is obtained from CoStar Group, Inc. The CoStar Comps

Professional database includes historical information on over 1.2 million confirmed

commercial real estate transactions from 1999 through the first half of 2005. The CoStar

database includes all sales in excess of $250,000 in more than 40 major U.S. markets.1

Land, mobile homes, and special use properties are excluded from this analysis. The

initial sample contains 270,415 confirmed sales in five property markets: office,

industrial, apartment, retail and hotel/motel. CoStar Comps Professional has a separate

attribute field that identifies whether the sale represents an exchange. Therefore, any

missing exchange identification is due to a lack of information, rather than CoStar's

failure to report the type of transaction. An observation is eliminated from the sample if it

could not be determined whether the sale was a part of a Section 1031 exchange. This

further reduces the sample to 158,196 observations.

 CoStar Comps Professional also contains descriptive information on the type of

exchange (e.g. taxpayer's sale of relinquished property, simultaneous exchange, reverse

exchange, etc.) in detailed notes. Based on the manual inspection of these notes, each

exchange property sale is placed into one of the following categories:

1. Seller's relinquished property in delayed (Starker) exchange
2. Buyer's replacement property in delayed (Starker) exchange


1 The CoStar product used in this analysis is CoStar Comps Professional
(www.costar.com/products/comps/).