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Paper eres2005_166:
Adjustment in Property Space Markets: Estimates from the Stockholm Office Market

id eres2005_166
authors Englund, Peter; Åke Gunnelin; Patric H. Hendershott and Bo Söderberg
year 2005
title Adjustment in Property Space Markets: Estimates from the Stockholm Office Market
source Book of Abstracts: 2005 European Real Estate Society conference in association with the International Real Estate Society
summary Rent setting behavior of landlords relates to rental rates on new leases, while tenant demand for space depends on the average rental rate on existing space. Thus models of the space market need to identify the roles of these two rates. A market or new lease rent series is constructed for the Stockholm office rental market for the time-period 1977–2002 by applying a standard hedonic approach to a data-set of some 2,400 individual leases. Given the market rent series and the lease length distribution, we estimate a time series on the average rent on existing leases. We explain the adjustment of both real market rent and vacancies and show the role played by "hidden vacancies" in the stock (the difference between space demand at the new and existing lease rates divided by the existing stock) in this process. We further calculate the natural vacancy rate assuming a trending equilibrium in the Stockholm office market. Simulations illustrate the importance of the lease length to the adjustment process.
series ERES:conference
type normal paper
discussion No discussions. Post discussion ...
session Session D3
last changed 2008/11/01 09:47
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