Real Estate Rental Growth Rates at Different Points in the Physical Market Cycle

Glenn R. Mueller ()
Additional contact information
Glenn R. Mueller: Johns Hopkins University and Legg Mason Wood Walker, Inc. Baltimore, MD 21203, http://www.jhu.edu/

Journal of Real Estate Research, 1999, vol. 18, issue 1, pages 131-150

Abstract: Real estate markets go through both physical cycles (demand and supply) that affect rental growth rates and financial cycles (capital flows to real estate) that affect property Prices (Mueller, 1995). This study develops a rental growth rate hypothesis based on a market’s position in the physical (demand-supply) market cycle. Using data from fifty-four office and industrial markets in the United States over a thirty-year period, an aggregated national average rental growth rate was calculated for each point in the cycle. An ANOVA test for differences of means found that the national average rental growth rates at each point in the cycle were statistically different. The results show local demand and supply, which interact to affect occupancy, are major determinants in rental growth rates. This research should help investors move from using a single rental growth rate for multiple year forecasts, to using yearly cycle driven rental growth rate estimates in their discounted cash flow projections.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1999
View list of references View citations in EconPapers

Downloads: (external link)
http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol18n01/v18p131.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:jre:issued:v:18:n:1:1999:p:131-150

Ordering information: This journal article can be ordered from
Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
http://aux.zicklin.b ... u/jrer/about/get.htm

Access Statistics for this article

Journal of Real Estate Research is edited by Dr. Ko Wang

More articles in Journal of Real Estate Research from American Real Estate Society
Address: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Series data maintained by JRER Graduate Assistant/Webmaster ().