Vintage effects in commercial real estate and the dynamics of the built environment

Jan Rouwendal, Or Levkovich, Edwin Buitelaar and Jip Claassens

Regional Science and Urban Economics, 2025, vol. 114, issue C

Abstract: This paper demonstrates that the prices of older commercial buildings increase relative to younger ones. We argue that this is a ‘vintage effect’ that is due to the increasing valuation of older buildings by their marginal occupant in an expanding market. We show that this effect is not due to local price trends, or listing or preservation zones. Furthermore, it is not confined to urban locations or buildings visible from main roads, and it is most pronounced for buildings constructed before 1960. Repeat sales analysis confirms the results of hedonic regressions. Further analysis of the office market, for which the vintage effect is strongest, confirms that survival probabilities and occupancy rates are highest for older buildings. These findings suggest that commercial buildings have a longer lifespan than is often thought, making the built environment less dynamic.

Keywords: Commercial real estate; Depreciation; Urban renewal; Vintage effects (search for similar items in EconPapers)
JEL-codes: R1 R3 R5 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:114:y:2025:i:c:s0166046225000481

DOI: 10.1016/j.regsciurbeco.2025.104131

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