Agglomeration Economies and Capitalization Rates: Evidence from the Dutch Real Estate Office Market

Arno J. Vlist (), Marc K. Francke () and Dennis A. J. Schoenmaker
Additional contact information
Arno J. Vlist: University of Groningen
Marc K. Francke: University of Amsterdam
Dennis A. J. Schoenmaker: University of Groningen

The Journal of Real Estate Finance and Economics, 2025, vol. 71, issue 1, No 5, 95-117

Abstract: Abstract Agglomerations of economic activity result in higher rents for users. However, these benefits do not necessarily carry over to real estate investors because higher rents might also come with higher investment amounts and risks. We address this by testing whether the effects of agglomeration economies, as observed in office rents, carry over to capitalization rates as a theoretically more refined measurement of productivity externalities. Using transaction-based data for the period 1996-2011 in the Netherlands, we show that agglomeration economies result in capitalization rates that are 4.6 percent, or 40 basis points, lower.

Keywords: capitalization rates; agglomeration economies; commercial real estate; office market (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11146-021-09881-x Abstract (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:kap:jrefec:v:71:y:2025:i:1:d:10.1007_s11146-021-09881-x

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2

DOI: 10.1007/s11146-021-09881-x

Access Statistics for this article

The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().