Price and Spatial Distribution of Office Rental in Madrid: A Decision Tree Analysis

Maximo Camacho, Salvador Ramallo and Manuel Ruiz
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Salvador Ramallo: University of Murcia, Spain
Manuel Ruiz: Technical University of Cartagena, Spain

Revista Economía, 2021, vol. 44, issue 87, 20-40

Abstract: n this paper, we assess the drivers of office rental prices in the municipality of Madrid with asample of 4,721 offices in March, 2020. The estimation was performed using the decision treeapproach, which was built with a random forest algorithm. This technique allows us to capturethe strong nonlinear component in the relation between price and its drivers, mainly geospatiallocation. Through a stratified analysis, we find out that the willingness to pay high rent in thecenter of Madrid is a feature of particular relevance to medium-sized offices. For different reasons, we also find out some office clusters located far from the city center with high rent for both largeand small offices.

Keywords: Spatial economics; Random forest; Nonlinear; Offices (search for similar items in EconPapers)
JEL-codes: C02 C44 R32 (search for similar items in EconPapers)
Date: 2021
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