Measuring Structural Vacancies: A Quantitative and Qualitative Approach for the German Office Market

Carsten Lausberg, Cay Oertel and Artur Tarassow ()

ERES from European Real Estate Society (ERES)

Abstract: Since the Covid-19 pandemic, vacancy rates have increased in many office markets around the world. This is reflected in the nominal vacancy rate, which market researchers and consultants regularly publish in their market reports. However, this does not accurately reflect the true vacancy for two reasons: first, it includes both natural ('good') and structural ('bad') vacancies, and second, it does not include hidden vacancies. As a result, in times of crisis, vacancies are underestimated, which can lead to wrong decisions by market participants.We construct a model to measure both types of vacancies. First, we indirectly estimate the natural vacancy rate using a quantitative rent adjustment model. Then we calculate the structural vacancy rate as the difference between the nominal and the natural vacancy rate using market data by BulwienGesa for the 14 largest German office markets from 1990 to 2023. After that, we use interviews with real estate managers and other market experts in combination with real estate market data to estimate the hidden vacancies in individual office markets. The results are incorporated into the overall model as a correction factor.

Keywords: Germany; Office Market; Structural vacancy; Vacancy (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024-01-01
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