Asymmetric Space Market Adjustment in the London Office Market

Patric Hendershott, Colin Lizieri and Bryan MacGregor

Real Estate & Planning Working Papers from Henley Business School, University of Reading

Abstract: Earlier estimates of the City of London office market are extended by considering a longer time series of data, covering two cycles, and by explicitly modeling of asymmetric space market responses to employment and supply shocks. A long run structural model linking real rental levels, office-based employment and the supply of office space is estimated and then rental adjustment processes are modeled using an error correction model framework. Rental adjustment is seen to be asymmetric, depending both on the direction of the supply and demand shocks and on the state of the space market at the time of the shock. Vacancy adjustment does not display asymmetries. There is also a supply adjustment equation. Two three-equation systems, one with symmetric rental adjustment and the other with asymmetric adjustment, are subjected to positive and negative shocks to employment. These illustrate differences in the two systems.

Keywords: office market models; rental adjustment; asymmetric responses; vacancy rate (search for similar items in EconPapers)
Pages: 41 pages
Date: 2009
New Economics Papers: this item is included in nep-geo and nep-ure
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Citations: View citations in EconPapers (2)

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Working Paper: Asymmetric Space Market Adjustment in the London Office Market (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:rdg:repxwp:rep-wp2009-03

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