Adjustment in Property Space Markets : Estimates from the Stockholm Office Market
Markets for property space adjust only gradually because tenants are constrained by long-term leases and landlords and tenants face transactions and information costs. Not only do rents adjust slowly, but space occupancy may differ from demand at current rent, giving rise to quot;hidden vacanciesquot;. We estimate the joint dynamics of office rents and vacancies using an error-correction model using a new lease rent series for Stockholm offices 1977--2002 estimated on 2,500 leases. It takes 5-10 years for the market to adjust to a shock. In a model simulation of a positive employment shock open vacancies fall from the natural level of 7 percent to below 4 percent, while hidden vacancies increase by about as much. Most of the variation in hidden vacancies over time is explained by the difference between demand at current and average rent on existing leases, which we calculate using data on contract lease length
Year of publication: |
[2010]
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Authors: | Englund, Peter |
Other Persons: | Gunnelin, Ake (contributor) ; Hendershott, Patric H. (contributor) ; Soederberg, Bo (contributor) |
Publisher: |
[2010]: [S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (37 p) |
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Series: | NBER Working Paper ; No. w11345 |
Type of publication: | Book / Working Paper |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 2005 erstellt |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012762462
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