Property markets are considered efficient when the market price of a transacted property equates with its market worth. If this condition holds then identical properties should sell or let for the same price. However, properties are heterogeneous, and information and operational constraints exist. Consequently, events in the transaction process and factors like time on the market, buyer and seller psychology and agent behaviour influence property prices, whereas in a perfectly efficient market they would have no impact. This gives rise to similar units selling for different prices. This paper examines the relationships between commercial property prices and time on the market for property. Tests fail to find evidence of a direct relationship between time on the market and transacted rents, time on the market and asking rents, and asking rents with transacted rents. The reason for the insignificant results could be because landlords would rather offer potential tenants non-price incentives such as rent-free periods, rent break clauses, shorter leases or fitting-out costs to achieve a faster let than discount the agreed contractual rent. A more detailed examination of the physical, location and market conditions that determine the expected time on the market for a property to let is undertaken. Results suggest that the state of the property market is an important influence on the time it takes to let a property, and concurs with the evidence found in housing studies. With the support of our empirical findings and evidence from the housing market, we conclude that including measures of non-price incentives, landlords’ motivation, tenants’ characteristics, and search costs in our model may explain the relationship more fully.
