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The Cyclic Behavior of the Greater London Office Market

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  • Wheaton, William C
  • Torto, Raymond G
  • Evans, Peter
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    Abstract

    This paper applies structural econometric methodology to estimating and forecasting the greater London office market. We assemble a time series covering the 1970-1995 period and estimate equations for net space absorption, movements in rents, and new building orders. Together with two identities, calculating the stock and vacancy, these form a complete model. We estimate a generally inelastic supply and demand relationship that yields a dynamically stable system. Without unanticipated economic shocks, the market is noncyclic. Therefore the building boom of the 1980s largely is delayed response to the huge growth in service jobs that occurred over that period. Copyright 1997 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Real Estate Finance & Economics.

    Volume (Year): 15 (1997)
    Issue (Month): 1 (July)
    Pages: 77-92

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    Handle: RePEc:kap:jrefec:v:15:y:1997:i:1:p:77-92

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    Web page: http://www.springerlink.com/link.asp?id=102945

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    Cited by:
    1. Paul Cheshire & Christian A.L. Hilber, 2008. "Office space supply restrictions in Britain: the political economy of market revenge," LSE Research Online Documents on Economics 4372, London School of Economics and Political Science, LSE Library.
    2. Rena Sivitanidou, 1999. "Does the Theory of Irreversible Investments Help Explain Movements in Office-Commerical Construction?," Working Paper 8659, USC Lusk Center for Real Estate.
    3. Paul Cheshire & Gerard Dericks, 2014. "'Iconic Design' as Deadweight Loss: Rent Acquisition by Design in the Constrained London Office Market," SERC Discussion Papers 0154, Spatial Economics Research Centre, LSE.
    4. Andrea Chegut & Piet Eichholtz & Paulo Rodrigues, 2013. "The London Commercial Property Price Index," The Journal of Real Estate Finance and Economics, Springer, vol. 47(4), pages 588-616, November.
    5. Patric Hendershott & Colin Lizieri & Bryan MacGregor, 2008. "Asymmetric Space Market Adjustment in the London Office Market," Real Estate & Planning Working Papers rep-wp2008-07, Henley Business School, Reading University.
    6. Stephen A. Pyhrr & Stephen E. Roulac & Waldo L. Born, 1999. "Real Estate Cycles and Their Strategic Implications for Investors and Portfolio Managers in the Global Economy," Journal of Real Estate Research, American Real Estate Society, vol. 18(1), pages 7-68.
    7. Patric Hendershott & Colin Lizieri & Bryan MacGregor, 2010. "Asymmetric Adjustment in the City of London Office Market," The Journal of Real Estate Finance and Economics, Springer, vol. 41(1), pages 80-101, July.
    8. Sofia Dermisi, 2005. "Industry location patterns in metropolitan area office markets - Central Business Districts versus suburbs," Urban/Regional 0509007, EconWPA.
    9. Davis, E. Philip & Zhu, Haibin, 2011. "Bank lending and commercial property cycles: Some cross-country evidence," Journal of International Money and Finance, Elsevier, vol. 30(1), pages 1-21, February.
    10. Arnab Bhattacharjee & Chris Jensen-Butler, 2005. "A Model of Regional Housing Markets in England and Wales," CRIEFF Discussion Papers 0508, Centre for Research into Industry, Enterprise, Finance and the Firm.
    11. Simon Stevenson & James Young, . "Capital Market Expectations and the London Office Market," Real Estate & Planning Working Papers rep-wp2011-09, Henley Business School, Reading University.
    12. Fuerst, Franz, 2006. "Predictable or Not? Forecasting Office Markets with a Simultaneous Equation Approach," MPRA Paper 5262, University Library of Munich, Germany.
    13. Dirk Brounen & Maarten Jennen, 2009. "Asymmetric Properties of Office Rent Adjustment," The Journal of Real Estate Finance and Economics, Springer, vol. 39(3), pages 336-358, October.
    14. Robert Thompson & Sotiris Tsolacos, 2000. "Projections in the Industrial Property Market using a Simultaneous Equation System," Journal of Real Estate Research, American Real Estate Society, vol. 19(2), pages 165-188.
    15. Marcel Arsenault & Jim Clayton & Liang Peng, 2013. "Mortgage Fund Flows, Capital Appreciation, and Real Estate Cycles," The Journal of Real Estate Finance and Economics, Springer, vol. 47(2), pages 243-265, August.
    16. Maria Ibanez & Anthony Pennington-Cross, 2013. "Commercial Property Rent Dynamics in U.S. Metropolitan Areas: An Examination of Office, Industrial, Flex and Retail Space," The Journal of Real Estate Finance and Economics, Springer, vol. 46(2), pages 232-259, February.

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