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Time-Series Characteristics and Long-Run Equilibrium for Major Australian Office Markets

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  • Anthony J. De Francesco

Abstract

While much attention has focused on the modeling of office property markets, little emphasis has been put on distinguishing between permanent and temporary effects. This article attempts to address this issue in the context of the rental adjustment mechanism and the demand-employment relationship for major Australian central business district office markets. It is shown that, by allowing the natural vacancy rate and the work-space ratio to be endogenously determined, it offers richer model specifications that permit a partitioning between long-run and short-run influences. This is achieved by employing econometric techniques that examine the stochastic behavior of time series data. It is found that, while equilibrium relationships exist (between the vacancy rate and rent, and demand and employment), other macroeconomic variables are found to be relevant cyclical determinants. Copyright 2008 American Real Estate and Urban Economics Association

Suggested Citation

  • Anthony J. De Francesco, 2008. "Time-Series Characteristics and Long-Run Equilibrium for Major Australian Office Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(2), pages 371-402, June.
  • Handle: RePEc:bla:reesec:v:36:y:2008:i:2:p:371-402
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    References listed on IDEAS

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    1. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
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    Cited by:

    1. Clark, David & Pennington-Cross, Anthony, 2016. "Determinants of industrial property rents in the Chicago metropolitan area," Regional Science and Urban Economics, Elsevier, vol. 56(C), pages 34-45.
    2. 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.
    3. K. W. Chau & S. K. Wong, 2016. "Information Asymmetry and the Rent and Vacancy Rate Dynamics in the Office Market," The Journal of Real Estate Finance and Economics, Springer, vol. 53(2), pages 162-183, August.

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