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Vintage effects in commercial real estate and the dynamics of the built environment

Author

Listed:
  • Rouwendal, Jan
  • Levkovich, Or
  • Buitelaar, Edwin
  • Claassens, Jip

Abstract

This paper demonstrates that the prices of older commercial buildings increase relative to younger ones. We argue that this is a ‘vintage effect’ that is due to the increasing valuation of older buildings by their marginal occupant in an expanding market. We show that this effect is not due to local price trends, or listing or preservation zones. Furthermore, it is not confined to urban locations or buildings visible from main roads, and it is most pronounced for buildings constructed before 1960. Repeat sales analysis confirms the results of hedonic regressions. Further analysis of the office market, for which the vintage effect is strongest, confirms that survival probabilities and occupancy rates are highest for older buildings. These findings suggest that commercial buildings have a longer lifespan than is often thought, making the built environment less dynamic.

Suggested Citation

  • Rouwendal, Jan & Levkovich, Or & Buitelaar, Edwin & Claassens, Jip, 2025. "Vintage effects in commercial real estate and the dynamics of the built environment," Regional Science and Urban Economics, Elsevier, vol. 114(C).
    • Handle: RePEc:eee:regeco:v:114:y:2025:i:c:s0166046225000481
    DOI: 10.1016/j.regsciurbeco.2025.104131
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    Keywords

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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