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Selling Prices/sq.ft. of Office Buildings in Downtown Chicago – How Much Is It Worth to Be an Old But Class A Building?

Author

Listed:
  • Sofia Dermisi

    (Roosevelt University)

  • John F. McDonald

    (University of Illinois at Chicago)

Abstract

This paper examines office building sales in downtown Chicago for the period 1996 to 2007. Our analysis provides a conventional OLS approach and an exploration of spatial dependence. We find some evidence of spatial lag and spatial autocorrelation in our dataset but the results are similar to the OLS approach. The results indicate that high occupancy is a statistically significant factor only for Class B properties, suggesting that a low occupancy rate is a negative sign for these buildings of lower quality. Class A property receives a 44% price/ sq. ft. boost due to the premium classification. This increase becomes more pronounced (90%) for floor plate efficient, neoclassical/ revival fac¸ade and/or famous Class A properties built before 1972 when the comparison is with Class B properties of the same age.

Suggested Citation

  • Sofia Dermisi & John F. McDonald, 2010. "Selling Prices/sq.ft. of Office Buildings in Downtown Chicago – How Much Is It Worth to Be an Old But Class A Building?," Journal of Real Estate Research, American Real Estate Society, vol. 32(1), pages 1-22.
    • Handle: RePEc:jre:issued:v:32:n:1:2010:p:1-22
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    References listed on IDEAS

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    Cited by:

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    2. Nan-Yu Wang & Jen-Yu Lee & Chih-Jen Huang, 2022. "The Effect of the Principal Component Index for Housing Quality Satisfaction on Housing Price: Urban vs. Rural Analysis," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(10), pages 1-63, October.
    3. Kyuman Cho & Jaeyeon Kim & Taehoon Kim, 2022. "Critical Review on Economic Effect of Renovation Works for Sustainable Office Building Based on Opinions of Real-Estate Appraisers," Sustainability, MDPI, vol. 14(10), pages 1-20, May.
    4. Beimer, Waldemar & Maennig, Wolfgang, 2020. "On the price gap between single family houses and apartments," Journal of Housing Economics, Elsevier, vol. 49(C).
    5. Eli Beracha & William G. Hardin & Hilla Maaria Skiba, 2018. "Real Estate Market Segmentation: Hotels as Exemplar," The Journal of Real Estate Finance and Economics, Springer, vol. 56(2), pages 252-273, February.
    6. Jack Corgel & Crocker Liu & Robert White, 2015. "Determinants of Hotel Property Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 51(3), pages 415-439, October.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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