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Do Market Rents Reflect the Value of Special Building Features? The Case of Office Atriums

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Abstract

Office buildings, hotels, and even residential apartment buildings often contain large amounts of space used for public purposes. An example is provided by buildings with atriums. In this article we examine the trade-off between leasable area in office buildings and the amount of the structure's space that is used for an atrium. The insights of our model suggest that the optimal level of planned atrium space increases with a decrease in unit development cost and decreases with an increase in market rents. The model is used to specify a hedonic rent function for comparable office buildings with and without atriums. This hedonic model allows us to test the extent to which charges for amenities such as atrium space are passed through to tenants in the form of higher rents.

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  • John Doiron & James D. Shilling & C.F. Sirmans, 1992. "Do Market Rents Reflect the Value of Special Building Features? The Case of Office Atriums," Journal of Real Estate Research, American Real Estate Society, vol. 7(2), pages 147-156.
    • Handle: RePEc:jre:issued:v:7:n:2:1992:p:147-156
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    1. Kennedy, Peter E, 1981. "Estimation with Correctly Interpreted Dummy Variables in Semilogarithmic Equations [The Interpretation of Dummy Variables in Semilogarithmic Equations]," American Economic Review, American Economic Association, vol. 71(4), pages 801-801, September.
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    Cited by:

    1. Peter F. Colwell & M. Shahid Ebrahim, 1997. "A Note on the Optimal Design of an Office Building," Journal of Real Estate Research, American Real Estate Society, vol. 14(2), pages 169-174.
    2. Franco, Sofia F. & Cutter, W. Bowman, 2022. "The determinants of non-residential real estate values with special reference to environmental local amenities," Ecological Economics, Elsevier, vol. 201(C).
    3. Jason Barr, 2012. "Skyscraper Height," The Journal of Real Estate Finance and Economics, Springer, vol. 45(3), pages 723-753, October.
    4. Barrett A. Slade, 2000. "Office Rent Determinants during Market Decline and Recovery," Journal of Real Estate Research, American Real Estate Society, vol. 20(3), pages 357-380.
    5. Allen C. Goodman & Brent C Smith, 2023. "Medical Service Quality and Office Rent Premiums: Reputation Spillovers," The Journal of Real Estate Finance and Economics, Springer, vol. 66(3), pages 680-708, April.
    6. Robin A. Howarth & Emil E. Malizia, 1998. "Office Market Analysis: Improving Best-Practice Techniques," Journal of Real Estate Research, American Real Estate Society, vol. 16(1), pages 15-34.
    7. Peter F. Colwell & Tim F. Scheu, 1998. "Public Land Use Constraints: Lot and House Configuration," Journal of Real Estate Research, American Real Estate Society, vol. 16(2), pages 201-218.
    8. 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.
    9. Ingrid Nappi‐Choulet Pr. & Tristan‐Pierre Maury, 2009. "A Spatiotemporal Autoregressive Price Index for the Paris Office Property Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(2), pages 305-340, June.

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    JEL classification:

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

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