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Modelling Use, Investment, and Development in the British Office Market

Author

Listed:
  • S Tsolacos

    (Centre for Spatial and Real Estate Economics, Department of Economics, Faculty of Urban and Regional Studies, University of Reading, PO Box 219, Reading RG6 6AW, England)

  • G Keogh

    (Centre for Property Research, Department of Land Economy, University of Aberdeen, St Mary's, King's College, Aberdeen AB24 3UF, Scotland)

  • T McGough

    (Investment Research, Hillier Parker, 77 Grosvenor Street, London W1A 2BT, England)

Abstract

The authors provide an empirical investigation of office market dynamics and model the user, investment, and development elements of this market. They recognise explicitly that the user and investment markets in office property influence trends in development and that development activity in turn affects office use and investment. This theoretical premise suggests that an analysis of these separate components of the market can make a significant contribution to a fuller understanding of office market dynamics, including swings in development activity. In the European context, there is a lack of research on modelling the functional elements of the office market individually, although such modelling is more common in US studies. Furthermore, most quantitative empirical work lacks an examination of the investment market for property and its intertemporal effects on development activity. In this paper, the authors estimate econometric models for rents, capital values, and development activity in the national office market in Great Britain. The results establish the significant influence of demand-side economic forces in the user market and the importance of use and investment market signals in the determination of office building output. However, the findings also strongly suggest that the investment market needs to be explored in more detail in order to identify and document the nature of the forces which interact in this sector of the office market.

Suggested Citation

  • S Tsolacos & G Keogh & T McGough, 1998. "Modelling Use, Investment, and Development in the British Office Market," Environment and Planning A, , vol. 30(8), pages 1409-1427, August.
    • Handle: RePEc:sae:envira:v:30:y:1998:i:8:p:1409-1427
    DOI: 10.1068/a301409
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    References listed on IDEAS

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    1. Éamonn D'Arcy & Sotiris Tsolacos, 1996. "A Study of Office Market Dynamics in London and Paris," ERES eres1996_134, European Real Estate Society (ERES).
    2. Kirk McClure, 1991. "Estimating Occupied Office Space: Comparing Alternative Forecast Methodologies," Journal of Real Estate Research, American Real Estate Society, vol. 6(3), pages 305-314.
    3. R Barras & D Ferguson, 1987. "Dynamic Modelling of the Building Cycle: 2. Empirical Results," Environment and Planning A, , vol. 19(4), pages 493-520, April.
    4. repec:arz:wpaper:eres1996-134 is not listed on IDEAS
    5. R Barras, 1983. "A Simple Theoretical Model of the Office-Development Cycle," Environment and Planning A, , vol. 15(10), pages 1381-1394, October.
    6. R Barras & D Ferguson, 1987. "Dynamic Modelling of the Building Cycle: 1. Theoretical Framework," Environment and Planning A, , vol. 19(3), pages 353-367, March.
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    Cited by:

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    2. Kieran Farrelly & Ben Sanderson, 2005. "Modelling Regime Shifts in the City of London Office Rental Cycle," Journal of Property Research, Taylor & Francis Journals, vol. 22(4), pages 325-344, December.
    3. Kim Hin David Ho & Satyanarain Rengarajan, 2017. "Industrial Real Estate Market Dynamics in Singapore: A VAR Approach," International Real Estate Review, Global Social Science Institute, vol. 20(4), pages 417-450.
    4. Jerome Coffinet & Etienne Kintzler, 2019. "Is the Office Market Overvalued? A Simple Framework Applied to France," International Real Estate Review, Asian Real Estate Society, vol. 22(2), pages 275-307.

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