Investigating the Interaction Effects of Office Rent Determinants

The application of factorial design on product quality management is becoming increasingly more popular. The essence of the numerical technique lies with its efficiency on determining both the influence of the main effects and their combined effects on optimising the desired qualities of an end product. Considering office rent is a function of a large number of parameters (office rent determinants) it may be prudent to apply the factorial design technique treating office rent as an end product whose quality is measured by the highest yield of rent. Using the method, it is then possible to define the most influential parameters (main effects) as well as the parameter interactions (combined effects) dictating the highest office rent. In a previous work by the same authors, it was attempted to represent the large number of office rent determinants in terms of a limited number of factors, based on the incorporation of factor analysis into the well-established hedonic regression approach. By means of the numerical procedure, it was managed to condense an extensive number of office rent determinants into five distinct factor variables of those only three were statistically significant. In addition, among the three parameters which could not be incorporated in any of the determined factor groups, only one was found to be statistically worthwhile using in the model. Expanding the contract data used in the previous study, obtained from PQP (Property Quality Platform) members in Istanbul, 24=16 two-level factorial design was conducted in order to examine the influence of interaction effects of the factors of the previous work on office rent in Istanbul.