The Workings of the London Office Market
THE CHARLES A. DICE CENTER FOR RESEARCH IN FINANCIAL ECONOMICS
Posted: 9 Feb 1998
This paper presents estimates of an equilibrium-based dynamic adjustment model of the office market, using supply and demand relationships to link construction, absorption, vacancies, and rents to employment growth and real interest rates. The model is estimated using data from the central London office market over the 1976-96 period. The model is shown to dynamically track the market well and the severe 1985-96 cycle is shown to be related to the cycle in employment growth and the surge in real interest rates. The latter affects both construction and rental adjustment.
JEL Classification: R12
Suggested Citation: Suggested Citation