Agglomeration Economies and Capitalization Rates: Evidence from the Dutch Real Estate Office Market

2021 ◽  
Author(s):  
Arno J. van der Vlist ◽  
Marc K. Francke ◽  
Dennis A. J. Schoenmaker
Keyword(s):  
Real Estate ◽  
Agglomeration Economies ◽  
Office Market

An examination of the structure and dynamics of Singapore's maturing Central Area office market

2014 ◽  
Vol 32 (5) ◽  
pp. 485-504 ◽  
Author(s):  
Kim Hin David Ho ◽  
Satyanarain Rengarajan ◽  
John Glascock
Keyword(s):  
Real Estate ◽  
Error Correction ◽  
Central Area ◽  
Content Type ◽  
Office Space ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Office Market ◽  
Office Employment ◽  
Office Rent

Purpose – The purpose of this paper is to examine the structure and dynamics of Singapore's Central Area office market. A long-run equilibrium relationship is tested and a short-run adjustment error correction model are estimated, incorporating appropriate serial error correction. The long-run equation is estimated for office rent, with office employment and available stock. Design/methodology/approach – With the vector error correction model (VECM), the lagged rent, available stock, office employment, vacancy and occupied stock (OS) can impact the rental adjustment process. Equilibrium rent on the whole reacts positively to lagged rents, available stock, office employment, OS and negatively to vacancy rates (VC). Past levels of positive change in VC and rental growth can have negative effects on current OS. Findings – While good economic conditions signaled by increases in rents increase the supply of new stock (available space), higher rents and VC dampen the long-term occupied space (space absorption) in accordance with economic theory. Available stock can be forecasted by past rent and absorption levels owing to the developer's profit-driven nature. Research limitations/implications – An understanding of the interaction between the macroeconomic variables and the Central Area office market is useful to domestic and foreign investors and developers, who then can better evaluate their decision making in commercial real estate investment and development projects. Practical implications – It is implicit that the Singapore Central Area office market requires at least a year before any rental increase can potentially dampen the space demanded. Firms are attracted to locate there owing to agglomeration economies and they are willing to pay premium office rents in conjunction with office space intensification in the Central Area. Newly built space is positively affected by past rents. Urban Redevelopment Authority and private real estate developers should be wary of excess office sector vacancies by avoiding over supply, even though an increase in the supply of office space in the Central Area can have a positive impact on office rent in the longer term. Most of the office space development would tend to meet the demand in the long run. Rental stickiness is exemplified as rental changes are affected by lagged rent. Social implications – Policy makers are better enabled to stabilize the office sectors of the real estate market if so required. Originality/value – The paper adopts the VECM and validated by empirical evidence, to investigate the long-run equilibrium relationship and short-term corrections underlying the dynamics of the Singapore Central office market. Delay in the restoration of equilibrium in real estate markets is attributed to factors like lease terms and supply lags.

scholarly journals How Close Is Close? The Spatial Reach of Agglomeration Economies

2020 ◽  
Vol 34 (3) ◽  
pp. 27-49 ◽  
Author(s):  
Stuart S. Rosenthal ◽  
William C. Strange
Keyword(s):  
Real Estate ◽  
Spatial Structure ◽  
Agglomeration Economies ◽  
Commercial Real Estate ◽  
Spatial Aggregation ◽  
Urban Spatial Structure ◽  
Agglomeration Effects ◽  
Neighborhood Level

This paper considers the attenuation of agglomeration economies. Put another way: how close is close? The paper presents evidence of agglomeration effects operating at various levels of spatial aggregation, including the regional, metropolitan, and neighborhood scales. In fact, agglomeration effects also seem to operate below the neighborhood level, including within buildings and organizations. These effects attenuate, with nearby activity exerting the strongest effects. The attenuation of agglomeration economies has implications for urban spatial structure, the microfoundations of agglomeration economies, and commercial real estate. It also affects the ability of governments and businesses to internalize agglomeration economies.

Office Price Index for Derivative Using S&P/Case-Shiller Estimator

2011 ◽  
Vol 19 (4) ◽  
pp. 363-387
Author(s):  
Kang Min Ryu ◽  
Soo Hoon Park ◽  
Chang Moo Lee
Keyword(s):  
Real Estate ◽  
Transaction Costs ◽  
Price Index ◽  
Global Financial Crisis ◽  
Real Estate Market ◽  
Option Markets ◽  
Financial Products ◽  
Weighted Arithmetic ◽  
Office Market ◽  
Index Future

People are starting to doubt business recovery in office market after global financial crisis in 2008. And most institutional and individual portfolios are undiversified in real estate : incurring enormous transaction costs than other financial products. Especially office market has more risks than other real estate market for high transaction costs and many related industries. Although this stuff can lead to increase the risk of investment in office market, nor are there markets that would allow individuals and institutions to hedge their risks. The establishment of office price index future and option markets is likely to hedge away large risk in office market, and provides lowering transaction costs for trading in real estate. We estimate Office Price Index using S&P/Case-Shiller repeat sale estimator which is proposed by Robert. J. Shiller in 1991. The estimator is a sort of Feasible Generalized Two Stage Least Squares, which compute Value weighted Arithmetic Price Index.

Life Science Real Estate Market Research and Analysis: Clustering & Agglomeration Economies

2021 ◽  
Author(s):  
Lawrence Souza ◽  
Alicia Becker ◽  
China Martin ◽  
Regina Cuevas ◽  
Kayla Moniz
Keyword(s):  
Real Estate ◽  
Market Research ◽  
Life Science ◽  
Agglomeration Economies ◽  
Real Estate Market

scholarly journals International Real Estate Review

2019 ◽  
Vol 22 (2) ◽  
pp. 275-306
Author(s):  
Jérôme Coffinet ◽  
◽  
Etienne Kintzler ◽  
Keyword(s):  
Real Estate ◽  
Interest Rates ◽  
Fair Value ◽  
Increasing Trend ◽  
Office Market ◽  
Low Interest Rates

We develop a simple framework to assess the position of office prices with respect to their fundamentals. Applying the model to France, we show that a constrained office supply and low interest rates mainly explain for the high and increasing trend of office prices in recent years. Nonetheless, we find that the office market is only slightly overvalued in France in late 2017: the deviation of office prices with respect to their fundamental determinants is between 0% and 10%, thus indicating that the market is close to fair value.

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