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

Vlist, A.J. van der; Francke, Marc; Schoenmaker, Dennis

doi:10.1007/s11146-021-09881-x

Cited by 4 publications

(4 citation statements)

References 38 publications

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“…This should not necessarily lead to a fall in rent and an increase in the vacancy rate. Indeed, some studies insist that due to reduced office space occupation risk at clusters, vacancy rates tend to be lower and rental growth rates tend to be higher, which conversely may mean higher prices and/or valuations of properties, and thus lower yield rates (van der Vlist et al 2021;Cheng et al 2013;Jennen and Brounen 2009). Devaney et al (2019), based on a study of office markets in 16 countries, proved that mature markets with a comparatively large total stock tend to have lower cap rates and, thus, higher asset prices.…”

Section: Selection Of Variablesmentioning

confidence: 99%

Yield rate in the Warsaw office market and its determinants. Further studies

Nowak

2024

Argumenta Oeconomica

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This article is a continuation and extension of a previous study which, to the best of the author’s knowledge, was the first scientific attempt to identify determinants of the yield rate in the Warsaw office market. The paper is based on the Gordon growth model. In this approach, the yield rate of buildings offering office space to let is a function of the risk-free interest rate, the risk premium and a constant rate of growth of generated cash flows. In the article, five different elements of the risk premium were identified (term structure, alternative investments’, market (country) specific, monetary and local office market capacity risk premium). The Error Correction Model was formulated based on quarterly time series data from 2007Q1 to 2021Q2. Most investors in the office market in Poland are financial institutions representing foreign capital. Therefore, the innovation of the paper and its main goal was to define which factors play key roles in determining yield rates in the Warsaw office space market – national or regional/international. However, the selected group of Polish determinants were indicated as having prevailing an impact on the yield rate in the Warsaw office market than the corresponding determinants from the European Monetary Union and the USA. Based on the model, the lead-lag, as well as asymmetric relations, were depicted. Moreover, the use of dummy variables checks, the Chow test and the Markov switching model indicated the presence of structural breaks and the existence of the two regimes in the model.

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Section: Selection Of Variablesmentioning

confidence: 99%

Yield rate in the Warsaw office market and its determinants. Further studies

Nowak

2024

Argumenta Oeconomica

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“…Some new concepts, such as sustainable rent for office buildings, have been developed in very recent research (Crosby et al [24]). Numerous studies on green office buildings also show a performance premium both in value and rent (Newell et al [25]; Onishi et al [26]). Previous research has also examined office market returns and their determinants (Hordijk et al [27]; Wang & Hartzell [28]); however, due to the lack of data on office building prices (unlike residential properties, office buildings are less frequently transacted.…”

Section: Literature Review 21 Office Market Researchmentioning

confidence: 99%

The COVID-19 Sentiment and Office Markets: Evidence from China

2022

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This study examines the impact of COVID-19 sentiment on office building rents and vacancy rates in China with a COVID-19 sentiment index constructed based on Baidu search queries on COVID-19-related keywords. We analyzed the data of office buildings and economic data from 2013 Q3 to 2022 Q2 in seven major Chinese cities with a two-stage Error Correction Model framework. We found that a heightened level of COVID-19 sentiment significantly and adversely affects the Chinese office buildings market. Specifically, office building rents decrease more than 8% if a city is exposed to an increase of one unit of COVID-19 sentiment for an entire quarter. The interaction terms model further reveals that the COVID-19 sentiment has a more substantial impact on office building rents where office vacancy is higher, reflecting an asymmetric effect. The findings here support the fear sentiment hypothesis. The findings suggest that a heightened level of investors’ COVID-19 sentiment resulted in a deterioration of office rents, reinforcing the role of investors’ sentiment in the pricing of office buildings. The findings suggest that investors should consider investor sentiment, particularly COVID-19 sentiment, in their decision-making.

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“…However, considering using higher order differencing may lead to biased results, we prefer to use the first difference here. availability of such data, we are able to estimate a difference-in-difference model which allows us, contrary to the standard hedonic model, to control for pre-existing differences between retail properties located in shopping districts and those outside (see, e.g., Been et al 2016;Van Duijn et al 2016;Van der Vlist et al 2019). The difference-in-difference model we propose is as follows:…”

Section: Unobserved Heterogeneitymentioning

confidence: 99%

“…This methodology is commonly used in applied geography, and has been used to delineate, for example, retail site location selections(Roig-Tierno et al 2013), retail center attractiveness and catchment areas(Dolega et al 2016), and retail clusters(Lloyd and Cheshire 2017;Teulings et al 2018). Other applications outside retail market analysis include delineation of nature(Daams et al 2016) and office clusters(Van der Vlist et al 2019). 6 The choice of using number of jobs as the weight of each retail property has practical reasons.…”

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confidence: 99%

Tenant Mix and Retail Rents in High Street Shopping Districts

Song

Duijn

Vlist

2020

J Real Estate Finan Econ

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Urban areas have long had shopping districts in which retail properties are concentrated. It is argued that the diversity of retail tenants, often called tenant mix, contributes to the image and attractiveness of the high street shopping district. These districts are characterized by fragmented ownership and therefore the tenant mix is outside the control of individual property investors. We aim to explore the relationship between tenant mix and retail rents by studying high street shopping districts in the Netherlands. We start with delineating high street shopping districts using granular data on the spatial distribution of retail jobs. Within each shopping district, tenant mix is measured using detailed information on SBI sector classification and the number of retail properties. We find shopping districts with greater tenant mix show higher retail rents compared to districts with lower tenant mix.

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

Cited by 4 publications

References 38 publications

Yield rate in the Warsaw office market and its determinants. Further studies

Yield rate in the Warsaw office market and its determinants. Further studies

The COVID-19 Sentiment and Office Markets: Evidence from China

Tenant Mix and Retail Rents in High Street Shopping Districts

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