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Asymmetric adjustment in the City of London office market

Hendershott, P. H., Lizieri, C. M. and MacGregor, B. D., (2009) Asymmetric adjustment in the City of London office market. Working Papers in Real Estate & Planning. 03/09. Working Paper. University of Reading, Reading. pp41.

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Earlier estimates of the City of London office market are extended by considering a longer time series of data, covering two cycles, and by explicitly modeling of asymmetric space market responses to employment and supply shocks. A long run structural model linking real rental levels, office-based employment and the supply of office space is estimated and then rental adjustment processes are modeled using an error correction model framework. Rental adjustment is seen to be asymmetric, depending both on the direction of the supply and demand shocks and on the state of the space market at the time of the shock. Vacancy adjustment does not display asymmetries. There is also a supply adjustment equation. Two three-equation systems, one with symmetric rental adjustment and the other with asymmetric adjustment, are subjected to positive and negative shocks to employment. These illustrate differences in the two systems.

Item Type:Report (Working Paper)
Divisions:Henley Business School > Real Estate and Planning
ID Code:19821
Publisher:University of Reading
Publisher Statement:The copyright of each working paper remains with the author. If you wish to quote from or cite any paper please contact the appropriate author; in some cases a more recent version of the paper may have been published elsewhere.


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