An Analysis on the Utility Ratio per Floor of Retail Property in Seoul

Abstract

The utility ratio per floor is not only used to estimate the price or rent of a condominium unit and compensation appraisal, but also is a significant indicator in calculating the standard of assessment of the price announcement system for non-residential properties to be introduced in the future. Despite the importance of the utility ratio per floor statistics, the current utility ratio per floor statistics provide a single indicator by commercial districts and region, making it impossible to closely reflect the characteristics of the retail properties. This study analyzes the utility ratio per floor using rent data of retail properties in Seoul. Especially, this study performs the multi-level analysis including the building level and commercial district level to consider the effects of the hierarchical influencing factors on the rent. After this study analyzes the utility ratio per floor of total sample using the hierarchical linear model, it also performs sub-sample analysis to compare the utility ratio per floor patterns of sub groups divided by gross leasable area and elevator installment. As a result, the study confirms that the utility ratio per floor generally tends to decrease from the first floor to the upper floors. This study discovers sub groups have significantly different patterns of the utility ratio per floor. The buildings with elevators show the higher the utility per floor compared to those without elevators. The utility ratio per floor of buildings with large gross leasable areas is higher in the upper floors than buildings with small gross leasable areas. On the other hand, the opposite results come up in the lower floors.