Determinants of Office Rents in the Istanbul Metropolitan Area

Abstract

From the 1980s onwards, restructuring of economy and globalization has increased the number and size of companies in Istanbul and demand for office space accordingly. Indeed, Istanbul has become an attractive location for the international business firms due to its strategic location between Europe and Asia. Since the old CBD did not have sufficient space for the modern office building, multi-centre developments in Istanbul with different locational and physical characteristics were established. This study investigates the factors which effect office rents by the use of hedonic price analysis. According to the results of the analysis, the number of floors of the buildings is the most important factor to affect office rents. Other factors according to their importance are as follows: vacancy rate in the vicinity, social facilities in the buildings, aesthetics of the buildings, rental office floor, banks in the vicinity, and accessibility. On the other hand, management cost, age, view and distances to the old CBD and the major highways are not fund significant since these sub-centers are already located on major highways. The results of the study can be useful for the investors, real estate agents, urban planners, architects and policy makers. For further research, time series analysis of office rents is suggested.