The Determinants of Office Rental Yields: The International Evidence

Abstract

We examine commercial office rental yields in 89 large cities in 33 developed and developing countries in the 2000-2019 period. As expected, commercial office yields have declined throughout the world, reflecting a decline in the real rate of interest over this time period. Our cross-city analysis indicates that commercial office yields are lower in cities with growing rental rates and in countries with higher credit ratings and lower inflation rates. Finally, we find that rental yields in suburban office markets are higher than in central business districts, and for a given metropolis, suburban yields are lower in suburbs with better public transport connections to the central business district.