Office Real Estate Research Articles

Land economic rent computation for urban planning and fiscal purposes

This article proposes an innovative methodology to compute economic rents of land designed to current or potential offices uses. It consists in the establishment of a cause-and-effect relation between offices’ price levels and correspondent levels of land rent, considering the main factors that influence property prices, the ones that guide public and private activities’ location decisions and the inter-dependencies between land and real estate property markets. The rationale subjacent to this research is that land economic rent is determined by the difference between offices market price and a set of costs correspondent to land acquisition, planning and building processes, and a profit margin. An assessment of surplus values is provided in order to compute it as the difference between total land market value (land economic rent plus economic return on land use) and correspondent tributary patrimonial-value according to legal valuation proceedings (settled on property law). In order to reach these goals, variables that exert influence on urban planning and municipal management were identified, an urban management information system was designed and implemented, and an integrated and interactive model to support decisions in urban planning – concerning real estate offices and land prices and characteristics – was developed. These tools were applied as a case study to Oporto city (Portugal). They embody updating functionalities, setting up as an on-going support to policies of municipal land use management (particularly applied to offices uses). A proposal is made to integrate similar models in territorial plans as valuation tools to support better approaches to assess the impact of planning decisions on real estate and land values, thus informing a more equitable, efficient and local-based tax basis. Implications of this analysis for urban planning and fiscal settings are proposed.

Determinants of the implementation of facility management in German communes

PurposeThis paper sets out to assess the extent of application of two important facets of facility management – building management and the principle of public‐private partnership (PPP).Design/methodology/approachThe approach takes the form of a survey of German communes, the primary interest in this regard being the question of the determinants of this application. The theory of planned behaviour forms the theoretical basis of the investigation. A total of 282 mayors, 217 treasurers and 168 heads of real estate offices ultimately participated in the survey.FindingsProfessional building management, understood to be a package of facility management services during the building use phase, and in particular PPP, have so far only been realised in German communes to a very limited extent, despite consistently positive attitudes on the part of the decision‐makers. The investigation sheds light on the differential reasons: in the case of PPP, normative pressure for co‐operation between communes and business proves to be the most influential determinant, while in the case of building management subjectively perceived control is of greatest importance.Research limitations/implicationsThe results reflect just processes in communes, but they give an example of the usability of the theory of planned behaviour as the explanation of the FM‐implementation process.Practical implicationsThe results give ideas for pushing the FM‐implementation in communes.Originality/valueThere has been no previous research on this topic.

Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago

The attacks of September 11, 2001, and more recently the Madrid and London downtown train bombings, have raised concerns over both the safety of downtowns and the continuous efforts by terrorists to attack areas of such high density and significance. This article employs building-level data on vacancy rates to investigate the impact of an increased perception of terrorist risk after 9/11 on the office real estate market in downtown Chicago. Chicago provides the perfect laboratory to investigate the effects of an increase in the perceived level of terrorist risk in a major financial district. Unlike in New York, the 9/11 attacks did not restrict directly the available office space in downtown Chicago. However, the 9/11 attacks induced a large increase in the perception of terrorist risk in the Chicago Central Business District, which includes the tallest building in the US (the Sears Tower) and other landmark buildings which are potential targets of large-scale terrorist attacks. We show that, following the 9/11 attacks, vacancy rates experienced a much more pronounced increase in the three most distinctive Chicago landmark buildings (the Sears Tower, the Aon Center and the Hancock Center) and their vicinities than in other areas of the city of Chicago. Our results suggest that economic activity in Central Business Districts can be greatly affected by changes in the perceived level of terrorism.

Office price index lagging in Singapore and Hong Kong

Abstract Price discovery of real estate investment has been getting lots of attentions from researchers and it is generally believed that lagging errors exist in appraisal‐based returns of commercial real estate investments, in comparison to other investment instruments traded in the stock market. Due to fewer transactions in the commercial real estate market, it is reasonable to notice a difference in the handling of current market information. By introducing two study approaches along with a test case using Singapore's data, this paper explores the extent of lagging in Hong Kong's commercial (office) real estate values, in a State Space Model with Kaiman filter. The findings first suggest that whether appraisal‐based indices overstate or understate true values lies in the economy condition at the time. Then, commercial real estate values in Hong Kong are about three months behind the stock market property indices. Also, as indicated by the findings, data collection/selection bias may render a de‐lagged ...

The Significance and Performance of Real Estate Markets in India

Executive Summary. This paper reviews the real estate markets in India and assesses the risk-adjusted performance and portfolio diversification benefits for the real estate markets (office, retail and residential) of New Delhi and Mumbai (two largest cities in India) over the 1998: Q2-2005:Q4 period. The real estate markets were found to under-perform the stock market in India over 1998- 2005, with most markets improving their performance in more recent years, although there was some loss of portfolio diversification benefits for office and residential real estate with stocks. Deregulation of the capital markets and international investment in India is also likely to have a significant impact on future FDI levels and the growth of real estate funds for real estate investment in India.

Institutional real estate portfolio diversification in Ireland and the UK

PurposeFew countries have sufficiently long and detailed returns data for real estate to permit sophisticated analysis. This paper aims to examine the potential diversification of private real estate investments using returns data for major regional centres in Ireland and the UK.Design/methodology/approachOptimal real estate‐only portfolios are constructed using total returns, income returns and appreciation returns for office and retail real estate in ten cities within Ireland and the UK. The analysis uses IPD data for the period 1984 to 2002. Total return, income return and appreciation returns are treated as separate asset streams in the modelling of portfolios.FindingsThe results show different risk levels; in particular the income stream carries low risk, whereas the capital appreciation element is much more volatile and risky. Optimal portfolios, office or retail, whether income, appreciation or total returns, indicate that provincial markets perform well and are capable of pushing London out of the optimised portfolios.Research limitations/implicationsLimitations stem from the optimal portfolios being based on return series without a consideration of market depth. Future research will seek to construct weighted portfolios.Originality/valueThe paper constructs optimal portfolios for three scenarios: low return; medium return; and high return across sectors, return streams and major regional centres in Ireland and the UK. The results show that regional centres perform well and can exclude London real estate from optimal portfolios.

Managing for excellence in the real estate industry

The real estate industry is very broad and diverse in terms of jobs and functions within the industry. Appraisers, loan officers, escrow officers, title associates, real estate lawyers and accountants, agents, and brokers represents some of the diverse work environments in the real estate industry. To limit the variance in diversity and to focus more effectively on the subject of this article, a real estate broker and or a real es tate branch man ager will be used to illustrate the importance of effective management in a real estate office.

Internet versus traditional office sales

This paper focuses on a comparison between Internet and traditionally presented and transacted office properties for sale in Boston/US and London/UK. This comparison provides a better understanding of the effect of the Internet on the real estate office market based on a data‐driven, rather than an opinion‐based, study. The study of both cities for a 6 month period, from September 2000 to February 2001, indicated that small properties are more likely to be sold through the Internet than in the traditional office market. Moreover, in both cities, there are differences in the distributions of price per square foot and area in square feet between Internet and traditionally transacted office properties.

Investitionsaussichten nach der Wachstumseuphorie

The development of the Berlin office market is strongly tied to the economic situation of the new German capital. When the transformation process started in 1990, it was accompanied by an initial euphoria. Market activity was characterized by a furiously investing construction industry and rising rental levels. It was supposed that the growing political importance of Berlin would have a positive effect on the economic power of the city and that Berlin would become an interesting place for investors on a national and international level. Even forecasts published by official survey institutes were optimistic that Berlin was going to become an international hub; especially in view of the EU's expected enlargement into central Europe. But the economic boom was short-lived. Most of the structural changes resulted in a strong rise in unemployment, high vacancy rates and a decline in office leases. Berlin has not recovered from its recession of the early 1990s, but the economic situation has stabilized at a consistent level. Due to the fact that an increasing number of prime services have been implemented in Berlin recently (media, IT, governmental services) and that the enterprise structure is dominated mainly by small- and medium-sized businesses, there is a high diversity in the pattern of demand that has developed. There has also been a tendency for companies to move into secondary areas of downtown Berlin which are near the traditional city centers, thus avoiding the high-priced areas while still enjoying the benefits of Berlin's outstanding overall infrastructure and traffic connections. Basically, there are still possibilities of development and chances for a slight increase in the demand for office real estate in the future, but a lengthy upswing can only be achieved if an improvement of the general economic and business situation in the city of Berlin can be brought about.

L’implication des pouvoirs publics locaux dans la production d’immobilier d’entreprise : le cas des centres d’appels dans deux agglomérations de taille moyenne, Orléans et Tours

Cet article analyse, dans les agglomérations françaises de taille moyenne (inférieure à 400 000 habitants environ), les interventions des collectivités locales pour favoriser le développement de centres d’appels. Parmi les outils employés, la production d’immobilier de bureaux "en blanc", constitue un pari presque obligé pour les collectivités locales. L’étude d’Orléans et de Tours montre, au delà des potentialités diverses de ces agglomérations, l’importance d’une convergence de vues et d’une coordination des actions entre communes, structures intercommunales, chambres consulaires, ou Conseil Général.

International unsecuritized real estate

Given the paucity of good international unsecuritized real estate data and the growing interest in diversifying real estate only and mixed‐asset portfolios beyond national borders, this study introduces an unsecuritized Japanese total return index for office real estate dating back to 1970. Moreover, this study analyses risk and return characteristics and compares them with the risk and return characteristics of US domestic unsecuritized office real estate. The results indicate that first, National Council of Real Estate Investment Fiduciaries (NCREIF) and the Mitsubishi Trust and Banking Corporation and IKOMA Data Service System Co. Ltd (MTB‐IKOMA) geographic region returns are generally from a normal distribution, although neither is without exception; second, all ten sub‐indices suffer from autocorrelation at two or three lags even after lower‐order effects have been removed; third, returns in Japan are historically higher, although so too are the risks; and most importantly fourth, while returns within Japan and the USA, separately, are highly correlated, correlation between Japan and the USA is quite low. In sum, given the results of this study, it is likely that Japanese unsecuritized real estate could be used to diversify international real estate only, and mixed‐asset portfolios.

The Global Determinants of Direct Office Real Estate Returns

We investigate the determinants of direct office real estate returns by analyzing rents, capital appraisals, and total returns. A recently compiled global database of major cities in Asia, Europe, and the United States provides a unique opportunity to give a macro-view on the effects of economic growth and supply and demand factors on nominal real estate returns. The global database provides quarterly observations from 1986 to 1999. To address the smoothness problem of appraisal-based price data and regulated rents, we employ the Generalized Method of Moments to estimate a dynamic panel-data model. The model allows us to combine the cross-sectional and time-series dimension in our quarterly data. We find that gross domestic product, inflation, unemployment, vacancy rate, and the available stock all have an effect on real estate returns.

Public vs. Private Real Estate in Hong Kong Using Adaptive Expectations

Executive Summary. Previous studies (Tse and Webb, 2000) have found mixed evidence for the role of the expected growth rate in real estate prices for explaining ex post real estate stock prices. This study demonstrates that the change in real estate stock prices is affected by both expected and unexpected changes in real estate prices where real estate price expectations are formed adaptively. The model presented in this study explains very well the real estate stock prices in Hong Kong for the period 1984-1998. This study indicates that both the expected and unexpected changes in residential, office and industrial real estate prices are important determinants of the change in real estate securities prices for Hong Kong.

What e‐commerce may mean for design of corporate real estate

Significant changes in business practice mean that the design of the physical working environment is now being used to add value to business performance. Businesses, stimulated by the potential of information technology and goaded by international competition, are seeing corporate real estate as more than a matter of simply accommodating themselves in the most efficient way. They are using building projects to add value to their core activities. They are using the design process to accelerate programmes of technological and cultural change. Three case studies are used to illustrate the new importance of design. The strategic implication of these experiences are that users, at all levels in business life, having become accustomed to radical changes in the design process, and increasingly used to the responsiveness of ecommerce, are likely to become increasingly impatient with old economy versions of office design, construction, and real estate practice.

Stationarity and Cointegration in Systems with Real Estate and Financial Assets

This study examines the properties of wealth indices for investments in several asset classes (real estate, stocks, bonds, and Treasury bills), for several types of real estate (office, retail, research and development office, and warehouse), and by region (East, Midwest, South, and West). The series representing the value of investments in real estate and financial assets are not stationary; therefore, ordinary statistical procedures cannot be applied. Since many of the properties that are included in the real estate series have outside appraisals on an annual basis, especially in the fourth quarter, the real estate series may show seasonal influences. Hence, the appropriate test for cointegration is the Johansen's test, which is formulated in such a way as to allow for deterministic seasonality by the inclusion of seasonal dummy variables. The finding of cointegration implies that there is a long-run relationship between the series in the cointegrated system. When the CPI (or a proxy for inflation) is included in the three systems, the number of common factors increase to two, implying that inflation plays an important role in creating a linkage between these time series. These findings also have implications for developing portfolios comprising financial assets and real estate. The findings also have implications for developing a model to forecast real estate prices.

The impact of negative attitudes toward computers on employees' satisfaction and commitment within a small company

In order to examine the impact of negative attitudes toward computer usage, a survey was administered that measured attitudes toward computers, the level of job satisfaction in the work environment, and general attitudes toward the organization. Twenty-nine employees at a real estate office completed a 24-item survey during a regularly scheduled employee meeting. Attitudes toward computers were generally positive; however, about one third of the sample felt incompetent in their ability to use computers, and 21% said that they avoid using computers altogether. Results also indicated that feelings of frustration and confusion about the use of computers were associated with lower job satisfaction. While negative attitudes towards computers were related to one 's attitudes toward the job, these attitudes were unrelated to one's feeling toward the company. Thus, computerphobia may have a strong link to individual job satisfaction, with any consequence for overall attitudes toward the company operating through prolonged dissatisfaction with one's job.

Global Office Market Survey

The results of a worldwide survey of office real estate by Colliers (on international property consultants) are revealed and discussed. Shows that Tokyo has the world′s most expensive office market while the least expensive office space is found in Wellington, New Zealand. London remains Europe′s costliest and Caen, in France, the least expensive. Good examples are shown by figures and diagrams in a complete survey.

Controlled blasting of concrete

In an old concrete building made available by the Stockholm Real Estate Office, several experiments at full‐scale were made on different methods of localised cutting, including controlled blasting with charges inserted into drilled holes and with lay‐on, metal‐enclosed explosives. Some punching shear to the rear of the wall was noted with the latter, which sometimes produced violent shock waves. The inserted charges performed well, however, and were found to be more economical and environmentally better than conventional cutting methods. The author works at the Swedish National Testing Institute.

Malpractice Law and Emergency Department Medicine

This article summarizes current law pertaining to medical malpractice litigation, focusing on the special medical/legal problems encountered by the emergency physician and defining the applicable legal standard of care. The discussion includes the issues of informed consent, documentation of emergency room treatment, advice and instruction to patients, legal abandonment, and the implications of the failure of an attending physician to authorize admission of an emergency department patient contrary to the advice of the emergency physician. The requirements for countersuits against lawyers and patients for the initiation of frivolous or malicious lawsuits is summarized.

Barred in Boston: Racial Discrimination in Housing

Abstract This study demonstrates the persistence of housing discrimination in Boston and shows how discrimination is practiced by real estate and rental agents. Black and white individuals, carefully matched according to employment, income, sex, and family size, successively visited rental and real estate offices requesting identical housing. The research, which extended the existing methodology, disclosed significant differences in the rental and sales housing offered to blacks and whites, with substantially more housing being made available to whites. These findings have strong and negative implications for blacks' housing search efforts; they also make clear the need for testing as the primary fair housing enforcement tool.