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A Simple Theoretical Model of the Office-Development Cycle

Author

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  • R Barras

    (CES Ltd, 5 Tavistock Place, London WC1H 9SS, England)

Abstract

The author proposes a simple theoretical model of the accelerator type which helps to explain some observed characteristics of the pronounced office-development cycle in Britain. The British economy is currently experiencing its third major postwar cycle, the previous peaks of development activity having occurred in the early 1960s and early 1970s, the latter during the famous ‘property boom’. The author begins with a summary guide to the literature on building cycles, examining the various exogenous factors which have been proposed to explain these cycles and identifying a crucial endogenous causal factor, which is the long production period between new building orders and completions. This delay is incorporated into an accelerator model of the development process, yielding a second-order difference equation which generates cyclical fluctuations around an equilibrium growth path. The behaviour of the model is then tested using typical values of the main parameters, and compared with the results of previous empirical research on the office-development cycle which has focused on the interaction of the user demand, investment demand, and development supply of new building.

Suggested Citation

  • R Barras, 1983. "A Simple Theoretical Model of the Office-Development Cycle," Environment and Planning A, , vol. 15(10), pages 1381-1394, October.
    • Handle: RePEc:sae:envira:v:15:y:1983:i:10:p:1381-1394
    DOI: 10.1068/a151381
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    References listed on IDEAS

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    1. Manuel Gottlieb, 1976. "Long Swings in Urban Development," NBER Books, National Bureau of Economic Research, Inc, number gott76-1.
    2. Klas Eklund, 1980. "Long Waves In The Development Of Capitalism?," Kyklos, Wiley Blackwell, vol. 33(3), pages 383-419, August.
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    Cited by:

    1. R Barras & D Ferguson, 1985. "A Spectral Analysis of Building Cycles in Britain," Environment and Planning A, , vol. 17(10), pages 1369-1391, October.
    2. H Leitner, 1994. "Capital Markets, the Development Industry, and Urban Office Market Dynamics: Rethinking Building Cycles," Environment and Planning A, , vol. 26(5), pages 779-802, May.
    3. Franz Fuerst & Anna-Maija Grandy, "undated". ""Oft Expectation Fails": A Time-Series Analysis of Construction Starts in the London Office Market," Real Estate & Planning Working Papers rep-wp2010-13, Henley Business School, University of Reading.
    4. John Henneberry, 1995. "Developers, property cycles and local economic development: The case of Sheffield," Local Economy, London South Bank University, vol. 10(2), pages 163-185, August.
    5. P W Daniels & J M Bobe, 1993. "Extending the Boundary of the City of London? The Development of Canary Wharf," Environment and Planning A, , vol. 25(4), pages 539-552, April.
    6. S Tsolacos & G Keogh & T McGough, 1998. "Modelling Use, Investment, and Development in the British Office Market," Environment and Planning A, , vol. 30(8), pages 1409-1427, August.
    7. Alireza Dehesh & Cedric Pugh, 2000. "Property Cycles in a Global Economy," Urban Studies, Urban Studies Journal Limited, vol. 37(13), pages 2581-2602, December.
    8. Yanfang Sun & Haiyan Xie & Xirong Niu, 2019. "Characteristics of Cyclical Fluctuations in the Development of the Chinese Construction Industry," Sustainability, MDPI, vol. 11(17), pages 1-14, August.
    9. Richard Barras, 1987. "Technical Change and the Urban Development Cycle," Urban Studies, Urban Studies Journal Limited, vol. 24(1), pages 5-30, February.
    10. John McCartney, 2012. "Short and long-run rent adjustment in the Dublin office market," Journal of Property Research, Taylor & Francis Journals, vol. 29(3), pages 201-226, April.
    11. Natacha Aveline-Dubach, 2020. "China’s Housing Booms: A Challenge to Bubble Theory [Les booms immobiliers en Chine, un défi à la théorie de la bulle]," Post-Print halshs-02963810, HAL.
    12. Jos Janssen & Bert Kruijt & Barrie Needham, 1994. "The Honeycomb Cycle in Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 9(2), pages 237-252.

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