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The existence of office submarkets in cities

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  • Neil Dunse
  • Colin Jones

Abstract

Analysis of local office markets to date has normally assumed a unitary market which implies that the prices of office attributes remain spatially constant across the entire market. This paper challenges that basic presumption, and its objective is to test for the existence of office market segmentation. It draws on the housing literature on submarkets, and discusses the potential reasons for their occurrence in the office market. An empirical study to test for submarkets is undertaken for Glasgow city centre as a typical UK provincial city. Submarkets are defined and tested using both a priori and statistical methods. The empirical analysis applies established statistical tests, based on hedonic regression models derived from housing research, to rental and characteristics data for individual offices let over two years. It is concluded from this study that the Glasgow office market consists of a set of submarkets. A priori submarket definitions based upon real estate agents' views of the office market provide the best segmentation scheme. It seems likely that similar submarkets exist within other major cities. This analysis also provides a potential method for defining property submarket areas, thereby enabling more meaningful local property market analysis to be undertaken.

Suggested Citation

  • Neil Dunse & Colin Jones, 2002. "The existence of office submarkets in cities," Journal of Property Research, Taylor & Francis Journals, vol. 19(2), pages 159-182, January.
    • Handle: RePEc:taf:jpropr:v:19:y:2002:i:2:p:159-182
    DOI: 10.1080/09599910210125214
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    References listed on IDEAS

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    1. Shilton, Leon & Zaccaria, Anthony, 1994. "The Avenue Effect, Landmark Externalities, and Cubic Transformation: Manhattan Office Valuation," The Journal of Real Estate Finance and Economics, Springer, vol. 8(2), pages 151-165, March.
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    Cited by:

    1. Franz Fuerst & Patrick McAllister & Claudia Murray, 2009. "Designer Buildings: An Evaluation of the Price Impacts of Signature Architects," Real Estate & Planning Working Papers rep-wp2009-10, Henley Business School, University of Reading.
    2. Allison M. Orr & Colin Jones, 2003. "The Analysis and Prediction of Urban Office Rents," Urban Studies, Urban Studies Journal Limited, vol. 40(11), pages 2255-2284, October.
    3. Harald Nitsch, 2006. "Pricing Location: A Case Study of the Munich Office Market," Journal of Property Research, Taylor & Francis Journals, vol. 23(2), pages 93-107, March.
    4. Michael White & Qiulin Ke, 2014. "Investigating the dynamics of, and interactions between, Shanghai office submarkets," Journal of Property Research, Taylor & Francis Journals, vol. 31(1), pages 26-44, March.
    5. Maarten Jennen & Patrick Verwijmeren, 2010. "Agglomeration Effects and Financial Performance," Urban Studies, Urban Studies Journal Limited, vol. 47(12), pages 2683-2703, November.
    6. Maarten G.J. Jennen & Dirk Brounen, 2009. "The Effect of Clustering on Office Rents: Evidence from the Amsterdam Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(2), pages 185-208, June.
    7. Xiaolong Liu, 2013. "Spatial and Temporal Dependence in House Price Prediction," The Journal of Real Estate Finance and Economics, Springer, vol. 47(2), pages 341-369, August.
    8. Catherine Bruneau & Souad Cherfouh, 2015. "Long-run equilibrium for the Greater Paris office market and short-run adjustments," Journal of Property Research, Taylor & Francis Journals, vol. 32(4), pages 301-323, December.
    9. Franz Fuerst & Patrick McAllister, 2008. "Green Noise or Green Value? Measuring the Price Effects of Environmental Certification in Commercial Buildings," Real Estate & Planning Working Papers rep-wp2008-09, Henley Business School, University of Reading.
    10. Odilon Costa & Wesley Mendes-da-Silva, 2016. "The Recent Slowdown in Sao Paulo’s Office Market: A Comparison of Hedonic Indices," LARES lares-16-costa_therecent_, Latin American Real Estate Society (LARES).
    11. Gonzalo Suazo-Vecino & Juan Carlos Muñoz & Luis Fuentes Arce, 2019. "The Displacement of Santiago de Chile’s Downtown during 1990–2015: Travel Time Effects on Eradicated Population," Sustainability, MDPI, vol. 12(1), pages 1-14, December.
    12. Fuerst, Franz, 2007. "Office Rent Determinants: A Hedonic Panel Analysis," MPRA Paper 11445, University Library of Munich, Germany.
    13. repec:fgv:eaespw:01 is not listed on IDEAS
    14. Eduardo Fernandes Cazassa & Odilon Costa, 2017. "Real Estate Indices: the good and the bad," LARES lares_2017_paper_65, Latin American Real Estate Society (LARES).

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