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Office Rent Processes: The Case of U.S. Metropolitan Markets

Rena Sivitanidou
This paper synthesizes elements of the traditional and contemporary theory of real estate markets to formulate an empirical framework for exploring metropolitan office rent processes. Such a framework is then applied to the analysis of office rents across eighteen U.S. office markets during 1986-1995. The empirical results underscore the sluggishness of rental adjustments, highlight the extent of rental disequilibria across markets, and uncover the role of office employment factors--size, diversity, spatial organization, growth rates, and volatility--, construction costs, interest rates, amenities, and zoning in shaping interarea differentials in the equilibrium component of office rents.