California State University, Fullerton - College of Business and Economics
This article empirically examines office rent determinants in distinct periods of a market cycle. The study uses a dataset of office properties located in a large metropolitan area and spanning a six-year period. During this period, office rents experienced a significant decline and recovery. A time-varying parameter rent index identifies three distinct periods of the cycle: decline, trough, and recovery. Tests of structural change conclude that market participants value the determinants of office rents differently during the periods. A micro-examination of each rent determinant over the periods of the market cycle provides a greater understanding of how rents vary over time and the factors that influence them.