OFFICE RENT MODELING IN ISTANBUL: A GEOADDITIVE APPROACH

Öz

The objective of this research is to develop a hedonic model for office space rent prices in Istanbul, using a data set consisting of 2348 office spaces. The data includes information on office building and office space characteristics, as well as features related to the lease, location, and neighborhood that impact office rents. To examine the connection between office rent and these factors, a semiparametric geoadditive model was utilized, which allows for flexibility in functional form and captures location effects through geographical smoothing functions instead of location dummies. The results indicate that the link between office rent determinants and office space rents is nonlinear. The vacancy rate, a measure of office space demand, is the determinant with the greatest impact on office rents. The second most important determinant of office rents is that the office space is in an A-class office building, and the third most influential factor is that the office spaces have a view of the Bosporus.

Anahtar Kelimeler

• Office rent
• Hedonic price theory
• Semiparametric
• Geoadditive model
• Istanbul office market

İSTANBUL’DA OFİS KİRA MODELLEMESİ: COĞRAFİ TOPLAMSAL BİR YAKLAŞIM

Öz

Bu araştırmanın amacı, 2348 ofis alanından oluşan bir veri seti kullanarak İstanbul'daki ofis alanı kira fiyatları için hedonik bir model geliştirmektir. Veriler, ofis binası ve ofis alanı özelliklerinin yanı sıra ofis kiralarını etkileyen kiralama, mekân ve komşuluk ile ilgili özellikleri içerir. Ofis kirası ile bu faktörler arasındaki ilişkiyi incelemek için, fonksiyonel formda esnekliğe izin veren ve mekânsal kuklalar yerine coğrafi düzgünleştirme fonksiyonları aracılığıyla mekân etkilerini yakalayan yarı parametrik bir coğrafi toplamsal model yaklaşımı kullanılmıştır. Sonuçlar, ofis kira belirleyicileri ile ofis alanı kiraları arasındaki ilişkilerin doğrusal olmadığını göstermektedir. Ofis alanı talebinin bir ölçüsü olan boşluk oranı, ofis kiraları üzerinde en büyük etkiye sahip belirleyicidir. Ofis kiralarının ikinci en önemli belirleyicisi, ofis alanının A sınıfı bir ofis binasında bulunması ve üçüncü en etkili faktör ise ofislerin boğaz manzarasına sahip olmasıdır.

Anahtar Kelimeler

• Ofis kirası
• Hedonik fiyat teorisi
• Yarı parametrik
• Coğrafi toplamsal model
• İstanbul ofis piyasası

Kaynakça

1. Ahamada, I., & Flacheir, E., (2010). Non-parametric econometrics. UK: Oxford University Press.
2. Basile, R., Kayam, S., Mínguez, R., Montero, J. M., & Mur, J. (2015). Semiparametric spatial autoregressive geoadditive models. In P. Commendatore, S. Kayam, &, I. Kubin (Eds.), Complexity and Geographical Economics (pp. 73-98). Springer, Cham.
3. Bender, A., Din, A., Hoesli, M., & Laakso, J. (1999). Environmental quality perceptions of urban commercial real estate. Journal of Property Investment & Finance, 17(3), 280-297. https://doi.org/10.1108/14635789910270521
4. Benjamin, J. D., Boyle, G. W., & Sirmans, C. F. (1990). Retail leasing: The determinants of shopping center rents. Real Estate Economics, 18(3), 302-312. https://doi.org/10.1111/1540-6229.00524
5. Benjamin, J. D., Shilling, J. D., & Sirmans, C. F. (1992). Security deposits, adverse selection and office leases. Real Estate Economics, 20(2), 259-272. https://doi.org/10.1111/1540-6229.00583
6. Bera, A. K. (2000). Hypothesis testing in the 20th century with a special reference to testing with misspecified models. Statistics Textbooks and Monographs.
7. Bera, A. K., & Kangalli Uyar, S. G. (2019). Local and global determinants of office rents in Istanbul: The mixed geographically weighted regression approach. Journal of European Real Estate Research, 12(2), 227-249. https://doi.org/10.1108/JERER-12-2018-0052
8. Bera, A. K., & Yoon, M. J. (1993). Specification testing with locally misspecified alternatives. Econometric Theory, 9(4), 649-658.

9. Bollinger, C. R., Ihlanfeldt, K. R., & Bowes, D. R. (1998). Spatial variation in office rents within the Atlanta region. Urban Studies, 35(7), 1097-1118.
10. Bond, S. A., Loizou, P., & McAllister, P. (2008). Lease maturity and initial rent: is there a term structure for UK commercial property leases?. The Journal of Real Estate Finance and Economics, 36(4), 451-469. https://doi.org/10.1007/s11146-007-9096-9
11. Bottom, C., McGreal, S., & Heaney, G. (1997). Evaluating office environments using tenant organization perceptions. Facilities, 15(7/8), 195-203. https://doi.org/10.1108/02632779710168236
12. Brennan, T. P., Cannaday, R. E., & Colwell, P. F. (1984). Office rent in the Chicago CBD. Real Estate Economics, 12(3), 243-260. https://doi.org/10.1111/1540-6229.00321
13. Čeh, M., Viitanen, K., & Peruš, I. (2012). A non-parametric CAE approach to office rents: Identification of Helsinki metropolitan area submarkets. Expert Systems with Applications, 39(1), 460-471. https://doi.org/10.1016/j.eswa.2011.07.037
14. Clapp, J. M. (1980). The intrametropolitan location of office activities. Journal of Regional Science, 20(3), 387-399. https://doi.org/10.1111/j.1467-9787.1980.tb00655.x
15. Colwell, P. F., Munneke, H. J., & Trefzger, J. W. (1998). Chicago’s office market: price indices, location and time. Real Estate Economics, 26(1), 83-106. https://doi.org/10.1111/1540-6229.00739
16. Desyllas, J. (2000). The Relationship between Urban Street, Configuration and Office Rent Patterns in Berlin. PhD thesis, Bartlett School of Graduate Studies, University College London.
17. Dixon, T., Marston, A., Thompson, B., & Elder, B. (2003). eBusiness and the City of London office market. Journal of Property Investment & Finance, 21(4), 348-365. https://doi.org/10.1108/14635780310483638
18. Dunse, N., & Jones, C. (1998). A hedonic price model of office rents. Journal of Property Valuation and Investment, 16(3), 297-312. https://doi.org/10.1108/14635789810221760
19. Dunse, N., & Jones, C. (2002). The existence of office submarkets in cities. Journal of Property Research, 19(2), 159-182. https://doi.org/10.1080/09599910210125214
20. Ekeland, I., Heckman, J. J., & Nesheim, L. (2004). Identification and estimation of hedonic models. Journal of Political Economy, 112(S1), S60-S109. https://doi.org/10.1086/379947
21. Englund, P., Gunnelin, Å., Hoesli, M., & Söderberg, B. (2004). Implicit forward rents as predictors of future rents. Real Estate Economics, 32(2), 183-215. https://doi.org/10.1111/j.1080-8620.2004.00089.x
22. Farooq, B., Miller, E., & Haider, M. (2010). Hedonic analysis of office space rent. Transportation Research Record: Journal of the Transportation Research Board, (2174), 118-127. https://doi.org/10.3141/2174-16
23. Fox, J., & Weisberg, S. (2018). An R companion to applied regression. Sage Publications.
24. Frew, J., & Jud, D. (1988). The vacancy rate and rent levels in the commercial office market. Journal of Real Estate Research, 3(1), 1-8.
25. Fuerst, F. (2008). Office Rent Determinants: A Hedonic Panel Analysis (No. rep-wp2008-12). Henley Business School, Reading University.
26. Gat, D. (1998). Urban focal points and design quality influence rents: the case of the Tel Aviv office market. Journal of Real Estate Research, 16(2), 229-247.
27. Geniaux, G., & Napoléone, C. (2008). Semi-parametric tools for spatial hedonic models: an introduction to mixed geographically weighted regression and geoadditive models. In Hedonic Methods in Housing Markets (pp. 101-127). Springer, New York, NY.
28. Glaeser, E., Gyourko, J. (2005) Urban decline and durable housing. Journal of Political Economy, 113: 345–375.
29. Glascock, J. L., Jahanian, S., & Sirmans, C. F. (1990). An analysis of office market rents: some empirical evidence. Real Estate Economics, 18(1), 105-119. https://doi.org/10.1111/1540-6229.00512
30. Halvorsen, R., & Palmquist, R. (1980). The interpretation of dummy variables in semilogarithmic equations. American Economic Review, 70(3), 474-475.
31. Heckman, J. J., Matzkin, R. L., & Nesheim, L. (2010). Nonparametric identification and estimation of nonadditive hedonic models. Econometrica, 78(5), 1569-1591. https://doi.org/10.3982/ECTA6388
32. Hendershott, P. H. (1996). Valuing properties when comparable sales do not exist and the market is in disequilibrium. Journal of Property Research, 13(1), 57-66. https://doi.org/10.1080/095999196368880
33. Hendershott, P. H., MacGregor, B. D., & Tse, R. Y. (2002). Estimation of the rental adjustment process. Real Estate Economics, 30(2), 165-183. https://doi.org/10.1111/1540-6229.00036
34. Huynh, D. T. (2014). The effects of clustering on office rents: empirical evidence from the rental office market in Ho Chi Minh City. Theoretical and Empirical Researches in Urban Management, 9(1), 5-26.
35. Ihlanfeldt, K. R., & Raper, M. D. (1990). The intrametropolitan location of new office firms. Land Economics, 66(2), 182-198.
36. Jennen, M. G., & Brounen, D. (2009). The effect of clustering on office rents: evidence from the Amsterdam market. Real Estate Economics, 37(2), 185-208. https://doi.org/10.1111/j.1540-6229.2009.00239.x
37. Kammann, E. E., & Wand, M. P. (2003). Geoadditive models. Journal of the Royal Statistical Society: Series C (Applied Statistics), 52(1), 1-18. https://doi.org/10.1111/1467-9876.00385
38. Kanas, A., Vasiliou, D., & Eriotis, N. (2012). Revisiting bank profitability: A semi-parametric approach. Journal of International Financial Markets, Institutions and Money, 22(4), 990-1005. https://doi.org/10.1016/j.intfin.2011.10.003
39. Keele, L. J. (2008). Semiparametric regression for the social sciences. John Wiley & Sons.
40. Kempf, S. (2015). Development of hedonic office rent indices: examples for German metropolitan areas. Springer.
41. Koster, H. R., van Ommeren, J., & Rietveld, P. (2014a). Is the sky the limit? High-rise buildings and office rents. Journal of Economic Geography, 14(1), 125-153. https://doi.org/10.1093/jeg/lbt008
42. Koster, H. R., Van Ommeren, J., & Rietveld, P. (2014b). Agglomeration economies and productivity: a structural estimation approach using commercial rents. Economica, 81(321), 63-85. https://doi.org/10.1111/ecca.12038
43. Laverne, R. J., & Winson-Geideman, K. (2003). The influence of trees and landscaping on rental rates at office buildings. Journal of Arboriculture, 29(5), 281-290.
44. Leishman, C., Dunse, N. A., Warren, F. J., & Watkins, C. (2003). Office space requirements: comparing occupiers’ preferences with agents’ perceptions. Journal of Property Investment & Finance, 21(1), 45-60. https://doi.org/10.1108/14635780310468301
45. McMillen, D. P. (1996). One hundred fifty years of land values in Chicago: A nonparametric approach. Journal of Urban Economics, 40(1), 100-124. https://doi.org/10.1006/juec.1996.0025
46. McMillen, D. P., & Redfearn, C. L. (2010). Estimation and hypothesis testing for nonparametric hedonic house price functions. Journal of Regional Science, 50(3), 712-733. https://doi.org/10.1111/j.1467-9787.2010.00664.x
47. Mills, E. S. (1992). Office rent determinants in the Chicago area. Real Estate Economics, 20(2), 273-287. https://doi.org/10.1111/1540-6229.00584
48. Nappi‐Choulet, I., Maleyre, I., & Maury, T. P. (2007). A hedonic model of office prices in Paris and its immediate suburbs. Journal of Property Research, 24(3), 241-263. https://doi.org/10.1080/09599910701599290
49. Nitsch, H. (2006). Pricing location: a case study of the Munich office market. Journal of Property Research, 23(2), 93-107. https://doi.org/10.1080/09599910600800252
50. Oven, V. A., & Pekdemir, D. (2006a). Office rent determinants utilising factor analysis—a case study for Istanbul. The Journal of Real Estate Finance and Economics, 33(1), 51-73. https://doi.org/10.1007/s11146-006-8274-5
51. Oven, V. A., & Pekdemir, D. (2006b). Perceptions of office rent determinants by real estate brokerage firms in Istanbul. European Planning Studies, 14(4), 557-576. https://doi.org/10.1080/09654310500421246
52. Ozus, E. (2009). Determinants of office rents in the Istanbul metropolitan area. European Planning Studies, 17(4), 621-633. https://doi.org/10.1080/09654310902811598
53. Pekdemir, D., & Dökmeci, V. (2011). İstanbul ofis kira tahmin modeli geliştirilmesi. ITU Journal Series A: Architecture, Planning, Design, 10(1).
54. Pollakowski, H. O., Wachter, S. M., & Lynford, L. (1992). Did office market size matter in the 1980s? A time‐series cross‐sectional analysis of metropolitan area office markets. Real Estate Economics, 20(2), 302-324. https://doi.org/10.1111/1540-6229.00586
55. Rebelo, E. M. (2011). Urban planning in office markets: A methodological approach. Land Use Policy, 28(1), 83-95. https://doi.org/10.1016/j.landusepol.2010.05.003
56. Rosen, K. T. (1984). Toward a model of the office building sector. Real Estate Economics, 12(3), 261-269. https://doi.org/10.1111/1540-6229.00322
57. Rosen, S. (1974). Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political Economy, 82(1), 34-55.
58. Ryan, S. (2005). The value of access to highways and light rail transit: evidence for industrial and office firms. Urban Studies, 42(4), 751-764. https://doi.org/10.1080/00420980500060350
59. Shilling, J. D., Sirmans, C. F., & Corgel, J. B. (1987). Price adjustment process for rental office space. Journal of Urban Economics, 22(1), 90-100. https://doi.org/10.1016/0094-1190(87)90051-9
60. Sivitanides, P. (1997). The rent adjustment process and the structural vacancy rate in the commercial real estate market. Journal of Real Estate Research, 13(2), 195-209.
61. Sivitanidou, R. (1995). Urban spatial variations in office-commercial rents: the role of spatial amenities and commercial zoning. Journal of Urban Economics, 38(1), 23-49. https://doi.org/10.1006/juec.1995.1021
62. Sivitanidou, R. (1996). Do office–commercial firms value access to service employment centers? A hedonic value analysis within polycentric Los Angeles. Journal of Urban Economics, 40(2), 125-149. https://doi.org/10.1006/juec.1996.0026
63. Slade, B. (2000). Office rent determinants during market decline and recovery. Journal of Real Estate Research, 20(3), 357-380.
64. Stanton, R., & Wallace, N. (2009). An empirical test of a contingent claims lease valuation model. Journal of Real Estate Research, 31(1), 1-26. https://doi.org/10.1080/10835547.2009.12091238
65. Tu, Y., Yu, S. M., & Sun, H. (2004). Transaction‐based office price indexes: a spatiotemporal modeling approach. Real Estate Economics, 32(2), 297-328. https://doi.org/10.1111/j.1080-8620.2004.00093.x
66. Vandell, K. D., & Lane, J. S. (1989). The economics of architecture and urban design: some preliminary findings. Real Estate Economics, 17(2), 235-260. https://doi.org/10.1111/1540-6229.00489
67. Webb, R. B., & Fisher, J. D. (1996). Development of an effective rent (lease) index for the Chicago CBD. Journal of Urban Economics, 39(1), 1-19. https://doi.org/10.1006/juec.1996.0001
68. Wheaton, W. C., & Torto, R. G. (1994). Office rent indices and their behavior over time. Journal of Urban Economics, 35(2), 121-139. https://doi.org/10.1006/juec.1994.1008
69. Wheaton, W. C. (1984). The incidence of inter-jurisdictional differences in commercial property taxes. National Tax Journal, 515-527.
70. Wheaton, W. C., & Torto, R. G. (1988). Vacancy rates and the future of office rents. Real Estate Economics, 16(4), 430-436. https://doi.org/10.1111/1540-6229.00466
71. Wheeler, D. (2007). Diagnostic tools and a remedial method for collinearity in geographically weighted regression. Environment and Planning A, 39(10), 2464–2481. https://doi.org/10.1068/a38325
72. Wood, S. (2006a). Generalized additive models. An introduction with R. London: Chapman and Hall.
73. Wood, S. (2006b). On confidence intervals for generalized additive models based on penalized regression splines. Australian and New Zealand Journal of Statistics, 48, 445–464. Endeksa (https://www.endeksa.com/)
74. PROPIN(http://www.propin.com.tr/UserFiles/image/PROPIN_Istanbul_Office_Market_General_Overview_2017_4_Q.pdf)