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| Integrating Regional Economic Indicators
with the Real Estate Cycle Author: Jacques Gordon, Paige Mosbaugh, and Todd Canter Start Page: 469 Abstract: Previous literature
has followed an evolutionary path in the examination of office market volatility. Where
initial models were designed to show the close relationship between economic fundamentals
and volatility at the national level, more recent models have focused on metro-level
volatility. This study quantifies the volatility associated with metropolitan markets in
terms of vacancy rates and identifies those economic factors that underlie this risk. The
analysis suggests that movements in vacancy rates are likely to be affected by different
factors at different stages of the cycle. In the long run, this analysis shows that the
availability of capital had the strongest effect on the volatility of office vacancy
rates. In periods that follow excess construction, market-specific, demand-side factors
appear to be the dominant influence. |
