The Identification of Key Economic and Property Variables that Impact on Prime Office Rents: a Study of Seven European Cities

The aim of this dissertation is to identify and assess the impact of macroeconomic and property variables on prime office rental levels. Data from seven diverse European cities was gathered from 2000 to 2014 and statistical analysis using econometric modelling was undertaken. The results unveil a number of relationships between the explanatory variables and prime office rents. In particular, the results highlight movements in the office vacancy rate and GDP as important variables impacting change in prime office rental levels while employment, interest rates and inflation play a less significant role. Results indicate that econometric modelling has a role to play in investment decision making and transnational studies such as this may prove useful for investment portfolio diversification. Like many social science econometric studies, a number of limitations are encountered such as the use of headline rents where effective rents would provide a more accurate reflection of the office market. This limitation is common to the majority of the studies in this area due to restrictions on data availability in the industry. The findings of the study should add to the existing body of knowledge on the subject area and prove useful to investors operating increasingly globalised portfolio strategies