Implicit forward rents as predictors of future rents

Martin Edward Ralph Hoesli, P. Englund, A. Gunnelin, B. Soderberg

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

This paper investigates the relation between the term structure of rents and future spot rents. A rich database of office rental agreements for various maturities is used to estimate the term structure of rents, and from this structure implicit forward rents are extracted. The data pertain to commercial properties in the three largest Swedish cities for the period 1998-2002. A positive relation between forward and spot rents is found in some regions, but forward rents underestimate future rent levels. Another contribution of the paper lies in the area of rental index construction. We provide evidence that rental indices should not only be quality constant (i.e., control for characteristics), but should also be maturity constant.

Original languageEnglish
Pages (from-to)183-215
Number of pages32
JournalReal Estate Economics
Volume32
Issue number2
DOIs
Publication statusPublished - Jun 2004

Keywords

  • OFFICE RENT
  • CHICAGO CBD
  • CONTRACTS
  • RATES

Cite this