Implicit forward rents as predictors of future rents

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

doi:10.1111/j.1080-8620.2004.00089.x

Implicit forward rents as predictors of future rents

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

Accountancy & Finance, Accountancy

Research output: Contribution to journal › Article › peer-review

13 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 language	English
Pages (from-to)	183-215
Number of pages	32
Journal	Real Estate Economics
Volume	32
Issue number	2
DOIs	https://doi.org/10.1111/j.1080-8620.2004.00089.x
Publication status	Published - Jun 2004

Keywords

OFFICE RENT
CHICAGO CBD
CONTRACTS
RATES

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10.1111/j.1080-8620.2004.00089.x

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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.",

keywords = "OFFICE RENT, CHICAGO CBD, CONTRACTS, RATES",

author = "Hoesli, {Martin Edward Ralph} and P. Englund and A. Gunnelin and B. Soderberg",

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AU - Hoesli, Martin Edward Ralph

AU - Englund, P.

AU - Gunnelin, A.

AU - Soderberg, B.

PY - 2004/6

Y1 - 2004/6

N2 - 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.

AB - 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.

KW - OFFICE RENT

KW - CHICAGO CBD

KW - CONTRACTS

KW - RATES

U2 - 10.1111/j.1080-8620.2004.00089.x

DO - 10.1111/j.1080-8620.2004.00089.x

M3 - Article

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VL - 32

SP - 183

EP - 215

JO - Real Estate Economics

JF - Real Estate Economics

IS - 2

ER -

Implicit forward rents as predictors of future rents

Abstract

Keywords

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