This paper develops and estimates a cross-sectional model of the commercial office market in which the building vacancy rate is a key factor in the determination of rents. Individual buildings in Greensboro, North Carolina are used as the unit of analysis and simultaneous equation procedures are employed to produce estimates of rent per square foot. The estimates confirm that the vacancy rate must be included when estimating the price of commercial office space.
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Frew et al. (1988) studied this question.
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