Selling Prices/Sq. Ft. of Office Buildings in Down town Chicago—How Much Is It Worth to Be an Old But Class A Building?

This paper examines office building sales in downtown Chicago for the period 1996 to 2007. Our analysis provides a conventional OLS approach and an exploration of spatial dependence. We find some evidence of spatial lag and spatial autocorrelation in our dataset but the results are similar to the OLS approach. The results indicate that high occupancy is a statistically significant factor only for Class B properties, suggesting that a low occupancy rate is a negative sign for these buildings of lower quality. Class A property receives a 44% price/sq. ft. boost due to the premium classification. This increase becomes more pronounced (90%) for floor plate efficient, neoclassical/revival façade and/or famous Class A properties built before 1972 when the comparison is with Class B properties of the same age.