An Analysis of Office Market Rents: Parameter Constancy and Unobservable Variables

This paper reexamines variations in office building rents using data for a six-year period in a medium-sized city. Previous literature has relied on estimates using OLS estimation of standard fixed-effects models. We test for structural shifts and parameter constancy using random effects on heteroscedastic-autoregressive models and we find that structural shifts occur. Overall, the rent adjustment process does not remain unchanged across different time periods or submarkets.