New Insights into Office Location and Rents

Abstract

This communication presents a research on the reasons that shape offices locations and respective rent levels, within the scope of increasing globalization. It tests the hypothesis that the factors that shape the spatial structures and rents of the office markets are much strongly determined by urban planning and municipal investments than by variables more market-related, recognized in vast literature (Glascock et al., 1990; Bellini, 2000; Archer and Smith, 2003; Rabianski and Gibler, 2007; Ozuz, 2009). Thus an innovative methodology and model are proposed aimed at supporting the definition of urban strategies and policies concerning officesŽ location and relocation, and corresponding influence on rent levels. They resort to a set of planning tools able to express the local characteristics of office markets. They are applied, as a case study, to the Porto s office market (Portugal). Implications for urban policies are inferred from this analysis. Some courses of planning intervention are further proposed that may consist, namely, in the regulation of property markets, in the indirect control on rent levels, and in a more local-based assessment of those markets. This research is relevant for planning and public policies because it stresses the importance of urban planning interventions in office markets; it develops a urban management upgradeable information system; it overcomes some restrictions of previous location models; it settles a hedonic integrated and interactive nondeterministic model that fits the values that variables underlying rents may assume any time; it develops cartographic display and simulation functionalities (resorting to the use of geographic information systems); and it finally includes agentsŽ behaviours in the hedonic model of officesŽ rents. The assessment of the proposed model complements and enriches the operational application of hedonic models previously proposed in literature, and includes flexibility devices to support urban planning decisions on office markets. Besides, the results of this methodology and model will probably engender a reassessment and discussion on the role of public intervention versus market factors on urban office rentsŽ levels and trends.