Estimating Natural Vacancy Rates in Office Markets Using a Time-Varying Model
Abstract
This study presents estimates of a time-varying, dynamic adjustment model of the office market using time series data from Hong Kong, Sydney, Perth and London. It aims to demonstrate that the natural vacancy rate of office property can be fitted into a time-varying framework. The model innovates in considering the stochastic nature of natural vacancy rates. The data shows that the stationary component of natural vacancy rates tends to differ across cities.