Negative Externalities of Structural Vacant Offices Sabira El Messlaki, Philip Koppels, Hilde Remøy and Clarine van Oel

Introduction Negative Externalities and Structural Vacancy High levels of vacancy Concentration in specific areas and buildings Social security, criminality Negative externalities related to structural vacant buildings? Positive externalities are often assumed Landmark buildings Spatially lagged dependent variable specification

Structural Vacancy Operationalization “Structural” nature: three consecutive years Visibility of vacancy: at least 50% of the building is vacant

Research Method Hedonic Pricing Data sample: 128 buildings 274 transactions 2003-2007

Research Method Hedonic Equation

structural vacant office buildings 450 m 50 m r=500m 300 m office buildings structural vacant office buildings Building size (GFA) 40.000 m² 500 m²

450 m 50 m r=500m Impact depends on: Distance Building size 300 m

Results Fit Statistics -2 Log Likelihood -282.2 AIC (smaller is better) -252.2 AICC (smaller is better) -250.3 BIC (smaller is better) Covariance Parameter Estimates Subject Estimate Intercept Building 0.03274 Time period 0.000249 Residual 0.007733

Results Solution for Fixed Effects Effect Estimate Std. Error DF t Value Pr > |t| Intercept 52.631 0.2703 121 19.47 <.0001 Ln Age -0.06855 0.02242 137 -3.06 0.0027 Ln Distance Tram or Metro -0.06546 0.02910 -2.25 0.0263 Ln Amenities (r=500m) 0.03874 0.01675 119 2.31 0.0224 Ln employment industry (r=500m) -0.00008 0.000026 120 -2.86 0.0050 Ln employment F&B (r=500m) 0.06277 0.02285 2.75 0.0070 Ln inverse parking ratio 0.1862 0.05413 3.44 0.0008 Garage No -0.1338 0.04207 -3.18 0.0019 Yes Façade Low -0.1677 0.04965 -3.38 0.0010 Standard -0.1639 0.04647 118 -3.53 0.0006 High Company Logo -0.09034 0.03577 -2.53 0.0129 Sp lagged vacancy -0.00011 0.000049 61.5 -2.30 0.0246

Predicted rent levels: No structural vacant neighbors € 155,- Age 10 Distance Tram or Metro 400 Amenities (r=500m) 18 Employment industry (r=500m) 1000 Employment F&B (r=500m) 4500 Parking ratio (1:LFA) 110 Garage Yes Façade High Company Logo Predicted rent levels: No structural vacant neighbors € 155,- 2 structural vacant neighbors of 10,000 GFA and at distance 50m € 148,- 50 m r=500m 50 m

Results

Conclusion & Discussion Base model seems plausible Significant relationship structural vacant offices and rent prices nearby buildings Vicious circle? Collective action Some issues to consider Proxy Weight matrix specification Submarket dummies

Questions? Contact author: p.w.koppels@tudelft.nl