Office rents, mixed-use developments, and agglomeration economies: a panel data analysis
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AbstractPurpose – The purpose of this paper is to investigate the relationship between office rents and mixed-use
development in the context of agglomeration economies.
Design/methodology/approach – Using a sample of 10,209 observations in 100 Grade A office buildings
in Hong Kong from January 2001 to June 2011, the authors estimated office rent regression using unbalanced
panel data analysis.
Findings – The results show that rents decreased with an increase in distance from retailers and hotels.
Furthermore, the results revealed that, ceteris paribus, office tenants were willing to pay higher rents in a
mixed-use than in a single-use office development.
Research limitations/implications – There is an existence of agglomeration economies due to the clustering
of various industries in mixed-use developments, which allow for their close proximity to potential clients.
Practical implications – The diversity of activities in a mixed-use development benefit its tenants and,
thus, convince them to pay higher rents. Higher rents generated by a mixed-use facility will attract more
investors to it. Investors should seek opportunities to capitalize on their equity in mixed-use developments.
Originality/value – This paper attempts to uncover a relationship between office rents and mixed-use
developments by drawing on the concept of agglomeration economies.
Acceptance Date24/03/2017
All Author(s) ListErvi Liusman, Daniel Chi Wing Ho, Hiu Ching Lo, Daniel Yet Fhang Lo
Journal nameJournal of Property Investment and Finance
Year2017
Volume Number35
Issue Number5
PublisherEmerald: 24 month embargo
Pages455 - 471
ISSN1463-578X
LanguagesEnglish-United States
KeywordsDiversity, Proximity, Panel data analysis, Agglomeration economies, Mixed-use development,
Office rents

Last updated on 2020-07-08 at 01:10