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Influence of Rent Differentials on the Choice between Office Rent Contracts with and without Relocation Provisions
Author(s) -
Benjamin John D.,
SaAadu J.,
Shilling James D.
Publication year - 1992
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00585
Subject(s) - relocation , economic rent , lease , extant taxon , economics , microeconomics , empirical evidence , business , labour economics , public economics , finance , computer science , philosophy , epistemology , evolutionary biology , biology , programming language
In this paper we concern ourselves empirically with the influence of rent differentials on the choice between rent contracts with and without relocation provisions investigating the effects of relocation provisions on office rents. The study departs from the extant literature by using a switching simultaneous‐equations model to estimate hedonic rent functions for alternative office lease contracts with choices of relocation provisions. The empirical results suggest that price considerations and certain lease terms are important determinants of the choice of office relocation rights. The results also suggest that certain tenant characteristics, like tenant size and creditworthiness, have only a marginal effect on the choice of relocation rights.