Christian Reiner, senior researcher at LBS, has published a peer-reviewed article with the title “Concordance of office market cycles? Dynamics in European metropolises in the context of the financial and economic crisis”. The paper is joint work together with Robert Musil from the Austrian Academy of Sciences. It is published in the well-established, peer-reviewed German journal “Zeitschrift für Wirtschaftsgeographie”. The topic of the paper is strongly related to the LBS study program Strategic Finance & Business Analytics.
Abstract of the article: Urban office markets show an ongoing internationalization due to financial agents following a strategy of spatial diversification of real estate investments as a key strategy to reduce the risks of an investment portfolio. Hence, there is a growing literature discussing the consequences of this development, in particular focusing on an increasing concordance between the cycles of globally oriented office markets. It is the intention of this paper to look into the concordance and convergence of a broad sample of office markets in Europe. Against the background of an increasing divergence in Europe and the Eurozone since 2008, the question arises whether office markets are more closely linked to national economic cycles or whether there is a trend towards a convergence between European agglomerations. Based on prime yields as our main indicator of interest, we conduct several parametric and non-parametric correlation analyses and convergence tests. Our results show a very uneven concordance between European office markets; further, the analyses show a strong national bias in the sense that the concordance between different urban office markets within a country is much stronger than on the European scale. Over time, the cycles of office markets follow the pattern of monetary integration in Europe: After a period of convergence in the early days of the Euro, a pronounced period of divergence started with the economic crisis in 2008/2009.
The article is available here.
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