|M.Sc Student||Shapir Arik|
|Subject||An Hedonic Price Model of the Office Building Market in|
|Department||Department of Architecture and Town Planning||Supervisor||Professor Daniel Gat|
Israel is moving steadily towards a services heavy economy. The city of Tel Aviv, which specializes in commercial, financial and business services, is the office capital of Israel. The purpose of this research is to reveal, using a hedonic framework, the major factors influencing rent levels within the growing Tel Aviv office space market.
The findings show that the major contributing factors are quality of design and access to three urban foci: the financial center nicknamed “the City”; the Kirya government center; and the diamond exchange district. Additional positive factors are height of the building and floor area. Age and density of manufacturing detract from the level of rent. It was originally intended that density of services would represent agglomeration economies, but its power of estimation turned out be far less than that of foci access.
Following the introduction, chapter 2 discusses the office market in general while defining, in particular, office buildings. It also describes entrepreneurial office construction activity in Israel and its concentration within Tel Aviv. Chapter 3 is a literature review of office real estate theory, models and recent evidence. It shows that office growth is a reflection of growth of services, and it refers to the recent office market crisis in the US and the West. The review centers on economic theories of office location and introduces the notion of hedonic analysis and its application to office real estate. The chapter ends by offering a paradigm of Tel Aviv office growth. Chapter 4 describes the purpose and hypotheses of the research. The main purpose is stated as the exposure of the major factors that influence office rental values. The main hypothesis, hedonically framed, says that the major contributing factors are access to services and other offices as well as the architectural quality of the building. Chapter 5 describes the research method. It identifies the office building population and sample which include major old landmark buildings as well as some very recent ones. Also defined is the research’s spatial boundary: the city of Tel Aviv as well as the Diamond Exchange district of neighboring Ramat Gan. Finally, data sources are identified. Chapter 6 sets up a linear and log-linear hedonic model of office rental values and reports statistical results. Chapter 7 interprets the meaning of the results and arrives at some design, planning, and location related conclusions.