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Topics Covered
- Office building vacancy
- Office building space overtime
- Hotel vacancy
- COVID-19
- Impact of the pandemic on hotels and office buildings
- RevPAR (revenue per available room)
Talk Citation
McDonald, J.F. (2024, August 29). Changes in real estate markets: office buildings and hotels [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved October 11, 2024, from https://doi.org/10.69645/GAEB7357.Export Citation (RIS)
Publication History
Changes in real estate markets: office buildings and hotels
Published on August 29, 2024
10 min
Other Talks in the Series: Key Concepts: Real Estate Economics
Transcript
Please wait while the transcript is being prepared...
0:00
Welcome back to Real
Estate Economics.
I'm John McDonald,
Emeritus Professor at
the University of
Illinois Chicago and
Emeritus Professor of
Real Estate at
Roosevelt University.
Today, the topic is change
in real estate markets.
We're going to look
at what are frankly
some extreme cases of
changes in real estate markets
to see how real estate
markets respond.
0:33
Moving on here, let's take
a quick look at office
building markets.
Some basic facts about
office buildings.
First of all, large
office buildings are
very durable and take
years to construct.
The planning phase
can take a long time.
Getting the approvals to
build where you want to
build will take time, all of
that adds time to the process.
Variations in demand
show up in changes in
vacancy rates and
rents, of course.
As they do in all
real estate markets.
But the actual rent includes
incentives that are
hard to track down.
As I mentioned before,
the face place rents that you
read in the newspaper
or on the Internet
really don't tell you
what the rent is,
because you have to know
what are the incentives
that are being given
to potential tenants
like months of free
rent, moving expenses,
allowances for making
your office space
fancier than it is. All
that sort of thing.
But vacancy rates are quite
easy to measure, so
that's what we look for.
Furthermore, as I mentioned,
the decision to build depends on
a demand forecast
for some years in
the future because it takes so
long to build a major
office building.
You can build a small
office building
out the suburbs very
quickly like housing.
But the major office buildings
take a long time to
plan and construct.
They need to have a
forecast to what it's
going to be in, I
don't know five,
seven, eight years
into the future.
Forecasts can be wrong.
Really? Yes, they can.
What happens if the
forecasts are wrong?
We're going to take
a look at that.