The Economics of Commercial Property Markets

The Economics of Commercial Property Markets

The Economics of Commercial Property Markets

The Economics of Commercial Property Markets


This new text provides a rigorous analysis of the economics of real estate markets. It goes beyond the often descriptive nature of much property market analysis to focus on important theoretical principles. Throughout, the emphasis is on making an often complex area as accessible and readable as possible, with each chapter containing a boxed summary and questions for self-testing or discussion.


In the mid-1980s, many property market specialists saw little point in studying economics and its applications to commercial property. A good illustration of this is the comment by a senior surveyor that surveying students should not waste time studying macroeconomics and finance but should, instead, learn about the property market. The academic view was no less encouraging. Property economics and finance were seen by many as, at best, a backwater.

Things have changed dramatically since then. It is now an axiom in the property professions that an understanding of the wider context within which commercial property markets operate is essential; and professionals and academics in other disciplines—such as, economics, finance, planning and geography—accept the importance of the study of commercial property markets. There is also a rapidly expanding literature, and growing academic status for the leading property journals.

Commercial markets are characterised by boom-bust periods of over and then under supply, with consequences for the wider economy. The built environment in which we live is shaped by forces that drive new commercial building and redevelopment. These forces are complex and are moderated by institutional contexts. Some are transmitted to property from the macroeconomy and from the capital markets, each of which must increasingly be considered within a global context. Others arise from within the property market itself, in the behavioural responses of the thousands of individuals to the constraints and opportunities existing for them at particular times. Whatever their origin and the feedback effects such forces may generate, there are locally specific outcomes. The roles and functioning of towns and cities are strongly influenced by property market processes. This book sets out to explain those processes and their effects.

When this book was conceived, we thought the task would be easier than it turned out to be. Each of us felt we had a reasonable grasp of the literature, particularly as together we could claim over 50 years' teaching experience of the subject, or parts of it, to undergraduates and post-graduates from all of the relevant academic disciplines. The initial optimism was soon replaced by . . .

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