Fundamentals of the Office Property Market and the Implications for Hedonic Price Indices

Abstract

The previous chapter explained the theory of the construction of a hedonic price index. Where possible, the office rental unit has been used as an example of a heterogeneous good. However, insufficient justification has been provided thus far as to why an office lease has to be considered a heterogeneous good. In addition, although the importance of an office rent index was explained in the introduction, no theoretical reasons have been given as to why the variable rent should be at the centre of the analysis. Both issues will be addressed in this chapter.