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Office Rent Determinants Utilising Factor Analysis—A Case Study for İstanbul

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Abstract

In recent studies, a wide range of variables has been suggested for modelling the variation in office rent. However, only a few of them are found to influence the explanatory power of the model significantly. Moreover, the significance of these variables varies from model to model, depending on the characteristics of the region or/and the model. It is well established that the regression model of complex phenomena do not perform well, unless the effects of all major determinants are adequately represented. It is also known that complex phenomena may involve a large number of variables, and linear regression models often becomes cumbersome as the number of variables increases. A practical solution to the problem may be to pre-select the significant variables, and leave the less influential ones out. An even better solution could be to include all or most variables, while incorporating the group effect of some variables into a reasonable number factor variables. This way, both the accuracy and practicality of the model can be sustained. Serving this purpose, ‘Factor Analysis’ has been employed in establishing the office rent model for the metropolitan area of İstanbul. The results of four different versions of the model, using linear and non-linear regressions are discussed.

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Authors and Affiliations

  1. DTZ Pamir & Soyuer, Hakki Yetten C, 12/7, 34365, Şişli, İstanbul, Turkey

    V. Atilla Öven & Dilek Pekdemir

Authors
  1. V. Atilla Öven
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  2. Dilek Pekdemir
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Correspondence to Dilek Pekdemir.

Additional information

This paper is dedicated to my mentor, Assistant Professor VasıAtilla Öven.

Dilek Pekdemir

* Dear readers of The Journal of Real Estate Finance and Economics, the subsequent article is the last one written by Dr. VasNf Atilla Öven, who unexpectedly passed away on 23 May 2005 at an early age. Dr. Öven was a highly-dedicated and hard-working researcher and educator. Despite his short academic career, Dr. Öven left a deep imprint on engineering, architecture and urban issues. His persistent pursuit and achievement of excellence; his compassion and humbleness; his integrity and his humanistic attitudes will always be remembered with deep affection.

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Öven, V.A., Pekdemir, D. Office Rent Determinants Utilising Factor Analysis—A Case Study for İstanbul. J Real Estate Finan Econ 33, 51–73 (2006). https://doi.org/10.1007/s11146-006-8274-5

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