Office Markets and Public Policy E-Book

Colin Jones

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Real Estate Issues
• Sprache: Englisch
• Veröffentlichungsjahr: 2013

Seitenzahl: 482

Beschreibung

This is the first book that looks at how offices and office markets in cities have changed over the last 30 years. It analyses the long-term trends and processes within office markets, and the interaction with the spatial economy and the planning of cities. It draws on examples around the world, and looking forward at the future consequences of information communication technologies and the sustainability agenda, it sets out the challenges that now face investors. The traditional business centres of cities are losing their dominance to the brash new centres of the 1980s and 1990s, as the concept of the central business district becomes more diffuse. Edge cities, business space and office parks have entered the vocabulary as offices have also decentralised. The nature and pace of changes to office markets set within evolving spatial structures of cities has had implications for tenants and led to a demand for shorter leases. The consequence is a rethink of the traditional perception of property investment as a secure long term investment, and this is reflected in reduced investment holding periods by financial institutions. Office Markets & Public Policy analyses these processes and policy issues from an international perspective and covers: * A descriptive and theoretical base encompassing an historical context, a review of the fundamentals of the demand for and supply of the office market and offices as an investment. Embedded within this section is a perspective on underlying forces particularly the influence of technological change. * A synthesis of our understanding of the spatial structure and dynamics of local office markets at the city level. * An assessment of the goals and influence of planning policies, and the evaluation of policies designed toward the long term sustainability of cities as services centres. This goes beyond standard real estate and urban economics books by assessing the changing shape of urban office markets within a spatial theoretical and policy context. It will be a useful advanced text for honours and postgraduate students of land economy; land management; property and real estate; urban planning; and urban studies. It will also be of interest to researchers, property professionals, policy-makers and planning practitioners.

Leseprobe

Contents

Acknowledgements

Preface

1 Introduction

History of offices

City office markets

Overview of office market trends

Book structure

2 Market Fundamentals

Growth of services

New technology, new work and new offices

New specialist office forms

The office stock

Constraining influences on the office property market

Office market cycles

Repeating the ‘mistakes’

Conclusions

3 Submarkets and the Changing Nature of the Traditional Central Business District

Economics of cities and office location

The Central Business District and intra-urban rent structures

Office submarkets

Identifying submarkets

Changing submarkets and a polycentric office market

Summary

4 Decentralisation and Edge City Office Centres

The information age

The motor age and urban forms

Deconstructing agglomeration economies

Decentralisation processes

Suburban offices and edge cities

Spatial structure of urban office markets

Spatial pattern of rents

Congestion, decentralisation and public policy

Conclusions

5 Investment, Risk Premiums and Office Market Dynamics

Obsolescence of offices and depreciation

Institutional office investment trends in the UK since the 1980s

Investment in offices

Establishment of office parks as an investment class

Mixed-use development

Institutional investment and office cycles

Credit crunch, cycles and bubbles

Conclusions

6 Public Policy and Competitiveness

Offices, competitiveness and the urban economy

Overview of public policy

Competitiveness and property market constraints

Public policy and office location constraints

Logic of property-led local economic development policies

Sustainable markets

Case studies of public policy initiatives

Concluding comments

7 Green Offices, Office Markets and Sustainability

A sustainable city?

Offices and the environmental dimension

Tall office towers and the economic dimension

Greening the office stock

Arguments for paying higher rents for green offices

Green refurbishment of existing offices

Current and changing occupier attitudes

Towards a green office rental market

Green investment

Conclusions

8 Market Changes and Challenges

Evolving offices

Evolving office markets

Office market cycles, bubbles and globalisation

Toward greener offices?

The future of offices as an investment

Public policy issues

Future challenges for the market

References

Index

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This edition first published 2013© 2013 Colin Jones.

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Library of Congress Cataloging-in-Publication Data

Jones, Colin, 1949 Jan. 13–Office markets & public policy / Colin Jones.pages cmIncludes bibliographical references and index.

ISBN 978-1-4051-9976-6 (cloth)1. Office buildings. 2. Central business districts. 3. City planning. 4. Land use, Urban. I. Title. II. Title: Office markets and public policy.HD1393.55.J66 2013333.33′87–dc23

2012045884

A catalogue record for this book is available from the British Library.

ISBN 978-1-405-19976-6

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Cover design by Garth Stewart.Cover image courtesy of iStockphoto.

The Royal Institution of Chartered Surveyors is the mark of property professionalism worldwide, promoting best practice, regulation and consumer protection for business and the community. It is the home of property related knowledge and is an impartial advisor to governments and global organisations. It is committed to the promotion of research in support of the efficient and effective operation of land and property markets worldwide.

Real Estate Issues

Series Managing Editors

Clare Eriksson

Head of Research, Royal Institution of Chartered Surveyors

John Henneberry

Department of Town & Regional Planning, University of Sheffield

K.W. Chau

Chair Professor, Department of Real Estate and Construction, The University of Hong Kong

Elaine Worzala

Director of the Carter Real Estate Center, Department of Economics and Finance, School of Business and Economics, College of Charleston

Real Estate Issues is an international book series presenting the latest thinking into how real estate markets operate. The books have a strong theoretical basis – providing the underpinning for the development of new ideas.

The books are inclusive in nature, drawing both upon established techniques for real estate market analysis and on those from other academic disciplines as appropriate. The series embraces a comparative approach, allowing theory and practice to be put forward and tested for their applicability and relevance to the understanding of new situations. It does not seek to impose solutions, but rather provides a more effective means by which solutions can be found. It will not make any presumptions as to the importance of real estate markets but will uncover and present, through the ­clarity of the thinking, the real significance of the operation of real estate markets.

Further information on the Real Estate Issues series can be found at http://eu.wiley.com/WileyCDA/Section/id-380013.html

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Acknowledgements

The genesis for this book is research on property markets undertaken with a small number of colleagues stretching back almost twenty years. Chapter 3 on submarkets had its inception with the PhD of Neil Dunse from which joint papers were originally published in the Journal of Property Investment and Finance and the Journal of Property Research in 1998 and 2002 ­respectively. Elements of Chapter 5 derive from research undertaken with Neil Dunse and Michael White on short-term office market dynamics, partly published in the Journal of Property Research and the Journal of European Real Estate Research in 2007 and 2010. Similarly, Chapter 6 draws on joint papers with Allison Orr and Craig Watkins published in Urban Studies (1996, 1999 and 2004). My interest in sustainability, developed in Chapter 7, stems from research undertaken as part of the Cityform research consortium of five universities on sustainable urban forms funded by the EPSRC and published in the book, Dimensions of the Sustainable City (Springer, 2010), edited by Mike Jenks and myself.

Preface

This book is primarily about the use of offices and how office markets work, and also about the role and inf luence of public policy in these processes. The book is designed to relate to the dynamics of office markets and public ­policy across the world. It therefore presents case studies from different ­continents and draws on the widest possible range of published ­international evidence. Nevertheless, it inevitably focuses on the UK and, to lesser extent the USA, simply because of the weight of published research in these countries.

It is a book about the economies of cities and written very much from an urban economics perspective. Unlike most economics books, there are deliberately no equations and the arguments are all expressed in words. This is to ensure the greatest access to the arguments presented.

The book takes a long-term perspective on office markets so the analysis considers how office markets have developed over almost two centuries. Change is a key theme of the book and it begins by looking back and ends by looking forward.

1

Introduction

Throughout history, the image of a city has been identified with the ­cathedral, the palace, the market place and the factory chimney, but today the office is arguably the prime symbol of a modern city’s development (Cowan et al, 1969). Offices now dominate the centre of the cities we live in, and whereas once a cathedral was the focal point of a city’s skyline this has now quite likely been replaced by tall, plate-glass office citadels. Very often a city can be recognised by the skyline of tall office buildings and structures. One historic example is ‘The Three Graces’ of the Liverpool waterfront: the Royal Liver Building (1911), the Cunard Building (1916) and the former offices of the Mersey Docks and Harbour Board (1907) that is now a UNESCO World Heritage site. In Shanghai, there was a deliberate plan to create a memorable skyline in the new financial district, Lujiazui. Many offices, even if they are not high-rise, are landmark buildings at major street junctions or squares. With the city centre normally the central business district, as the predominant built form offices represent a major element of the ­signature of a city.

Offices are increasingly the principal locus of economic activity. The amount of office space in England and Wales has more than doubled since 1980 (Mayor of London, 2009). The shift to a service economy from a manufacturing economy in developed countries, especially in cities, during the latter half of the last century is reflected in the rise of office-based employment. A high proportion of workers in service industries – accountants, lawyers, surveyors, bankers, insurance brokers, etc and managers through to specialist service and clerical staff – spend their working day in an office. The history of office development is bound up with the evolving economy of cities and new technologies.

The cluttering of city skylines by offices also emphasises the capital sums invested in this real estate. A large office block in London could be worth more than £20 m and financial institutions in the UK invested £66bn in offices in 2006 (Investment Property Databank, IPD, 2007). Office areas, especially financial centres, are the most expensive areas of real estate in the world. Foreign real estate investment often targets ‘trophy’ offices. With real estate investment increasingly part of the globalisation of capital markets, major offices can be an integral part of an international real estate investment labyrinth involving vast sums of money. In December 2009, for example, Dubai World sent shudders through global financial markets after requesting a six month ‘hold’ on interest payments to a range of international banks in order to restructure its $26bn debt, part of it invested in offices around the world.