HEDONIC RENTAL MODEL OF HIGH TECHNOLOGY BUSINESS SPACE

Abstract

This dissertation uses a hedonic rental model to examine variations in the asking rents of hi-tech business spaces in relation to their physical characteristics and the business environment. A total of 319 quarterly asking rents spanning over 12 quarters were used in this study. The 18 independent variables included in the semi-log regression model can be classified as Physical, Locational and Economical characteristics, for which no multicollinearity has been detected among these variables. The regression analysis indicates a good fit with an adjusted R² (Ṝ2) of 0.59 and a high F-statistic that rejects the null hypothesis that all the coefficients are zeros. The results indicate that the asking rents of hi-tech business spaces are positively correlated to all the quarters, with smaller increase seen after the fourth quarter of 2008 when the effect of the global financial meltdown was probably felt. A 1% increase in the score of building attributes affects the asking rent positively by 0.168%. Likewise, the elasticity of asking rents with respect to space attributes is 0.01. Asking rents in the west were higher than those in the central region. Leasable spaces located above the ground floor have lower asking rents than those on the ground floor by 0.003%.