Effect of Past Crises on US Downtown Office Property Income and Expenses

ARES 2010 Manuscript Prize Winner - Office Buildings/Office Parks

The paper studies the effect of past recessions/crises (hyper-inflation periods, financial &
oil crises, terrorism etc.) on average rental income, operating expenses and taxes of downtown
office building across the US. The real estate data were gathered from the BOMA Experience
Exchange Reports (1960 through 2008) and include two distinct building groups (300,000 to
599,999 sf and more than 600,000 sf). This dataset was then supplemented with economic and
other factors from multiple public/government databases. Two different methodologies were
applied with the goal of understanding: a) the effect of economic/other factors on the
aforementioned variables and b) the underlying cyclicality patterns which aid in the prediction of
future trends until 2020.