Do Market Rents Reflect the Value of Special Building Features?
” Journal of Real Estate Research, Vol. 7 No. 2, Spring 1992, 147-156, John C. Doiron, James D. Shilling, and C.F. Sirmans. Office buildings, hotels, and even residential apartment buildings often contain large amounts of space that are used for public purposes. An example is provided by buildings with atriums. In this article we examine the trade-off between leasable area in office buildings and the amount of the structure’s space that is used for an atrium. The insights of our model suggest that the optimal level of planned atrium space increases with a decrease in unit development cost and decreases with an increase in market rents. The model is used to specify a hedonic rent function for comparable office buildings with and without atriums. This hedonic model allows us to test the extent to which charges for amenities such as atrium space are passed through to tenants in the form of higher rents. 16 “Housing Price Indices Based on All Transactions Compared to Repeat Subsamples,” Jo
