Posted: April 1st, 2015

Real estate economics: coursework question

Real estate economics: coursework question

Date Set:                      20^th October 2014

Date for Submission:    1^st December 2014

An individual essay, guideline word count 2,500 to 3,000 (excluding footnotes and list of references).

To be submitted in Moodle in a Word or pdf file.

Formatting: your document will have page numbers, headings for the main sections / sub-sections, the normal top / bottom / left / right margins, at least 11 pt font size, and 1.5 or 2 x line spacing.

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Structure: you should have at least one paragraph of general introduction which states how have you have interpreted and approached the question, and sets out the structure of the essay, and at least one final paragraph of summary / conclusions.

Assessment: marks will reflect understanding of the core material from the lectures and required reading, plus evidence of wider research, ability to apply concepts taught in the course to specific questions and to illustrate them with real world examples, clarity of written style and quality of presentation.

Question:

Draw on modern theories of rent and urban economics to analyse and explain the patterns in office rents shown in the data sources below.

• Colliers UK Office Rent Map plus Central London data. (Note the latter is given only for the rental figures, you do not have to use the take-up etc data.)
• REE VOA Data.xls which has detailed figures on rateable values and floorspace.

The data sources are all in Moodle. There is a (not terribly helpful) interactive version of the map at http://www.colliers.com/en-gb/uk/insights/offices-rents-map.

Beyond these, you might also like to look at the distances and travel times between locations. And you can use any other relevant sources of data you choose.

Pointers:

There is no one “required” answer to this question. It covers several different “patterns” – rents within urban cores, within city regions, across major cities or different types of city. Your answer should touch on all of them, but might concentrate on one or two of them.

You are expected to use the data provided, though you don’t have to use all of it. Note that the question asks for an analysis. This means more than an essay with a few numbers dropped here and there in the text: you are expected to construct your own charts, tables to demonstrate your points.

It would be possible to answer the question with a lot of statistics and modelling. But a statistical approach is not required: do it that way if you are comfortable with statistics, if you are not you do no need more than clear charts and tables, perhaps extending to a bit of correlation.

A good answer to the question will demonstrate that you understand the relevant theories (note the “modern theories” – it does not need a large chunk of Ricardo, von Thunen etc to get started), and then test how far they are supported by the data. So you could structure the essay as a theory section with a separate section for patterns in the data. Or you could have a section for each pattern with theory and data together. Either way is OK.

You will need to understand a bit of UK geography. The country is divided into a set of “standard regions” as shown on the regional map at the end. These are not the economic “city regions” – a dominant central city with surrounding commuter zones and satellites – we discuss in the course. In Scotland, for example, Glasgow and Edinburgh are two separate major cities quite close together, with only minor centres in the rest of the country. Manchester and Leeds may look close enough to be part of the same “regional” system, but in fact the North West is divided from Yorkshire and Humberside by the Pennine mountain range. (Alright, they’re hills but you don’t want to be up there in a February blizzard.)

For office market analysis, the country is usually divided into a set of dominant cities each with a surrounding region running out 20-40 miles. They are London plus the major provincial cities Bristol, Birmingham, Manchester, Leeds, Glasgow, Edinburgh (the “Big Six”), to which some would add Sheffield, Newcastle, Cardiff, Liverpool. Note this leaves some areas – the East Midlands, East Anglia – without a dominant central city, and instead several cities of roughly equal size.

Finally, please do not say London is the CBD for the whole country, so rents fall with distance from London. It just isn’t, so they don’t.