A Hedonic Rent Index for Commercial Properties

Commercial real estate is an important class of investment for investors and has a considerable influence on companies’ cost structures. Due to the very modest amount of data available, the potential for efficient market observation of commercial real estate has so far been limited. In view of this, we developed a sample rent index for Berlin’s commercial properties. To do so, we compared two alternative hedonic approaches. The primary advantage of our model is its ability to take account of more detailed offers. The results show that rents for offices in Berlin have risen markedly in recent years, whilst rents for retail space have increased more moderately.