Krzysztof Nowak
The Elasticity of the Office Space Market in Poland: Looking for the London Effect
Purpose: The article concerns the elasticities of demand in the office space market. The article presents indicated in the literature reasons for discrepancies in magnitude of elasticities of demand on local office space markets. The purpose of the article is to verify the presence o the so called London effect on polish office space market.
Methods: The verification of the hypotheses stated in the study was carried out by comparison of the calculated price and income elasticities of demand on the office space markets in Warsaw, Krakow, Wroclaw and Poznan. For the purpose of the study two econometric models were formulated with a use of the Error Correction Model approach.
Findings: The London effect was verified on the four major office space markets in Poland. To this end, two research hypotheses were formulated stating that price elasticity of demand and income elasticity of demand on the office space market in Warsaw is lower in magnitude than on the markets in Krakow, Wroclaw and Poznan together. Based on the study, the presence of the London effect on the four major office markets in Poland cannot be unambiguously confirmed. Office space markets in Krakow, Wroclaw and Poznan are on the earlier stage of development than in Warsaw. This affects the availability of reliable data and causes the fact that in case of Model 1 for first three cities the time range of data used in the study is shorter than in Model 2. Furthermore, time series that have been used to determine demand variables in both models are not exact.
Research implications: Dependencies between rent and number of employees and the need for office space are different in Warsaw than on the office space markets in Krakow, Wroclaw and Poznan.
Keywords: price elasticity of demand, income elasticity of demand, office market, error correction model
JEL codes: R30, R33
Category of the paper: research article
CITATION (APA): Nowak, K. (2019). The Elasticity of the Office Space Market in Poland: Looking for the London Effect. World of Real Estate Journal, 108(2), 5-18.
DOI: https://doi.org/10.14659/worej.2019.108.01
