Anmerkungen:
In: Wong SK & Cheung KS (2017) Renewing a lease at a discount or premium? Journal of Real Estate Research, 39(2), 215-234
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 11, 2021 erstellt
Beschreibung:
Occupancy discount is a long-accepted doctrine in literature. Search theory supports such a proposition, but empirical evidence is mixed. This study revisits this dilemma and puts forward an alternative argument that a landlord may exploit sitting tenants who have made non-redeployable investments and charge them an occupancy premium. Based on data of high-end commercial properties where quality information is symmetric, this study confirms that the magnitude of discounts/premiums hinges on the tradeoff between asset specificity and search. It also demonstrates that instrumental variables estimation is a better approach to correcting endogeneity bias in lease renewal decisions