Testing for the Existence of Offi ce Sub-markets

Testing for the Existence of OfŽ ce Sub-markets: A Comparison of Evidence from Two Cities
Neil Dunse, Chris Leishman and Craig Watkins
[Paper Žrst received, October 2000; in Ž nal form, June 2001]
Summary. Most conceptual and applied economic models of the structure of urban ofŽ ce markets have been developed from traditional location theory. In their basic form, these models tend to posit a trade-off between accessibility and space. In the light of changing business practices and decentralisation, however, some authors have noted that the in uence of agglomer- ation economies on the locational dynamics of commercial property markets may be declining. In this paper, we seek to undertake an indirect test of the power of intraurban ofŽ ce location theory. The paper is developed in two stages. In the Ž rst part, we examine the theoretical case for the existence of sub-markets in urban ofŽ ce markets and outline the implications of sub-market existence for traditional ofŽ ce location theory. In the second part of the paper, using data from Edinburgh and Glasgow, we undertake empirical tests for sub-market existence. A comparison of the results from the two city markets provides limited evidence of the existence of spatial sub-markets and suggests that markets might take different spatial forms depending on the urban context. The paper concludes by highlighting the need to account for the complex structure of urban property markets in developing models for property appraisal, taxation and land use planning purposes.

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