Forecasting Models for the German Office Market 2009

This work is motivated by the research gap evident in the area of forecasting models for the German office market. Furthermore, I observed that GARCH models are able to outperform single ARIMA models for forecasting horizons of three to five years, when increased volatility appears within the respective city rent series.

In every market with free floating prices, all market participants are interested in the future developments of these prices. However, there is an evident research gap for forecasting models for the German office market.

Alexander Bönner closes this gap by focusing on an empirical investigation of several rent and total yield forecasting models for nine major German cities. The applicability and performance of ARIMA, GARCH and multivariate regression models are analyzed and city as well as forecasting horizon-specific patterns are determined and interpreted. Univariate rent forecasting models generally outperform multivariate rent forecasting regression models in the short run. In the long run, multivariate regression models dominate. However, one must bear in mind that in some cities one model permanently outperforms the other. Eventually, the rent level is mainly determined by its economic fundamentals, which is also demonstrated for the total yield examination.