Office Rent Modeling in Istanbul: A Geoadditive Approach

Abstract

The objective of this research is to develop a hedonic model for office space rent prices in Istanbul, using a data set consisting of 2348 office spaces. The data includes information on office building and office space characteristics, as well as features related to the lease, location, and neighborhood that impact office rents. To examine the connection between office rent and these factors, a semiparametric geoadditive model was utilized, which allows for flexibility in functional form and captures location effects through geographical smoothing functions instead of location dummies. The results indicate that the link between office rent determinants and office space rents is nonlinear. The vacancy rate, a measure of office space demand, is the determinant with the greatest impact on office rents. The second most important determinant of office rents is that the office space is in an A-class office building, and the third most influential factor is that the office spaces have a view of the Bosporus.