CHICAGO OFFICE MARKET - PRICE INDEXES, LOCATION AND TIME

Conventional wisdom holds that overbuilding and high vacancy, coupled with curtailed tax benefits, have led to reduced office property value s since the late 1980s, Yet assertions that office real estate values fell between the mid-1980s and mid-1990s are not supported everywhere by convincing evidence. This study offers a hedonic analysis of Chicag o area office properties that sold from 1986 through 1993. Whereas ear lier office market studies generally have been based on rents, this st udy focuses on variation in actual sale prices (although the prices we re not adjusted for financing differences). The transaction-based inde x estimated here does not support the existence of a nominal office pr operty price level decline beginning in the mid-to-late 1980s. in fact , the results show an upward trend in office property values after 198 6, with nominal declines in office market price levels occurring only in the latter portion of the study period.