An hedonic analysis of the rental office market in the Tokyo central business district: 1985-1994 fiscal years

We study the rental office market in the Tokyo central business district by estimating hedonic equations for the office rent for 1985-94 fiscal years. This period includes the "Bubble" of asset prices, followed by its deflation. We find that the characteristics related to transportational conveniences are less effective in explaining office rents than the characteristics related to the agglomeration of offices and the amenity characteristics of the office buildings themselves. Using a skewed error-term specification, we show that the discount in rental transactions is not irrelevant. The hedonic office rent indices and possible policy implications are also presented. JEL Classification Numbers: L85, R32.