Vacancy Rate and Rent on the Office Market in Poland - In Search of Asymmetry

Abstract A growing body of empirical evidence suggests that adjustments on the office market are not symmetric. The theoretical framework provides various justifications for the presence of frictions, especially in the case of rent and vacancy rate. In this paper, we investigate the asymmetric reactions of rent and vacancy rate to the demand and supply shocks in the nine major office markets in Poland. In the course of the study we seek answers to two research questions. First, we investigate if the direction (positive or negative) as well as type (demand or supply) of the shocks produce asymmetry in the adjustments of vacancy rate and rent. Secondly, we examine if market conditions and distinction between the long-term and short-term perspective can generate asymmetry in vacancy rate and rent responses to the shocks. We use quarterly time series starting in 2011 / 2018 in the case of mature markets and markets in the early stage of development, respectively. Our data end in the end/mid- of 2024. In the study, the nonlinear autoregressive distributed lag (NARDL) model is applied. The paper contributes to the discussion regarding nonlinear adjustments on the office markets in Central and Eastern Europe.