| The Journal of Real Estate Finance and Economics | |
| Volume 28, Issue 2, Article 9 (Abstract) | |
| Title: | Real Estate Rental Payments: Application of Stock-Inventory Modelling |
| Author: | Philip McCann and Charles Ward |
| Abstract: | This paper analyses the rental term structure taking into account the opportunity costs faced by the tenant for varying lease lengths. The analysis involves the application of a multi-period stock inventory model. The implication of the model is that the term structure of rents is determined by a clientele effect that can cias the occupancy value derived from using rational-expectations i the term structure relationship. The model does however reveal the characteristic stock-inventory U-shaped function that will determine the optimal lease length for a given tenant. |
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