The office market: a lemon market? A study of the Malmö CBD office market

• Published in: Journal of property investment & finance Vol. 33; no. 2; pp. 140 - 155
• Main Author: Palm, Peter
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Group Publishing Limited 02.03.2015
• Subjects: Adverse selection; Advertising; Asymmetry; Economic models; Hypotheses; Internet; Leasing; Litigation; Moral hazard; Office space; Ownership; Property management & built environment; Property valuation & finance; Quality of service; Real estate & property; Tenants; Sweden; Malmo Sweden; Leasing; Online advertising; Quality signalling; Quality in real estate management; Lemon market; Office market
• ISSN: 1463-578X; 1470-2002; 1470-2002
• DOI: 10.1108/JPIF-12-2014-0073

Purpose – The purpose of this paper is to test whether bad real estate owners drive out good real estate owners from the online marketplace for offices. Design/methodology/approach – This research is based on a statistical analysis of the advertisement of offices in Malmö CBD, collected weekly during a period of one year. Findings – The hypothesis that the market for advertisement of office properties is a lemons market cannot be rejected. The result that owners who have appeared in court more than once in the last two years being more inclined to advertise supports this. Research limitations/implications – The research in this paper is limited to the Malmö CBD office market. Practical implications – It provides an insight in how the online marketplace for offices works as a marketplace and how quality signals influences advertisement. Originality/value – This paper is a direct test of Akerlof’s classical lemon model.