A Comparison of Federal Government Office Rents with Market Rents.

This study examines Federal Government office leases using data from Texas and Oklahoma during the 198 1- 1991 time period. The lease indifference model presented here indicates that landlords may be willing to accept lower rents from government tenants due to reduced tenant risk, but that such discounts may be offset by other premiums implicit in the lease contract. The data collected for this study reveal that rents paid by the government are significantly higher than avenge market rents during this time period. A time-series, cross-sectional regression analysis of the spread between market rents and office rents to government tenants in nine metropolitan markets suggests that the difference is affected in part by expense pass-throughs, lease period, amount of space leased, and local market conditions. [ABSTRACT FROM AUTHOR]