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Suppose user demand for space in a certain market grows from 4 to 5 million square feet (MSF) at $10/SF net rent. Assuming property market
Suppose user demand for space in a certain market grows from 4 to 5 million square feet (MSF) at $10/SF net rent. Assuming property market cap rates remain constant at 10%, show on a four-quadrant diagram similar to Exhibit 2-4 a the short- and long-run effects of this change in user demand. [Hint: You can answer qualitatively or recognize that specific quantitative answers will depend on the shapes and slopes of the curves (i.e., the elasticities) in each quadrant.]
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