Real Estate Research Quarterly | september 2009 | 31 I n the ield of real estate an often heard statement is that the rent level and the asset price of oice properties are deter- mined by “location, location and location”. The chosen location is assumed to inluence the proitability of the oice organisation and this should result in increased willing- ness to pay, expressed in rent levels and asset prices, for locations with preferred characte- ristics. An important location aspect for of- ice organisations are the opportunities for face-to-face contacts (Cofey and Shearmur 2002). By congregating in space, oice irms facilitate face-to-face contacts and minimise formal and informal transaction costs, which generates production eiciencies. Together with other ‘external’ eiciencies related to ag- glomeration efects this explains why oice functions still remain among the most cen- tralized of urban activities. In most discus- sions of agglomeration efects, the term is synonymous with urban economies of scale, referring to a host of potential ‘external’ ef- iciencies that result as the number of econo- mic activities increase at a location. In addition to the urban economies of scale Archer (2003) considers presentation or image efects as important location factors. Image is an important signal in product marketing when the price of the service is relatively easily determined while the qua- lity of the service is not, as is the case with many oice services. Consequently, oice irms engage in a multitude of activities to establish favourable recognition. Selection of site and building is one dimension of this strategy (Archer and Smith 2003). A irm may be known by its neighbourhood, “by the company it keeps” or by the building it occupies. In efect the location and building choice might inluence the marketing costs of an oice irm. The importance of image efects has long been recognised in real es- tate literature and is often referred to as the ‘right address’. Image may also be important for recruiting and retaining employees. Ar- cher (2003) notes that the ‘quality’ of the lo- cation may inluence (prospective) employee LOCATION AND BUILDING Economic value of image The standard theory of oice location hypotheses, that oice organisations are heavily dependent on face-to-face contacts between its own personnel and their counterparts in other oice irms and their clients. Nevertheless, the importance of the image of the neighbourhood and building has long been recognised in real esta- te literature and is often referred to as the “right address”. This study examines, in a hedonic framework, the importance of neighbourhood and building image for oice irms. The results indicate that the image of the neighbourhood and building has a strong inluence on the site selection and building choice of oice organisations. By Philip Koppels MSc, Hilde Remøy MSc and prof. ir. Hans de Jonge thema: eres-special onderzoek service PNL09-RERQ-031-KOPPELS.indd 31 02-09-2009 11:16:56