Colin Lizieri 
Towers of Capital 
Office Markets and International Financial Services

Are global city office markets inherently unstable?

This examination of office markets in major world cities
analyses the flows of capital that create urban form, the nature of
ownership, investment and occupation and the impact of office
markets on economic stability.

Towers of Capital – office markets & international
financial services explores the relationship between the
evolution of major international financial centres as part of the
global capital market system, the development of office markets in
those cities, real estate investment in those office markets and
the patterns of risk and return that result from the interactions
between financial flows and office markets.

Rather than focusing on just one single aspect of the
relationship, Colin Lizieri sets out the interconnections between
the location of financial activity, the processes operating in
office markets and the volatility of real estate returns. The
resulting schematic model of IFC office markets provides insights
into risk and will act as a springboard for subsequent empirical
work.

Towers of Capital develops a framework for understanding
real estate and the transformation of the built environment in
financial centres, based both on the development of global capital
markets and on micro-level research into the functioning of office
markets.

By drawing together the insights, models and ideas that address
global capital flows, the evolution of city systems, office market
processes and real estate finance, the book will help students and
researchers in property and urban planning, investors and policy
advisors to understand the linkages between the evolution of
financial markets, innovation in commercial real estate markets and
the dynamics of the office markets in global cities.

Table of Content

About the Author

Acknowledgements

Introduction

PART I SYSTEMS OF CITIES AND CITIES OF FINANCE

Introduction

1 The Urban Hierarchy and Global Cities

1.1 Introduction

1.2 Cities and the urban hierarchy

1.3 World cities, global cities

1.4 Cities, space and finance

2 International Financial Centres and Global Cities

2.1 Introduction

2.2 Concentration in financial centres

2.3 Information technology and cities

2.4 Agglomeration and concentration

2.5 IFCs, concentration and office markets

3 A Sense of History: Development and Inertia in the
International Financial Hierarchy

3.1 Introduction

3.2 A sense of history

3.3 ‘The age of catastrophe’

3.4 Asian and Middle Eastern markets

3.5 Lessons of history: a tentative conclusion

PART II INSIDE THE OFFICE MARKET

Introduction

4 Occupational Demand, Office Space and Rents

4.1 Introduction

4.2 Land value, land rent and financial services

4.3 Rent models and rental adjustment

4.4 Empirical evidence of rental adjustment processes in major
office markets

4.5 Changing business practices and the demand for office
space

4.6 Employment, volatility and the use of space

5 The Supply of Space

5.1 Developers, development cycles and research

5.2 Development, building costs and property value

5.3 Economic models and developer behaviour

5.4 Real options and developer strategies

6 Investment, Capital Flows and the Office Market

6.1 Introduction

6.2 Real estate in the portfolio

6.3 Investment patterns and investor behaviour

6.4 Real estate vehicles and the portfolio

6.5 International real estate investment

6.6 Real estate capital flows

6.7 Investment, capital flows and IFC office markets

PART III INTERNATIONAL FINANCE, GLOBAL OFFICE MARKETS AND
SYSTEMIC RISK Introduction

7 Booms, Bubbles, Crises and Contagion

7.1 Introduction

7.2 Financial markets, co-movement and crises

7.3 Booms and bubbles

7.4 Real estate in booms and bubbles

7.5 Bubbles, crashes and IFC office markets

8 Globalisation, Ownership and Innovation in Real Estate
Markets

8.1 Introduction: innovation in real estate investment and
ownership

8.2 Innovation in property investment vehicles

8.3 Global real estate investment

8.4 Ownership patterns

8.5 Conclusions: innovation, ownership and real estate risk in
IFCs

9 All Fall Down: Global Financial Centres, Real Estate and
Risk

9.1 Introduction

9.2 Retracing the threads

9.3 Market integration, globalisation and systemic risk

9.4 Some preliminary evidence

9.5 Global financial centres and office market risk: some policy
implications

Epilogue

Bibliography

Index

About the author

Colin Lizieri – Professor of Real Estate Finance, Head of Department of Real Estate and Planning, University of Reading Business School.