Real estate investors traditionally have viewed the office market as the most volatile property sector when compared with apartments, industrial and retail. A key and distinctive observation regarding the dynamic behavior of office markets has been the periods of persistently high and low vacancy rates. In contrast with the other major property sectors, fluctuations in office vacancy are far more pronounced and last longer. This higher degree of volatility may indicate the office market does not stabilize as quickly and, rather, stays in a state of disequilibrium for longer periods.

A couple of standard explanations are:

•          Supply risk: Recurrent overbuilding has been a primary factor in creating periods of persistent oversupply in the office market. An important characteristic of the office market is the substantial lag between the start of a project and completion of construction. Downtown office buildings, for example, may take two t