CHAPTER ONE
INTRODUCTION
1.1. BACKGROUND OF THE STUDY
The basis for the existence and growth of urban areas is found in the gregarious nature of mankind and also in the cultural, economic and political advantages that stem from the agglomeration or clustering together of people (Barlowe, 2009). From the standpoint of intensity of use, rent-paying capacity and land values, the areas occupied by central business districts in urban areas represent some of the most valuable lands (Lean & Goodall, 2011; Barlowe, 2009 and Harvey, 2010). In cities where the business has retained its attractiveness, economic strength and viability, the business is almost always found close to the hub of the city’s traffic and transportation system and at locations both accessible and convenient to large numbers of people. This develops a possibility for high volumes of retail and other commercial activities, which in turn enhances intensive land use practices, high rents and high land values (Lean & Goodall, 2011; Barlowe, 2009; Harvey, 2010 & Ighalo, 2010). In other words, sites closer to the main business area often offer greatest opportunities for profitable use and these locations have the highest site values and command the highest rents. Thus, due to the business opportunities available to firms at the area, there is reasonable bidding and counter-bidding between firms and operators for the choice of locations. This process often leads in commercial land use patterns in which office and retail spaces are allocated in concordance with the rent-paying capacities of the various operators. This pattern is rarely stable as new adjustments are always done, including rental adjustments. The primary basis of most office rental studies as summarized by Sivitanides (2013) is that, rent differences in the commercial property market are engineered by excess demand or excess supply, as measured by the deviation of the prevailing vacancy rate from a “natural” or “structural” vacancy rate. In addition, the results of evidence from previous empirical studies suggests that vacancy rate is a crucial determinant of office rental performance in cities (Hekman, 2013; Shilling et al., 2009; Glascock et al., 2011; Wurtzebach et al., 2011; Sivitanides, 2013; Hui & Yu, 2014; Boon & Higgins, 2007 & McCartney, 2012). It is on this premise that this study examines the determinants of vacancy rate in commercial properties in Minna, Nigeria. According to Boon and Higgins (2007), rental value is a vital parameter for measuring real property performance. It is also a key cost for tenants and an important source of income for the landlord