I am attempting to predict rental price (Sq/ft) for a Retail space. I have a vector of demand / economic variables and other control variables such location and time fixed effects. I’d like to add a constraint to the model for balancing loss due to vacancy.
The data is at monthly level.
Pt = b0 + b1*Dt + b2*Lt + b3*Vt + b4*St + b5*Sup + e where, Pt = Rental Price St = Type of the space - categorical variable Dt = Demand variables Lt = Location variables Sup = Available comparable supply / Vacancy Vt = Loss due to vacant days ($) Vt is the constrain in the model.
I am looking for advise on:
- Appropriate model to use (Linear or Non-Linear) and metrics to use for evaluation.
- How to treat constraint variable? Regularization or other approaches?
- Fit a model separately for space type or if included as a variable, how do I estimate the effect of each space type (categorical variable) separately?