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An Analysis of the Factors Affecting Light Industrial Property Valuation

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Abstract

This paper uses statistical regression techniques to develop a model to explain both warehouse asking prices and warehouse quoted lease rates. In developing the statistical models, the paper provides a useful comparison between ordinary least squares (OLS), and weighted least squares (WLS) techniques. The results indicate that the market for industrial property is rational and that property characteristics determine the majority of the building value. The results also indicate the presence of a clientele effect between the market for industrial property listed for sale and property listed for lease.

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  • Brent W. Ambrose, 1990. "An Analysis of the Factors Affecting Light Industrial Property Valuation," Journal of Real Estate Research, American Real Estate Society, vol. 5(3), pages 355-370.
    • Handle: RePEc:jre:issued:v:5:n:3:1990:p:355-370
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    References listed on IDEAS

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    1. William A. Donnelly, 1989. "The Methodology of Housing Value Assessment: An Analysis," Journal of Real Estate Research, American Real Estate Society, vol. 4(2), pages 1-12.
    2. James R. Lang & Wesley H. Jones, 1979. "Hedonic Property Valuation Models: Are Subjective Measures of Neighborhood Amenities Needed?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 7(4), pages 451-465, December.
    3. George W. Gau & Daniel B. Kohlhepp, 1978. "Multicollinearity and Reduced‐Form Price Equations For Residential Markets: An Evaluation of Alternative Estimation Methods," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 6(1), pages 50-69, March.
    4. James L. Kuhle & Josef D. Moorehead, 1990. "Applying the Bootstrap Technique to Real Estate Appraisal: An Empirical Analysis," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 33-40.
    5. Alan K. Reichert & James S. Moore, 1986. "Using Latent Root Regression to Identify Nonpredictive Collinearity in Statistical Appraisal Models," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(1), pages 136-152, March.
    6. John F. Kain, 1989. "The Economics of Architecture and Urban Design: Some Preliminary Findings," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(2), pages 261-266, June.
    7. David H. Richardson & Richard Thalheimer, 1979. "Alternative Methods of Variable Selection: An Application to Real Estate Assessment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 7(3), pages 393-409, September.
    8. Hoag, James W, 1980. "Towards Indices of Real Estate Value and Return," Journal of Finance, American Finance Association, vol. 35(2), pages 569-580, May.
    9. Kerry D. Vandell & Jonathan S. Lane, 1989. "The Economics of Architecture and Urban Design: Some Preliminary Findings," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(2), pages 235-260, June.
    10. Kerry D. Vandell, 1979. "Alternative Estimation Methods for Reduced form Price Equations under Conditions of Multicollinearity: A Comment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 7(3), pages 427-436, September.
    11. Otis W. Gilley & R. Kelley Pace, 1990. "A Hybrid Cost and Market-Based Estimator for Appraisal," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 75-88.
    12. Joseph B. Lipscomb & J. Brian Gray, 1990. "An Empirical Investigation of Four Market-Derived Adjustment Methods," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 53-66.
    13. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    14. Peter F. Colwell & Roger E. Cannaday & Chunchi Wu, 1983. "The Analytical Foundations of Adjustment Grid Methods," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 11(1), pages 11-29, March.
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    Cited by:

    1. Frank A. Fehribach & Ronald C. Rutherford & Mark E. Eakin, 1993. "Implicit Liquidity Premiums in the Disposition of RTC Assets," Journal of Real Estate Research, American Real Estate Society, vol. 8(3), pages 365-376.
    2. Robert Thompson & Sotiris Tsolacos, 2000. "Projections in the Industrial Property Market using a Simultaneous Equation System," Journal of Real Estate Research, American Real Estate Society, vol. 19(2), pages 165-188.
    3. Thomas O. Jackson, 2002. "Environmental Contamination and Industrial Real Estate Prices," Journal of Real Estate Research, American Real Estate Society, vol. 23(1/2), pages 179-200.
    4. Peter Byrne & Stephen Lee, 2008. "Spatial Concentration in Institutional Industrial Real Estate Investment in the England and Wales," Real Estate & Planning Working Papers rep-wp2008-02, Henley Business School, University of Reading.
    5. Clark, David & Pennington-Cross, Anthony, 2016. "Determinants of industrial property rents in the Chicago metropolitan area," Regional Science and Urban Economics, Elsevier, vol. 56(C), pages 34-45.
    6. Bob Thompson & Sotiris Tsolacos, 2001. "Industrial Land Values — A Guide to Future Markets?," Journal of Real Estate Research, American Real Estate Society, vol. 21(1/2), pages 55-76.
    7. R Sivitanidou, 1996. "Warehouse and Distribution Facilities and Community Attributes: An Empirical Study," Environment and Planning A, , vol. 28(7), pages 1261-1278, July.
    8. Richard J. Buttimer, Jr. & Ronald C. Rutherford & Ron Witten, 1997. "Industrial Warehouse Rent Determinants in the Dallas/Fort Worth Area," Journal of Real Estate Research, American Real Estate Society, vol. 13(1), pages 47-56.
    9. Bob Thompson & Sotiris Tsolacos, 1999. "Rent Adjustments and Forecasts in the Industrial Market," Journal of Real Estate Research, American Real Estate Society, vol. 17(2), pages 151-168.
    10. Tian, Yingying & Zhou, Dingyang & Jiang, Guanghui, 2021. "A new quality management system of admittance indicators to improve industrial land use efficiency in the Beijing−Tianjin−Hebei region," Land Use Policy, Elsevier, vol. 107(C).
    11. Stefania Tonin & Margherita Turvani, 2011. "Environmental contamination and industrial real estate market: an application of hedonic price method in Italy," ERSA conference papers ersa10p511, European Regional Science Association.
    12. Hyunwoo Lim & Minyoung Park, 2019. "Modeling the Spatial Dimensions of Warehouse Rent Determinants: A Case Study of Seoul Metropolitan Area, South Korea," Sustainability, MDPI, vol. 12(1), pages 1-17, December.
    13. Daniel Lo & Yung Yau & Michael McCord & Martin Haran, 2022. "Dynamics between Direct Industrial Real Estate and the Macroeconomy: An Empirical Study of Hong Kong," Land, MDPI, vol. 11(10), pages 1-23, September.
    14. Ryo Itoh, 2013. "Estimating the Willingness to Pay of Industrial Firms for Japanese Industrial Parks," Urban Studies, Urban Studies Journal Limited, vol. 50(13), pages 2753-2765, October.
    15. Kim Hin David Ho & Satyanarain Rengarajan, 2017. "Industrial Real Estate Market Dynamics in Singapore: A VAR Approach," International Real Estate Review, Global Social Science Institute, vol. 20(4), pages 417-450.
    16. Jasper Beekmans, 2011. "An indicator for decline of industrial estates," ERES eres2011_281, European Real Estate Society (ERES).
    17. Jorrit Sennema, 2010. "Industrial Property Analysis from an Investor's Perspective: The Case of Orange County, California," NEURUS papers neurusp145, NEURUS - Network of European and US Regional and Urban Studies.
    18. Marvin L. Wolverton, 1998. "Empirical Investigation into the Limitations of the Normative Paired Sales Adjustment Method," Journal of Real Estate Research, American Real Estate Society, vol. 15(2), pages 191-204.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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