Focusing on the relevance of the modern investment theory in explaining movements in office–commercial construction, we attempt to advance existing empirical work in two respects. First, building on recent theoretical advances, we offer an extended empirical model of new construction that takes into account the full opportunity cost of irreversible investments in uncertain environments. Second, using updated time series of office–commercial construction across the nation's largest markets, we empirically estimate such a model to (i) explore investment behavior during 1982–1998 and (ii) detect differences, if any, in such behavior between the pre‐ and post‐recession years. Our empirical findings are fully consistent with the theory of irreversible investments. Such findings highlight both the relevance and the relative importance of uncertainty in underlying demand factors in shaping movements in office–commercial construction, while pointing altogether to more cautionary investment behavior during the post‐recession years.

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The paper presents a first attempt to unveil the underlying determinants of the geography of R&D labs within contemporary metropolises. To this end, the study builds on the premise of contemporary intraurban location and pricing models, suggesting that intraurban variations in property rents must reflect the imputed location preferences of firms or their workforce, as well as the extent to which local institutional constraints hinder these preferences. Against this background, the study proceeds with the econometric analysis of R&D property rent differentials within Greater Los Angeles. The empirical results indicate that access to research and nonresearch universities, transportation access, access to a host of worker amenities, as well as zoning and other local regulations play a critical role in shaping the intraurban geography of R&D labs.

In this paper the authors explore an integrated view of the relationship between location and industrial real-estate rents within decentralized metropolises. It is postulated that variations across space in industrial rents reflect spatial variations not only in productivity-enhancing firm amenities, but also in utility-bearing worker amenities and local institutional constraints on the supply of industrial space or land. To test for such influences, alternative empirical models employing 1990 industrial (production space) rents in Greater Los Angeles are estimated. Although firm amenities induce the strongest price effect, worker amenities and zoning constraints do play an important role in industrial pricing.

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