Industrial Rent Differentials: The Case of Greater Los Angeles

Abstract

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.

A hedonic price analysis of the value of industrial sites

“…Accessibility via road is also an important explanatory variable for industrial property value (see e.g. Sivitanidou and Sivitanides, 1995;Dunse et al, 2004). Dunse and Jones (2005) report similar results for rental values of industrial property and the proximity of a motorway junction.…”

“…Not surprisingly, size of the property is found to be an important variable (Ambrose 1990;Fehribach et al 1993;Lockwood and Rutherford 1996;Buttimer et al 1997). The same is true for the age of a property, although some studies do not show significant results (cf : Ambrose 1990;Fehribach et al 1993;Sivitanidou and Sivitanides 1995;Black et al 1997;Buttimer et al 1997;Dunse, Jones, Brown and Fraser 2004;Ryan 2005;Dunse and Jones, 2005). A selection of other characteristics of properties that are included in analyses are the number of dock-high doors (Ambrose 1990), the presence of sprinklers (Buttimer et al 1997), the type of tenant (Sivitanidou en Sivitanides 1995) and the size of the office area within the industrial property (Black et al 1997).…”

“…Accessibility can be defined in a number of ways. Lockwood and Rutherford (1996) and Sivitanidou and Sivitanides (1995) show that the proximity of an airport has a positive effect on the price of industrial property. Accessibility via road is also an important explanatory variable for industrial property value (see e.g.…”

“…Although it is beyond the scope of this paper to discuss all regional effects in detail, one effect that we will highlight here is scarcity for industrial land. Sivitanidou and Sivitanides have studied the relation between supply and rental levels of industrial rents in Los Angeles and find that supply indeed influences rental levels (Sivitanidou and Sivitanides, 1995).…”

The Value of Access to Highways and Light Rail Transit: Evidence for Industrial and Office Firms

“…This adjustment in the measure of access more accurately models a decentralised urban area by allowing for the possibility of important transport or service nodes outside the traditional urban centre. Sivitanidou and Sivitanides (1995) find that the density of freeway availability (measured as freeway miles per square mile of zoned land) and distance to an intersection of two major freeways are both significant in their rents models, and indicate that higher levels of freeway access are associated with higher industrial rents. Kowalski (1990) found that industrial properties abutting freeways have higher rents than properties that are not adjacent to freeways.…”