A hedonic price analysis of the value of industrial sites

Abstract

Hedonic price modelling is a widely used technique to explain the value of different types of individual property. Following the notion that areas within the city can suffer from devaluation the question arises what factors influence the value of urban areas. In this paper we use hedonic price analysis to answer this question for a specific type of urban area, the industrial site. We use the average property value per hectare as a representation of the value of an industrial site. Although there are many studies that try to explain the value of individual property, the value of industrial sites as urban areas remains under researched. A distinction is made between three types of explanatory variables: physical characteristics of the industrial site, regional economic characteristics and general economic trends. Our results show that 'mixed-use' sites -a third of all industrial sites in the Netherlands -show the lowest average property values. Specialisation in terms of the composition of firms located on an industrial site appears to have a positive influence on the average property value with specialised types of industrial sites, such as 'transport' and 'consumer services', showing significantly higher average property values. Furthermore, visibility from motorway and the region in which the industrial site is located (the economic core region Randstad showing the highest average values) also have a significant influence on the value of an industrial site. Although the overall explanatory value of our model appears to be modest compared to existing hedonic pricing studies of individual property, results show that most explanatory variables in our model have the expected coefficients and signs, indicating that this method can be applied in a meaningful way to gain insight into the valuation of urban areas.

Modeling the Spatial Dimensions of Warehouse Rent Determinants: A Case Study of Seoul Metropolitan Area, South Korea

“…According to the geographic variability test, distance to the nearest highway interchange, repackaging service, and built-in ramps were determined as global (fixed) variables. The positive effect of proximity to highway infrastructure on increasing rental prices was also reported in other previous studies on industrial property rents or values [14,21].…”

“…Hedonic price modeling has been widely used to assess property value and to estimate the demand for specific attributes of properties and their neighborhoods [21]. Hedonic price theory argues that the utility of the good is created by its individual characteristics rather than by the good itself [26].…”

“…On the contrary, they identified the building age, the ceiling height, percentage of the office space, and the presence of the sprinkler system as the negative determinants. Beekmans et al [21] used the OLS regression model to estimate the property value of industrial sites in the Netherland based on physical attributes of the buildings, regional economies, and overall economic trends.…”

“…Past studies on warehouse rent are rare, with the exception of a few studies on industrial property rent or value [19][20][21]. Most of these studies relied on ordinary least square (OLS) regression models to identify rental price determinants under the hedonic price modeling framework.…”

The impact of ship size on ports’ nautical costs

“…physical and locational characteristics on land prices and real estate prices (see e.g. Beekmans et al 2014;Case and Quigley 1991). However, there also many other applications of hedonic pricing techniques (see e.g.…”