Investment in industrial buildings: Modelling the determinants of new orders

Giussani, Bruno; Tsolacos, Sotiris

doi:10.1080/09599919408724098

Cited by 19 publications

(5 citation statements)

References 13 publications

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“…Industrial development appears to exhibit a very clear correlation with industrial rents and, since the latter are closely correlated with the business cycle, changes in GDP or its derivatives provide a good explanation of new orders for industrial buildings (Nicholson and Tebbutt, 1979), although its precise influence may and GDP 1970-1992Figure 6. Commercial New Orders and GDP 1970-1992 exhibit a complex lagged pattern as developers make partial responses to the shortfall in industrial space (Giussani and Tsolacos, 1994). Figure 5 shows that peak levels of industrial new orders coincide closely with peaks in the business cycle.…”

Section: Development Market 1970-1991mentioning

confidence: 99%

Use and Investment Markets in British Real Estate

Keogh

1994

Journal of Property Valuation and Investment

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IntroductionThis article focuses on the operation of use and investment markets in British real estate. In particular it considers whether the British property market is successful in reconciling use and investment decisions and, if so, over what time scale. Insofar as the market fails to achieve consistent use and investment choices, it examines the factors which might prevent adjustment from occurring. In theory these markets should exhibit a close relationship, realigning freely to ensure that investment values reflect accurately both current income generated by the use of property and expectations of future income growth. However, since use and investment decisions are subject to different influences and respond to different motives, there is some reason to believe they might track independent paths in practice.These issues are examined in the case of non-residential property markets which, for clarity, can be broken down into three functional components: use, investment and development (Fraser, 1993a; Keogh, 1991). Use and investment are clearly separable since the market itself commonly distinguishes between the right to use property and the right to hold a purely financial investment interest in property. In Britain, it is this distinction which forms the basis of the mature property investment market which currently exists (Keogh and D'Arcy, 1993). However, even where use and investment rights are embodied in a single property interest, for example an unencumbered freehold giving rights of owner occupation, existing buildings may be subdivided conceptually between use and investment. This reflects the different opportunities afforded by these distinct aspects of property ownership and the fact that the balance between them can be modified to meet changing market requirements. The third element, development, is conceptually distinct but is crucial to the explanation of use and investment markets. It is changes in these markets which stimulate development activity, and development which in turn supplies new user and investor rights into the market. Clearly it has a role to play in determining the balance between use and investment since legal interests in new property can be brought to the market in differing configurations.This breakdown provides the building blocks for the simple model of property market relationships illustrated in Figure 1. Each component of the model represents a market arena in which trade occurs and prices are determined by the interaction of demand and supply. As indicated in Figure 1,The author is grateful to Eamonn D'Arcy, Alan Evans, Bruno Giussanni, Sotiris Tsolacos and other colleagues who commented on an earlier draft, and to Alan Mooney of Sheffield Hallam University who assisted with the revision of data for the final version.

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Section: Development Market 1970-1991mentioning

confidence: 99%

Use and Investment Markets in British Real Estate

Keogh

1994

Journal of Property Valuation and Investment

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“…This body of research was primarily based on an empirical model of the building cycle and explicitly focused on the supply side of the market (Barras and Ferguson, 1987;Barras, 1983). Subsequently, in the 1990s, this body of research was extended by some other scholars through modelling the rate of development activity (such as Tsolacos, 1995;Giussani and Tsolacos, 1994). By contrast, demand-side changes were shown by some empirical studies, mostly in the UK, to explain movements in rental values by including macroeconomic indicators (Hendershott et al, 2002a(Hendershott et al, , 2002b(Hendershott et al, , 1999Key et al, 1994;Dobson and Goddard, 1992;and Gardiner and Henneberry, 1988).…”

Section: Literature Review: Theoretical Developments Towards the Urbamentioning

confidence: 99%

An urban growth model of office property development

Jayantha

2014

Facilities

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2014),"Supply network design in the residential-FM sector: A service provider perspective", Facilities, Vol. 32 Iss 11/12 pp. 723-738 http://dx.If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this study is to estimate an empirical model for new office space development starts, based on the theoretical treatment of urban growth. The study introduces a new parameter, namely, office space-usage pattern, to the office space development equation and tests whether developers respond to non-price measures in deciding to commence new developments. Design/methodology/approach -The study first introduces a co-integration approach based on an error correction model to test for long-run relations and short-run dynamics of new office space development. A multivariate regression model is then introduced to identify significant determinants that influence office development starts. The study uses annual data over a time span of 30 years. Findings -Estimated results provide strong evidence that the newly introduced parameter exerts a positive impact on new office space development. It suggests that if the average floor space per employee changes by one percentage point, new office development starts would change by 1.5 percentage point, indicating even a marginal change in floor-space usage per employee (SPE) would have a significant impact on new office space development. Empirical estimates also suggest a strong response of office development starts to the lagged land supply and office space stock. Research limitations/implications -The paper raises the concern about the importance of non-price measures of the supply-side of the office market. There is scope to address the research questions using better data sets. It is also possible to model the supply adjustment process more dynamically in an error correction framework. Practical implications -The findings would suggest that non-price measures, such as space-usage pattern, need to be taken into account when planning and estimating future office space needs. This finding provides valuable insight for our current knowledge on factors affecting new office supply. Originality/value -This is the first study to introduce office floor space usage as a determinant of of...

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“…Industrial property is normally treated as a kind of productive space and its supply, despite seasonal variations, is affected by the manufacturing sector (Tompkins and Webb, 1988). Economic conditions like GDP, industrial output changes, industrial rent, and availability of industrial floor space are found to determine new investment in private industrial space (Giussani and Tsolacos, 1994). What appears logically, therefore, is that deindustrialization will lead to a decline in both demand and supply for industrial accommodation.…”

Section: Literature Review and Theoriesmentioning

confidence: 99%

Cross-Sectoral Influence, Planning Policy, and Industrial Property Market in a High-Density City: A Hong Kong Study 1978–2012

Tang

2014

Environ Plan A

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Why did Hong Kong property developers continue to produce a large amount of new industrial accommodation despite the city exhibiting a strong trend of deindustrialization since the late 1970s? This study addresses this question by examining a longitudinal cross-sectoral interaction between industrial and office property markets and its relationship with planning policy. It theorizes about the substitutability between industrial and office accommodation and hypothesizes that the use of new industrial premises by nonmanufacturing operators may be the answer. Using the methodology of Johansen cointegration and a vector error correction model, our estimations have found that industrial rent, price, and supply were influenced by both changing economic structure and office market parameters. Cross-sectoral influences between industrial and office property markets were confirmed.

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Investment in industrial buildings: Modelling the determinants of new orders

Cited by 19 publications

References 13 publications

Use and Investment Markets in British Real Estate

Use and Investment Markets in British Real Estate

An urban growth model of office property development

Cross-Sectoral Influence, Planning Policy, and Industrial Property Market in a High-Density City: A Hong Kong Study 1978–2012

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