Determinants of industrial property rents in the Chicago metropolitan area

David Clark and Anthony Pennington-Cross

Regional Science and Urban Economics, 2016, vol. 56, issue C, 34-45

Abstract: Urban economists have long understood the theoretical importance of transportation infrastructure and accessibility on the location choice of households and firms. We utilize a readily available data set of transaction rents in the Chicago metropolitan area to investigate the determinants of industrial property rents. Among the factors considered are proximity to transportation infrastructure, characteristics of the property, the term structure of lease agreements, and local attributes of the neighborhood. Empirical results suggest property, lease, and local demographics play important roles in determining rents. Despite the fact that industrial property tends to locate very close to rail lines and interstate highways, transportation infrastructure has much less influence. There is evidence that there is an upward sloping lease term structure premium and that the premium varies over time. The model is also used to develop a constant quality rent index for the Chicago commercial property market. Compared to average rents and asking rents, the estimated constant quality index shows a smaller run up in rents from 2003 through 2008 and a larger drop off in rents through the end of 2011.

Keywords: Commercial property; Lease term structure; Transportation infrastructure; Hedonic (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0166046215000824
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:56:y:2016:i:c:p:34-45

DOI: 10.1016/j.regsciurbeco.2015.10.003

Access Statistics for this article

Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou

More articles in Regional Science and Urban Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().