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An Investment Model of the Demand and Supply For Industrial Real Estate
Author(s) -
Wheaton William C.,
Torto Raymond G.
Publication year - 1990
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00536
Subject(s) - investment (military) , real estate , economics , metropolitan area , measure (data warehouse) , capital (architecture) , space (punctuation) , capital investment , production (economics) , finance , industrial organization , microeconomics , computer science , geography , archaeology , database , politics , political science , law , operating system
A recent inventory of industrial building in fifty‐two major metropolitan areas of the country indicates that most such space is either owner occupied or single tenant. This suggests that the production of industrial space may be modeled as a firm “investment” decision. Using the completion date of each inventoried building, we construct a time series of plant completions that moves similarly to some other national investment data. We are able to successfully estimate an “accelerator” type model of plant deliveries, driven by movements in employment and the after‐tax cost of corporate capital. Our model can be used to estimate a measure of excess plant capacity in the market, and historic values of this measure do move parallel to some recent industrial vacancy data.