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Projections in the Industrial Property Market using a Simultaneous Equation System

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  • Robert Thompson
  • Sotiris Tsolacos

Abstract

This article is the winner of the Industrial Real Estate manuscript prize (sponsored by the Society of Industrial and Office REALTORs) presented at the 1999 American Real Estate Society Annual Meeting.A three-equation simultaneous system is used to model the industrial property market in Great Britain. Strong relationships are found between new industrial building supply and both real rents and construction costs, and between rents, industrial floorspace availability and the gross domestic product. The performance of ex post simulations of new building supply, rents and floorspace availability are satisfactory with the exception of rent simulations post 1993. The central forecast of the model indicates a quiet market until 2001 (lower level of new supply, constant levels of real rents and increasing availability of industrial space) but a more active market in 2002 and 2003. This study suggests that simultaneous equation models can prove useful alternative tools in analyzing the industrial property market and generating forecasts both at the aggregate and more localized level of analysis.

Suggested Citation

  • Robert Thompson & Sotiris Tsolacos, 2000. "Projections in the Industrial Property Market using a Simultaneous Equation System," Journal of Real Estate Research, Taylor & Francis Journals, vol. 19(2), pages 165-188, January.
    • Handle: RePEc:taf:rjerxx:v:19:y:2000:i:2:p:165-188
    DOI: 10.1080/10835547.2000.12091014
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    1. John Benjamin & G. Donald Jud & Daniel T. Winkler, 1998. "A Simultaneous Model and Empirical Test of the Demand and Supply of Retail Space," Journal of Real Estate Research, American Real Estate Society, vol. 16(1), pages 1-14.
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    Cited by:

    1. Bob Thompson & Sotiris Tsolacos, 2001. "Industrial Land Values — A Guide to Future Markets?," Journal of Real Estate Research, American Real Estate Society, vol. 21(1/2), pages 55-76.
    2. Geoffrey Meen & Kenneth Gibb & Daniel Mackay & Michael White, 2001. "On The Interrelationship Between Housing and Industrial Construction," ERES eres2001_232, European Real Estate Society (ERES).
    3. Kim Hin David Ho & Satyanarain Rengarajan, 2017. "Industrial Real Estate Market Dynamics in Singapore: A VAR Approach," International Real Estate Review, Global Social Science Institute, vol. 20(4), pages 417-450.

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    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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