Industrial Rent Differentials: The Case of Greater Los Angeles

Abstract

In this paper the authors explore an integrated view of the relationship between location and industrial real-estate rents within decentralized metropolises. It is postulated that variations across space in industrial rents reflect spatial variations not only in productivity-enhancing firm amenities, but also in utility-bearing worker amenities and local institutional constraints on the supply of industrial space or land. To test for such influences, alternative empirical models employing 1990 industrial (production space) rents in Greater Los Angeles are estimated. Although firm amenities induce the strongest price effect, worker amenities and zoning constraints do play an important role in industrial pricing.