Modelling the Drivers of the UK Multi-let Industrial Property Market: An Exploratory Study

Higgins, David and Tsvetomira, Vincent and Peter, Wood (2020) Modelling the Drivers of the UK Multi-let Industrial Property Market: An Exploratory Study. Property Management, 38 (4). pp. 585-596. ISSN 0263-7472

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Abstract

Multi-let industrial (MLI) estates are an emerging £15 billion UK real estate asset class that can offer attractive returns, a diversified income base, constrained supply and extensive management opportunities to add value within an operational platform. This investment appeal is supported by the evolving MLI occupier market with the growth of small to medium enterprises (SME) requiring modern urban business space driven in part by technology advances offering new streams of supply chain connectivity between businesses and potential clients at a local level. In detailing these key MLI property features, current research is limited and focused primarily on market commentary. New knowledge on the MLI property market can provide a platform creating interesting opportunities for fund managers with an intensive management engagement strategy.

To understand more about MLI properties, this study utilises a hedonic pricing model to quantify property values as a function of defined variables. The dataset used for this research is a sample portfolio of 26 multi-let industrial properties. The dataset was analysed alongside eleven physical, financial and locational factors. Interestingly, the hedonic pricing model results showed that only four characteristics are value-affecting across the selected properties: namely i) Granularity of the property income, ii) Distance from the nearest motorway, iii) Distance to the nearest town centre and iv) Gross internal floor area. A chi–test confirmed that there was no significant difference between the modelled values and the supplied property valuations. This preliminary study offers valuable insight into MLI property market drivers and could easily form a simple decision-making tool to examine potential MLI opportunities in this developing real estate asset class.

Item Type:	Article
Identification Number:	https://doi.org/10.1108/PM-10-2019-0057
Dates:	Date Event 17 May 2020 Accepted 20 June 2020 Published
Uncontrolled Keywords:	Multi-let industrial (MLI) properties; Hedonic pricing model; Key property characteristics; Small to medium enterprises (SME)
Subjects:	CAH13 - architecture, building and planning > CAH13-01 - architecture, building and planning > CAH13-01-01 - architecture CAH13 - architecture, building and planning > CAH13-01 - architecture, building and planning > CAH13-01-02 - building CAH13 - architecture, building and planning > CAH13-01 - architecture, building and planning > CAH13-01-04 - planning (urban, rural and regional) CAH17 - business and management > CAH17-01 - business and management > CAH17-01-02 - business studies
Divisions:	Faculty of Computing, Engineering and the Built Environment
Depositing User:	David Higgins
Date Deposited:	04 Jan 2021 10:01
Last Modified:	03 Mar 2022 15:49
URI:	https://www.open-access.bcu.ac.uk/id/eprint/10554

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