Manufacturing versus Distribution: Implicit Pricing of Real Property Characteristics by Submarket

This article develops and tests the idea that the industrial real estate market is an aggregate market consisting of at least two submarkets—manufacturing and distribution. While there is no observable difference in implicit pricing of most industrial property characteristics across these two submarkets, some property-characteristic implicit prices do differ. Therefore, manufacturing and distribution submarket property-pricing functions are best estimated in aggregate, while making allowances for variability of coefficients on some property characteristics. For this sample of 331 industrial property sales from the southeastern region of the United States, the two submarkets vary with regard to implicit pricing of building volume, below-average building condition, site area, and dock-high doors.