Rental depreciation, obsolescence and location: The case of industrial properties

This study explores the basic premise that depreciation/obsolescence will systematically vary by location and sets out to assess the spatial dimension to these processes. A series of hypotheses linking differential locational rates of depreciation within a framework of local industrial property market areas are developed. These hypotheses are tested by the use of hedonic regression analysis based on industrial properties in five industrial property market areas in west central Scotland. This is followed by a series of statistical tests to establish whether rates of depreciation are distinct in these local property market areas. The results demonstrate that the age coefficients, and hence depreciation, vary significantly between local industrial property markets and therefore support the essential contention of the study, namely the existence of spatial variations in the rate of depreciation. © 2005 Taylor & Francis.