Rational expectations? Developer behaviour and development cycles in the central London office market

Purpose – Expectations of future market conditions are acknowledged to be crucial for the development decision and hence for shaping the built environment. The purpose of this paper is to study the central London office market from 1987 to 2009 and test for evidence of rational, adaptive and naive expectations. Design/methodology/approach – Two parallel approaches are applied to test for either rational or adaptive/naive expectations: vector auto-regressive (VAR) approach with Granger causality tests and recursive OLS regression with one-step forecasts. Findings – Applying VAR models and a recursive OLS regression with one-step forecasts, the authors do not find evidence of adaptive and naïve expectations of developers. Although the magnitude of the errors and the length of time lags between market signal and construction starts vary over time and development cycles, the results confirm that developer decisions are explained, to a large extent, by contemporaneous and historic conditions in both the City and the West End, but this is more likely to stem from the lengthy design, financing and planning permission processes rather than adaptive or naive expectations. Research limitations/implications – More generally, the results of this study suggest that real estate cycles are largely generated endogenously rather than being the result of large demand shocks and/or irrational behaviour. Practical implications – Developers may be able to generate excess profits by exploiting market inefficiencies but this may be hindered in practice by the long periods necessary for planning and construction of the asset. Originality/value – This paper focuses the scholarly debate of real estate cycles on the role of expectations. It is also one of very few spatially disaggregate studies of the subject matter.

Processes controlling DOC in pore water during simulated drought cycles in six different UK peats

The effect of episodic drought on dissolved organic carbon (DOC) dynamics in peatlands has been the subject of considerable debate, as decomposition and DOC production is thought to increase under aerobic conditions, yet decreased DOC concentrations have been observed during drought periods. Decreased DOC solubility due to drought-induced acidification driven by sulphur (S) redox reactions has been proposed as a causal mechanism; however evidence is based on a limited number of studies carried out at a few sites. To test this hypothesis on a range of different peats, we carried out controlled drought simulation experiments on peat cores collected from six sites across Great Britain. Our data show a concurrent increase in sulphate (SO4) and a decrease in DOC across all sites during simulated water table draw-down, although the magnitude of the relationship between SO4 and DOC differed between sites. Instead, we found a consistent relationship across all sites between DOC decrease and acidification measured by the pore water acid neutralising capacity (ANC). ANC provided a more consistent measure of drought-induced acidification than SO4 alone because it accounts for differences in base cation and acid anions concentrations between sites. Rewetting resulted in rapid DOC increases without a concurrent increase in soil respiration, suggesting DOC changes were primarily controlled by soil acidity not soil biota. These results highlight the need for an integrated analysis of hydrologically driven chemical and biological processes in peatlands to improve our understanding and ability to predict the interaction between atmospheric pollution and changing climatic conditions from plot to regional and global scales.

Diurnal and seasonal cycles of cloud occurrences, types and radiative impact over West Africa

This study focuses on the occurrence and type of clouds observed in West Africa, a subject which has neither been much documented nor quantified. It takes advantage of data collected above Niamey in 2006 with the ARM mobile facility. A survey of cloud characteristics inferred from ground measurements is presented with a focus on their seasonal evolution and diurnal cycle. Four types of clouds are distinguished: high-level clouds, deep convective clouds, shallow convective clouds and mid-level clouds. A frequent occurrence of the latter clouds located at the top of the Saharan Air Layer is highlighted. High-level clouds are ubiquitous throughout the period whereas shallow convective clouds are mainly noticeable during the core of the monsoon. The diurnal cycle of each cloud category and its seasonal evolution is investigated. CloudSat and CALIPSO data are used in order to demonstrate that these four cloud types (in addition to stratocumulus clouds over the ocean) are not a particularity of the Niamey region and that mid-level clouds are present over the Sahara during most of the Monsoon season. Moreover, using complementary data sets, the radiative impact of each type of clouds at the surface level has been quantified in the shortwave and longwave domain. Mid-level clouds and anvil clouds have the largest impact respectively in longwave (about 15 W m−2) and the shortwave (about 150 W m−2). Furthermore, mid-level clouds exert a strong radiative forcing in Spring at a time when the other cloud types are less numerous.

Cycles and steps in British commercial property values

This paper examines cyclical behaviour in commercial property values over the period 1956 to 1996, using a structural times series (unobserved components) approach. The influence of the transition to short rent reviews during the late 1960s and the short and long-term impacts of the 1974 and 1990 property crashes are also incorporated into the analysis, via dummy variables. It is found that once these variables are taken into account a fairly regular cyclical pattern can be discerned, with a period of about 7.8 years. Furthermore, the 1974 and 1990 property crashes are shown to have had a major long-term impact on property value growth (presumably via their influence on investors' expectations).

Concordance in global office market cycles

A large proportion of international real estate investment is concentrated in the office markets of the world’s largest cities. However, many of these global cities are also key financial services centres, highlighting the possibility of reduced economic diversification from an investor’s perspective. This paper assesses the degree of synchronization in cycles across twenty of the world’s largest office markets, finding evidence of significant concordance across a large number of markets. The results highlight the problems associated with commonalities in the underlying economic bases of the markets. The concentration of investment also raises the possibility of common flow of funds effects that may further reduce diversification opportunities.

Evidence of cycles in European commercial real estate markets and some hypotheses

In this paper, we seek to achieve four objectives. First, we provide some contextual material concerning the performance of the UK real estate market relative to stocks and bonds over a long period. Second, we provide UK – and some non-UK European - evidence of the tendency for property demand, supply, prices and returns to fluctuate around their long term trends or averages. Third, we briefly examine some hypotheses which suggest institutional contributions to property cycles in European markets. Fourth, we suggest some reasons why the future may not be as cyclical as the past.

Effects of repeated cycles of acid challenge and growth on the phenotype and virulence of Salmonella enterica

Aims: The aim of the study was to investigate how stresses like low pH, which may be encountered in farms or food preparation premises, shape populations of Salmonella enterica by the selection of stress-resistant variants. Methods and Results: Stationary-phase cultures of S. enterica serovar Enteritidis and serovar Typhimurium (one strain of each) were exposed to pH 2Æ5 for up to 4 h, followed by growth at pH 7 for 48 h. This process was repeated 15 times in two separate experiments, which increased the acid resistance of the three out of four populations we obtained, by three- to fourfold. Sustainable variants derived from the populations showed changes in colony morphology, expression of SEF17 fimbriae, growth, increased heat resistance and reduced virulence. Conclusions: The study demonstrates that low pH environments can select for populations of S. enterica with persistent phenotypic changes such as increased acid resistance and occasionally increased SEF17 expression and lower virulence. Significance and Impact of the Study: There is a common belief that increased acid resistance coincides with increased virulence. This study demonstrates for the first time that increased acid resistance often impairs virulence and affects the general phenotype of S. enterica.

Climate change and coupling of macronutrient cycles along the atmospheric, terrestrial, freshwater and estuarine continuum

This paper provides an introduction to the Special Issue on “Climate Change and Coupling of Macronutrient Cycles along the Atmospheric, Terrestrial, Freshwater and Estuarine Continuum”, dedicated to Colin Neal on his retirement. It is not intended to be a review of this vast subject, but an attempt to synthesize some of the major findings from the 22 contributions to the Special Issue in the context of what is already known. The major research challenges involved in understanding coupled macronutrient cycles in these environmental media are highlighted, and the difficulties of making credible predictions of the effects of climate change are discussed. Of particular concern is the possibility of interactions which will enhance greenhouse gas concentrations and provide positive feedback to global warming.

Nuclear fuel cycles: interfaces with the environment

The waste materials generated in the nuclear fuel cycle are very varied,ranging from the tailings arising from mining and processing uranium ore, depleted uranium in a range of chemical forms, to a range of process wastes of differing activities and properties. Indeed, the wastes generated are intimately linked to the options selected in operating the nuclear fuel cycle, most obviously to the management of spent fuel. An open fuel cycle implies the disposal of highly radioactive spent fuel, whereas a closed fuel cycle generates a complex array of waste streams. On the other hand, a closed fuel cycle offers options for waste management, for example reduction in highly active waste volume, decreased radiotoxicity, and removal of fissile material. Many technological options have been proposed or explored, and each brings its own particular mix of wastes and environmental challenges.