The impact of planning on business development

This paper explores the relationship between planning policies and the performance of the industrial property market. There has been a growing research interest in measuring the impact of planning and land-use regulations on property market outcomes. Nevertheless, at least three main limitations have been highlighted in the literature that constrain the development of a stronger evidence base. These are insufficient attention for the impact of planning at the micro-level of supply, a relative lack of studies that assess the impact of planning on other than housing markets (i.e. office, retail, and industrial property markets) and inadequate consideration of the potentially varied impacts of different types of planning intervention. This research attempts to improve on these limitations by adding results from two novel datasets. The first contains information on individual building permits for a sample of Dutch municipalities who have given us access to their data. The data cover the period from 2004 to 2008. This permits an analysis of investment activity at the micro-level, looking at building investment at the level of individual sites allocated for industrial uses. The second dataset consists of a range of indicators that capture different dimensions of planning intervention. These indicators reflect the main policy actions and initiatives deployed by (local) governments in the Netherlands in order to influence business development. A model has been developed to estimate the effect of these planning indicators on investment activity in industrial buildings. The results provide some evidence of the negative effects on new construction often associated with planning induced restrictions on the amount of available land. However, it appears that more proactive (regeneration) policies, designed to improve the physical environment of particular sites, have a more profound and positive impact on investment in both refurbishment and new construction.