A critical analysis of industrial land demand forecasting

In spatial planning and commercial property markets demand forecasts are an important tool to make policy and investment decisions. However, there is only a small amount of research on the accuracy of those forecasts, especially in the case of medium and long term forecasts. In this paper I will analyse various forecasts on the demand for industrial land in the Netherland on the national, regional and local level. After a brief literature review on forecasting in commercial property markets, an overview will be given of the various forecasting models which are used on the various spatial levels. After this introduction, forecasts on the national and regional level in the period 1995-2005 are compared with the amount of land which was sold after the forecasts were made. It will be concluded that in almost all cases the demand forecasts exceeds actual demand. Also three case studies will be presented on how regional and local governments use forecasts during the planning of industrial estates. The paper concludes with an analysis on the causes for the inaccuracy of the forecasts. The analysis indicates that insufficient knowledge about industrial land use is one of the reasons for the inaccuracy, but also that there is a kind of optimism bias among the makers and users of the forecasts which unwittingly pushes demand levels upwards during the planning process.