An indicator for decline of industrial estates

Urban decline is a much‐researched topic in both urban and real estate literature. Yet, there is no generally accepted measurable indicator for decline. This paper starts to fill this void. The purpose of this paper is threefold: to better understand the process of decline of one particular urban area, industrial estates; based on that, to identify a possible indicator for decline; and to take a first step in the empirical testing of the suitability of this indicator.

Building on a review of the literature on definitions of urban decline, and inspired by hedonic price models, the average property value per hectare is identified as a promising indicator for urban decline. Drawing on hedonic price studies explaining the value of individual industrial property, the paper subsequently distinguishes a number of independent variables likely to influence the average property value of an urban area. The paper uses a simple OLS regression to test whether the relation between these independent variables and average property value is in line with expectations.

The analysis shows that nearly all independent variables have the expected effect on average property values of industrial estates. From this the authors conclude that constructing an indicator for decline based on the average property value of an urban area can prove fruitful to measure decline.

The decline of industrial estates, as a particular type of urban area, has not received much attention in the international real estate literature. Furthermore, the identification of average property value as an indicator for the decline of urban areas is new.