Challenge the future Delft University of Technology Rebuilding Business Premises versus Firm Relocation European Real Estate Society conference 2013 Vienna, Austria, 3th – 6 the July 2013 Erik Louw Delft University of Technology Faculty of Architecture and the Built Environment

2 Sustainability Since 2000 a lot of policy debates in the Netherlands about industrial land, because of: Its contribution to sprawl The large number of obsolete sites Increasing vacancy rates

3 Sequential test (SER-ladder) 1.Use space which has already designated for a particular use and/or could be made available after restructuring. 2.Do everything to increase ‘productivity’ of land by promoting multi-functional use of space. 3.In the last resort, consideration should be given to extending the amount of land designated for a particular use.

4 Sequential test at firm level in one Dutch municipality Before selling new industrial land to a firm investigation into: 1.Use current site for expansion. 2.Use vacant sites and building. 3.Use new sites. Policy assessment in 2010: Policy seems to work: 11% of firm who wanted to buy building land from municipality decided to stay at current site.

5 Literature review Literature is mainly about re-use of vacant buildings. Constraining factors for renovation (Ball: 2002): Structural elements (including age). Condition. Size (smaller premises can be more marketable). Accessibility. Design and situation of property. Nothing is known about rebuilding of renovation of premises that are still in use. Re-use seems different from extending existing use.

6 Chamber of Commerce Survey Among 27,000 firms in the middle of the Netherlands (both urban and rural areas). About: premises, plans to renovate and/or relocate business Response: (32,6%)

7 Investments in premises and relocations Last 3 yearsPlans Expansion of floor space12%3% Renovation of premises25%4% Relocation21% (last 5 years)8%

8 Reasons to renovate and not to relocate Present location is important: 53%. Relocation is more expensive: 26%. Renovation is faster to implement than a relocation: 25%. Various other reasons (all < 2%).

9 Reasons to relocate Premises is too small: 38%. It is a private relocation (small firms, business at home): 13%. Renovation was not possible: 8%. Other site is cheaper: 8%. Current site is inaccessible: 7%. Site or premises is not representative: 6%. Re-organisation of the firm (including mergers): 5%. Renovation was too expensive: 4%. Premises is too large: 4%. Characteristics of the premises: 3%. Environmental or safety reasons: 2%. From rental to ownership of premises: 2%. Expiring rental contract (no renewal of contract): 2%. Renovation takes too much time: 1%. Several others: 1%.

10 Variables to ‘explain’ the amount of renovation/rebuilding Type of premises (at home, industrial, office, shop or multi- user). Type of location (centre, residential area, industrial/business estate, rural area). Rental of ownerhip. Possibility to expand on site.

11 2 binary logistic regression models Model with all firms with either rebuilding/renovation or relovation plans (N=827). Model with only the firms wich want to expand (more space) their premises (N=335).

12 Model: all firms with plans Preliminaly results B Odds ratio 95% CI for odds ratio lowerupper Constant-0.38 Possibility to expand on site2,31*10, Centre locationReference Residential area-0.83* Industrial / business estate Outside build up area0.511, Premises at homeReference Multiple user premises-1.02* Industrial premises Office building Shop0.89* Nagelkerke R² = Percentage correct 53.1 → *Ρ<.01

13 Model: firms with needs more space and possibilities to expand on site Preliminaly results B Odds ratio 95% CI for odds ratio lowerupper Constant-3.25 Possibility to expand on site2.85* Centre locationReference Residential area Industrial / business estate Outside build up area1.81* Nagelkerke R² = Percentage correct 57.5 → *Ρ<.01

14 Conclusions There is potential for the sequential test. However: Only plans were tested. There are many reasons in which a relocation can not be prevented.