Industrial Land and Property Markets: Market Processes, Market Institutions and Market Outcomes: The Dutch Case

Abstract

Outcomes of land and property markets may be understood by studying the effects of (interventions in) market processes and market institutions. Many studies have paid attention to the meaning of institutions for land and property development processes. The standpoint of this paper is that changes in the institutional order of the market may be considered to arrive at more desirable market outcomes. It will be argued that institutional economic theory offers a valuable theoretical approach to bring forward possible interventions in this institutional order. This theoretical approach to land and property development processes is applied to analyse one specific market outcome, the spatial layout of industrial parks in the Netherlands. Starting from the analysis of the oversupply of industrial land and the deterioration of existing industrial parks, the paper focuses on possible interventions to change the institutional order that should lead to more favourable market outcomes. For the present submarket for industrial land (building plots), a number of interventions are discussed to internalize the externalities that occur in this market and to increase the number of suppliers. Additional interventions are proposed to create a “new” submarket for new leasehold industrial property, which is almost absent in the case of industrial estates.