The effects of enterprise zones on local property markets

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Abstract
Erickson R. A. and Syms P. M. (1986) The effects of enterprise zones on local property markets, Reg. Studies 20, 1–14. The local property market is a principal mechanism through which the effects of the enterprise zone and programme are distributed. Different responses by businesses and developers generate a complex set of possible outcomes. In addition, the boundary problem emerges as a ‘dual local property market’. Based on different combinations of demand for and supply of property in the zone, four scenarios of possible effects are identified. Data from the Salford-Trafford Park zones in Greater Manchester are analysed in an assessment of a low response scenario. The empirical results indicate that zone designation created a dual property market with distinctly different short-run effects in the zone and the periphery; industrial building rents in the zone increased significantly while rents in the periphery dropped. Landlords with holdings in the zone expropriated over 60% of the local rates exemption through higher rents. The scenarios approach could assist in predicting certain outcomes of major policy decisions.

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