The Highest and Best Use? Urban Industrial Land and Job Creation

Policy makers seeking to rezone urban industrial land often cite the need to attract or retain non-industrial or high-tech businesses that would otherwise locate in outlying areas or other regions. Yet industrial land may still play an important role in the 21st-century economy. This article describes how industrially-zoned land shapes the dynamics of business relocation and expansion in four San Francisco Bay Area cities. The analysis combines two unique data sets (the National Establishment Time Series and historic zoning maps) and uses multivariate analysis to examine the role of zoning in firm expansion, controlling for firm characteristics, industry, building characteristics, and location. Firm size plays the most important role, but the availability of industrially-zoned land and large buildings also helps firms to expand. The article concludes by outlining land use and economic development strategies that help cities target firms creating jobs on industrial land.