Redeveloping brownfield land The decision‐making process
| Published date | 01 December 1999 |
| Pages | 481-500 |
| DOI | https://doi.org/10.1108/14635789910294903 |
| Date | 01 December 1999 |
| Author | Paul Syms |
| Subject Matter | Property management & built environment |
Academic papers:
Redeveloping
brownfield land
481
Journal of Property Investment &
Finance, Vol. 17 No. 5, 1999,
pp. 481-500. #MCB University
Press, 1463-578X
Received January 1999
Revised April 199
ACADEMIC PAPERS
Redeveloping brownfield land
The decision-making process
Paul Syms
Paul Syms Associates, Macclesfield, Cheshire, UK and
Sheffield Hallam University, Sheffield, UK
Keywords Valuation, Redevelopment, Risk assessment, Environment, Contamination
Abstract ``Location'' is undoubtedly one of the most important factors in deciding whether or not to
undertake a property development; however, when considering the redevelopment of a ``brownfield''
site it may be only one of a number of issues which need to be considered as part of the decision-
making process. Issues such as the environmental and economic cost of reclaiming or remediating
land will assume an importance which does not exist with greenfield sites. The potential for harm,
both to human beings and to the wider environment, will have to be considered, especially if any
contamination is to be left on the site. Many brownfield sites are small in size, requiring the assembly
of a number of sites, in different ownerships, in order to have a viable development project and they
may also be plagued with problems such as inadequate access and obsolete services. The availability of
tax incentives, or indeed penalties, to encourage brownfield redevelopment, together the possibility of
obtaining insurance cover, will need to be factored into a valuation or development appraisal. This
paper considers the issues to be considered as part of the decision making process. Some issues relate
specifically to the assessment of risk, such as the potential for harms to humans, buildings or the
environment, but taken altogether they should form part of a risk assessment strategy to determine
the viability of development projects and the value, positive or negative, of brownfield development
land. The paper reports on a survey of surveyors, developers and other professionals undertaken in
the second half of 1998. It concludes that, while property professionals do not undertake a formal
``risk assessment'' procedure, they do take account of environmental as well as financial issues when
deciding whether or not to proceed with the redevelopment of brownfield land.
Introduction
It is generally accepted that ``location'' is the most important criterion to be
factored into the decision-making process when deciding on whether or not to
undertake a property development. Prudent developers will thus tend to seek
out those locations which are best located for their intended product. This
would appear to imply that only ``prime'' locations should be considered for new
developments, for a secondary location will represent a higher risk to the
developer in terms of achieving a letting/sale and securing funding (Cadman
and Topping, 1995). In practice, development does not occur only on sites in
prime locations, as some developers are prepared to take higher than average
risks in return for an anticipated enhancement in the eventual development
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This research formed the first phase of a two-year research project, Releasing Brownfields,
which is funded by the Joseph Rowntree Foundation. The next stage will be to develop these
issues further with the respondent population, through a series of regional seminars. These
seminars will seek to identify other factors which are of importance in brownfield
redevelopment and, ultimately, to make recommendations as to both policy and practice.
JPIF
17,5
482
profit. Such developers may be willing, as part of their decision making
process, to trade off a less than ideal location against other factors, such as a
perceived undersupply of premises of a particular type, or the availability of
public sector funded incentives.
While location may be of significant importance in most, if not all,
development situations, when it comes to the redevelopment of previously used
land it is only one of a number of factors which will vie with each other in terms
of importance. Intending developers and their advisers need to consider the
degree of importance to be attached to each of these as part of the decision-
making process. Uppermost in the minds of potential developers will be the
question of whether or not the land has been ``stigmatised'' by its previous use.
In this context, stigma is generally perceived as having a relationship with the
presence of contaminative substances on the site. The question of stigma has
been considered in the USA by Mundy (1992a; 1992b; 1992c), Patchin (1988;
1991a; 1991b; 1994) and Wilson (1994; 1996) and in the UK by Kennedy (1998),
Lizieri et al. (1995), Richards (1995; 1997), Syms (1997a) and Wiltshaw (1996;,
1998).
While most commentators would agree that stigma is a key factor in
lowering the value of land which is actually, or potentially, contaminated
(Wiltshaw, 1998), there is some disagreement as to the appropriate methods for
use in determining the impact of any such stigma on property values. For
example, Mundy, Kennedy and Richards adopt techniques based on the
discounting of investment values, while Patchin and Syms prefer a ``sales
comparison'' approach, which seeks to compare valuesby taking account of the
degree of contamination present in sites which may not otherwise be strictly
regarded as comparable. Wiltshaw (1998) proposes an analytical ``perception
based'' approach, which takes account both of the rational ``expert'' view of the
causality of stigma and the sentiment of the ``non-expert''. There is also
disagreement as to the extent, if any, that any value stigma persists followinga
properly designed and executed programme of site remediation and
redevelopment. It can be argued that the stigma factor, as it relates to
environmental impairment is simply one of a number of issues which need to be
taken into account when considering whether or not to redevelop brownfield
land. This paper seeks to identifyand discuss a number of these issues.
Government policy in the UK is that, wherever possible, brownfield or
recycled land should be developed in preference to ``greenfield'' land (Prescott,
1998). This policy is usually referred to in the context of meeting the projected
requirement for new homes (DoE, 1996a) but, as stressed by Perowne (1998), it
may not be desirablefor the re-use of such land for housing purposesto be given
such a high priorityas to exclude other, non-housing,forms of development.
Many brownfield sites are located in inner urban areas and their location
may, in theory, appear well suited to redevelopment; for example in close
proximity to city centres, or close to rail termini and other public transport
facilities, but the realities may be somewhat different. The inner urban location
may also be a high crime area, the road and service infrastructures may have
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