A major criterion for the selection of the two neighborhoods studied was a mixture of industrial and residential land uses. The other criteria included (1) recognized problems of physical deterioration, crime, and fear of crime in the area; (2) concern over industrial relocations within the area; (3) the potential for industrial expansion in the area; and (4) location of the neighborhood within an Industrial Council area and a Neighborhood Strategy area. Although any conclusions about the impact of neighborhood conditions on industrial flight are tentative at this stage, neighborhood-related problems seemed to be an important factor in industrialists' dissatisfaction with their locations and decisions to relocate. Not only were the industrialists concerned about the physical conditions of the area and crime occurrences there, but they were also aware that these problems exacerbated many of their business problems, such as obtaining financing for expansion or improvements and recruiting an adequate labor force. Further, a substantial proportion of the industrialists thought that the physical and social environment of the neighborhood heightened perceptions that the area is dangerous. This awareness of the importance of fear of crime as a problem distinct from crime itself and the influence of environmental factors on both was expressed by community leaders as well as industrialists. Thus, it appears that neighborhood conditions constitute an important factor in industrial development and retention in inner city areas. The environmental approach to crime prevention may be a particularly useful means of addressing these issues. Two notes are included. For the final research report, see NCJ 90475.