Our paper begins with a review of the relationship between sustainability and the compact city in the information age. We defined two dimensions of the compact city: physical and functional. The need for more scientific and objective knowledge leads to a whole range of research on the compactness of urban settlement patterns. However, questions to how compact is sustainable and how sustainable is compact have yet to be answered for the most part. This induces us to create a ARC/INFO-database of land-use patterns and to model the physical compactness of 116 German Regional Cities. Moreover, we calculated the degree of sealing and land price of these cities. There are many examples of claims and counter-claims within compact city theory (contradictions): compact city versus telecommunication-rich dispersal, the green city, suburban quality of life, and rural economic development. It is claimed that the compact city can improve the economic attractiveness of an area; but it could be argued that the compact city generates higher land prices, making housing and business premises prohibitively expensive. For these reasons, we carried out the cluster analysis for the 116 cities with the variables' degree of sealing as an ecological indicator and land price or gross value-added per m2 of settlement areas as an economic indicator, in order to find out the sustainable balance between ecological and economic performance potential and to extrapolate benchmark values and recommendations for sustainable urban development. © 2002 Elsevier Science Inc. All rights reserved.