Urban land use and density are shaped by economic principles and social factors. The classical monocentric city model provides a foundation for understanding urban spatial economics, but real-world cities exhibit more complexity, reflected in two key models:

  • Concentric Ring Model (Burgess): Land uses form concentric rings around the city center. High-density, low-income housing is closer to the center, while lower-density, higher-income housing is farther out. This pattern reflects transportation costs, density preferences, and social factors like crime and education.
  • Sector Model (Hoyt): Land uses cluster in wedge-shaped sectors extending from the city center. Development patterns persist along these sectors, influenced by compatibility (e.g., industrial areas adjacent to low-income housing) and environmental factors (e.g., high-income areas upwind of industrial zones).

Both models highlight how land markets balance transportation costs, density, and preferences to maximize productivity, shaping the unique structure of each city.

Boundaries on urban land values and locational rent

The interplay between compatibility, externalities, and accessibility in shaping urban form:

Homogeneity and Land Use Clusters

  • Urban models, such as the concentric ring and sector models, demonstrate how similar land uses tend to cluster in cities due to shared transportation costs, locational needs, and agglomeration economies.
  • Zoning regulations reinforce this natural tendency, creating districts with relatively homogeneous land use.

Land Use Boundaries

  • Homogeneous districts inevitably result in boundaries between different land uses, affecting the location rent and land values of adjacent sites.
  • Compatibility between land uses enhances value. For example, residential neighborhoods benefit from proximity to grocery stores, while proximity to heavy industry can reduce residential value.

Spillover Effects and Externalities

  • Positive spillover effects occur when compatible land uses, such as residential and certain commercial areas, support each other.
  • Negative externalities, such as noise, traffic, or pollution from incompatible uses like heavy industry or airports, reduce nearby property values.

Bid-Rent Functions and Boundaries

  • Exhibit 5-6 illustrates how bid-rent changes near land use boundaries.
    • Initially low at the boundary due to negative externalities (e.g., traffic or noise).
    • Increases with distance as the negative impact subsides.
    • Eventually declines as accessibility diminishes.

Long-Term Implications

  • Over time, land markets and zoning regulations tend to separate incompatible uses and align compatible ones.
  • However, balancing accessibility and minimizing externalities requires careful planning to optimize land use efficiency and value.

This analysis underscores the importance of understanding both economic and regulatory influences in shaping urban land use patterns.

Polycentric cities

Polycentric cities feature multiple centers of economic and social activity, rather than being dominated by a single central business district (CBD). Below are the main takeaways:

Characteristics of Polycentric Cities

  1. Multiple Activity Centers (MACs):
    • Most metropolitan areas with populations over a million have other major centers alongside the CBD, such as:
      • Airports
      • Major medical centers
      • Sports or educational complexes
    • Suburban development includes regional shopping malls and, in some cases, large commercial centers known as edge cities, rivaling traditional CBDs.
  2. Polynuclear Cities:
    • Some cities have multiple major centers from their inception, like:
      • Twins: Examples include Minneapolis-St. Paul.
      • Multicentered conglomerates: The Los Angeles metropolitan area.
      • Clusters: The Ruhr region in Germany.
  3. Multiple Central Points:
    • Different land uses have unique central points based on where transportation costs are minimized. For instance:
      • A clothing factory might prioritize proximity to interstate highways.
      • A grocery store may value a location in the heart of a residential neighborhood.
    • These differing needs make it impossible for cities to remain perfectly monocentric.

Hierarchical Structure of Urban Centers

  • Urban centers often relate hierarchically, as described by Christaller’s urban hierarchy model.
  • In equilibrium, land rents and values are determined by the highest bid-rent curve at each location, reflecting its highest and best use.

Rent Gradients in Polycentric Cities

  • Exhibit 5-7 illustrates the rent gradients for cities with a dominant CBD and multiple outlying centers:
    • The highest bid-rent curve at each location determines land use and value.
    • Accessibility drives the intensity of land use in competitive markets, as more accessible land is both more valuable and used more intensely.

Interdependence of Accessibility and Productivity

  • Highly accessible sites are:
    • More valuable because they minimize transport costs.
    • Used more intensely, as their value incentivizes maximizing utility.
  • Accessibility and productivity are interconnected, with both factors shaping urban land values.

This polycentric model provides a more realistic framework for understanding urban land use patterns compared to monocentric models.

Neighborhood Succession Theory

This theory tracks changes in land use and value across time, unlike earlier models that focus on spatial variations.

Stages of the Life Cycle (Exhibit 5-8):

  1. Growth Phase (Point I):
    • Rapid development and rising land values as areas transition from agricultural to urban.
    • Development starts with low-density housing.
  2. Maturity Phase (Point II):
    • Values stabilize as development completes.
    • Refurbishment and replacement of old structures sustain the neighborhood’s character.
  3. Pressure to Change (Point III):
    • The area may evolve based on metropolitan dynamics, leading to:
      a. Rejuvenation: Higher land values attract redevelopment (e.g., higher-density housing, commercial uses).
      b. Decline: Declining attractiveness due to aging structures, economic or social challenges, or reduced transport costs.
  4. Turnaround Potential (Point IV):
    • Declined areas might rebound through redevelopment or gentrification, especially if favorable conditions arise (e.g., economic growth, favorable demographics).

Source:

Commercial Real Estate Analysis and Investments, D. M. Geltner, N. G. Miller, J. Clayton, P. Eichholtz