1. Urban Land Values and Urban Form
Lecture 3
Urban Land Values and Urban Form

2. Productivity and Value
The more productive land is, the more price and rent it will generate
Transportation costs are a major factor affecting productivity and, therefore, value of land
Gas
Public Transportation
Insurance
Capital Costs (purchase costs and real depreciation)
Time

3. Urban Form Physical spatial characteristics of a city
How big is the city spatially?
What is the overall density and geographical dimensions?
How does this density vary across different parts of the city?
What are the patterns of the locations of different land uses?
Where do high-income and low-income neighborhoods tend to locate?

4. Variations of Urban Form
Steep urban form with central focus of intense land use and value
Sprawled urban form with multiple focus points and even more land values
Value

5. Factors Influencing Spatial Patterns
The higher transportation costs are for a market as a whole, the steeper will be the land value gradient over space away from centers of economic activity.
The more populous a given region and the more concentrated the supply of land from natural or political regulation, the higher the value of useable land.
The more productive any given user of space, the more rent the user can pay.

6. Factors Influencing Spatial Patterns
In competitive markets, more efficient and productive users of space will need to pay excess profits in order to outbid other users.
Land captures all of the residual productivity through rents or prices.

7. Factors of Production
Land
Labor
Capital
Raw Materials

8. Residual Theory of Land Value
Land is only Factor of Production that is fixed in location—it cannot be moved
Value of labor, capital, and raw materials are derived first, as these factors are mobile (could be worth more elsewhere)
Rent is paid from remaining revenue after mobile factors are paid respective market costs

9. Residual Theory of Land Value
Revenue
$10,000,000
Less: Raw Materials
($4,000,000)
Less: Payroll
($5,000,000)
Less: Cost of Physical Capital
($900,000)
Profit After Mobile Factors
$100,000

10. Transportation Costs and Land Value
Major differences in land value from one location to another are differences in transportation costs
Energy Costs
Maintenance and Capital Costs
Time Costs

11. Monocentric Cities
Land Value is Highest
CBD

12. Multicentric Cities
Land Value is Highest
NBD
CBD
NBD

13. Lecture 3
Urban Sprawl

14. Problems with Land Sprawl
Traffic congestion and longer commute time
Auto pollution
Lost green space and farmland
Deterioration of the central city
Concentration of poverty and unemployment
Low-quality city schools
Loss of community
General economic inefficiency
Disregard for nature

15. Growth of Suburbs Increase in number of cars
Interstate system has decreased travel time
Zoning Changes

16. Government Problems with Suburban Growth
Governmental and public services of the central city are usually not decreased in line with fewer residents.
Middle- and upper-income populations have largely left the central urban core, placing most purchasing power in the suburbs
Traffic congestion from highways connecting CBD to suburbs, increasing transportation costs

17. Lecture 3
“Smart Growth”

18. Smart Growth
Planning concept that calls for more compact and transit-oriented development
Developed in 1990’s and early 2000’s
Aims at curbing sprawl, which is “spreading out the population away from an older central city core along with reduction in density of households”

19. Market Solutions to Traffic Congestion and Pollution
Increases in permitted building heights and density within all neighborhoods
Municipalities to encourage walkable communities with flexible mixed-use zoning clusters
Reduction in air pollution