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Chapter 4 Urban Land Values, Transportation Costs Impact and the Urban Form

Chapter 4 Urban Land Values, Transportation Costs Impact and the Urban Form. “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner. Major Topics. How transportation costs and productivity affect land values in a city

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Chapter 4 Urban Land Values, Transportation Costs Impact and the Urban Form

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  1. Chapter 4Urban Land Values, Transportation Costs Impact and the Urban Form “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  2. Major Topics • How transportation costs and productivity affect land values in a city • Why and how a freely functional competitive land market will lead to land being used at its “highest and best use” • The impact of population growth, transport nodes and regulation on land values and density “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  3. Urban Form Physical spatial characteristics of a city • Size • Population density • Density variation in different parts Value A steep urban form with a central focus of intense land use and value A sprawled urban form with multiple focus points and more even land values. “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  4. Residual Nature of Land Value • Four basic “factors of production • Labor, capital and raw materials are “mobile” factors • Land is not “mobile” “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  5. Transportation Costs • A major reason for differences in land value from one location to another. • Transport costs are part of “mobile” costs, hence lower transport cost = higher land value • When the highest and best use of land wins the site the aggregate transportation costs are minimized for the market as whole “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  6. Land Rent A B C Zone of Use B Center Distance from Center The “Bid-Rent” Curve • The “bid-rent” is the maximum rent that a potential user would be willing to pay for a site or location Bid-Rent Functions of Three Land Uses With Differing Productivity & Sensitivity to Transport Cost “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  7. Changes in Transportation Costs “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  8. Multiple Nuclei Cities • Real world cities are not purely monocentric, they have other major activity areas (MACs) besides the CBD. • Large cities are sprinkled with neighborhood business districts (NBDs) that serve needs of local communities CBD where land value is highest Multiple clusters of economic centers Suburban retail and office cluster CBD NBD NBD NBD “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

  9. Impact of Highways on Land Values

  10. END “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

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