Avoid Projects with high market risk (most hotels and motels, restaurants and entertainment facilities)
Ways to Minimize Market Risk
Avoid projects with prospective major change (lease rollover for major tenants, major renovations)
Ways to Minimize Market Risk
Study urban markets
Ways to Minimize Market Risk
Urban growth causes..
real estate market growth
Urban decline causes..
real estate market decline
Urban change causes..
real estate market change
Urban land use patterns dictate..
real estate location patterns
Linkages
are the attractions or important access needs that one land use has for other land uses.
Demand for access causes..
urban clustering
Competition for access creates..
the patterns of urban land uses
Preindustrial
fortress or religious center
From river to ocean, intersections of rivers, from water to rail, from rail to rail
are transition points in trade routes
Economic Base (Export Base)
activities that bring income into a city, is a set of economic activities that a city provides for the world beyond its boundaries.
Export activities
products or services provided to the outside world. (manufacturing, higher education and research, advanced health care), activities that attract money (retirement, tourism)
Secondary (Local Economic) activities
activities that recirculate income in a city (local gov. local merchants and services)
Economic base of a city determines its..
growth or decline
Most of the recirculation occurs through..
paychecks or commissions.
Employment is a..
particularly important measure of multiplier impact.
Exports bring dollars into the community
first part of the economic multiplier
Most is respent on local goods and services
second part of the economic multiplier
some leaks through outside expenditures
third part of the economic multiplier
some leaks into savings
fourth part of the economic multiplier
total community income is the sum of export dollars plus respent dollars
fifth part of the economic multiplier
More isolated cities tend to recirculate more..
base income locally
Multiplier effect is greater as city is..
more isolated, diversified, larger
Multiplier effect
base income is respent, producing additional income
The "gravity" that draws economic activity into forming cities is the need for..
access
Most urban land use is for..
local activities (retail centers, government and public land uses, medical offices, restaurants etc..)
The theory underlying the concept of economic base is that cities exist to serve..
the economic world
The size of an economic base multiplier depends on the amount of " " from the local economy.
exports
One quick indicator of a community's economic base is called a..
location quotient
1) compute the % of total local employment in a given industry (education 20%)
2) compute same % for national economy (9%)
3) compute ratio of local to national % (20%/9%=2.22)
Location quotient calculation.
interpretation: local economy has 2.22 times the normal education employment; education must be an export industry.
Supply factors affecting a community economic base
labor force characteristics (existing/available labor force) , quality of life, leadership
special skills, educational level, unionization, work ethic
labor force characteristics
Increasingly, knowledge -intensive firms are..
sensitive to quality of life issues, they want to be where the chara. of the community can provide their employees an enriching and satisfying lifestyle.
Companies are concerned with the business..
leadership and environment
The customary analysis of a city's economic base tends to focus on _____, which tends to be a short-term phenomenon.
external demand
Industry economies of scale
the growth of an industry within a locality that creates special resources and cost advantages for that industry (efficiencies of production due to scale of local industry)
Agglomeration economies
the emergence of specialized resources in response to demand from multiple industries. (efficiencies is production due to multiple different (large scale) local industries (airport service, financial services, and banking etc..) )
Agglomeration economies is perhaps the distinctive feature of..
very large cities
cities with industry economies may be more resistant to..
downturns due to cost advantage
cities with agglomeration economies may have..
long-term advantages: incubator for new businesses, cost advantage for emerging industries
Bid-Rent Model
model of how land users bid for location that reveals the influences on how density of land use is determined, how competing urban land uses sort out their locations, how urban land value is determined, and why land uses change over time.
Cost efficiencies that arise in a city due to concentration of an industry are called ____ whereas cost efficiencies arising from concentration of multiple industries is called ____.
industry economies of scale, agglomeration economies
1)# of bidders (commuters or firms)
2)Wage rate (time cost) of commuters
3)Speed of travel
4)Frequency of trips
factors that affect a bid-rent curve
Bid-rent analysis
explains how urban land uses are determined, assumes households or firms have one demand for access (single linkage)
Burgess concentric circle model 1923, Hoyt Sector Model 1939, Harris and Ulman Multinuclei Model 1945
Three observed patterns of urban form
Concentric ring model
model created by Burgess that offered a concentric ring model of urban form in which the center circle is the CBD. Adjacent to it is a zone of transition which contained warehousing and other industrial land uses. THis was followed by a ring of lower-inco
Sector Model
model of urban form proposed by Homer Hoyt that is characterized by radial corridors or wedges, particularly for higher income residential land use.
Multinuclei city
phrase coined by Harris and Ullman in a landmark study that described the effects of the motor vehicle, combined with new technologies of production, that released the city from its absolute ties to the CBD.
Automotive revolution
1920: one car per 13 persons
1930: one care per 5 persons
2003: more than one care per driver
Half of all roads were hard surface by..
1940
Interstate system beginning in..
1955
The bus enabled the creation of..
lateral as well as radial passenger routes, with flexibility of routes to accommodate change.
Production Revolution
birth of the assembly line, horizontal rather than vertical processes, effect of the telephone on decentralization
In the postwar era, flexibility in location was further advanced by the trend in the economy away form heavy manufacturing and toward services, thus was increasing recognition of the growth of _______ industries that were not tied to the rail lines, ports
footloose
Advances for offices and retailing
first, during the 1930s fluorescent lighting became effective, air-conditionning, self-service retailing (rise of packaging and advertising)
Data processing and communications
advances in telephones, birth of computers, and explosion of "cyberspace
Dispersion of employment and urban functions to suburbs
effects of technological change on urban form
obsolescence of older structures
vertical manufacturing facilities, low-ceiling, small-depth buildings, non-ari- conditioned office and retail buildings.
Convenience activities
meaning that users seek to obtain the good or service from the closest available source.
Locational Pattern
tends toward uniform dispersion.
Distance of separation depends on customer ______ and minimum required _____ size.
concentration, market
Central place pattern
a location pattern in which similar economic entities, such as a particular type of convenience service or retail establishment, tend to disperse evenly over the market region.
If the influence of transportation routes and constraints such as turning barriers were ignored, and if the density of customers were even, the resulting pattern of locations and markets would be a..
honeycomb of hexagonal markets with an establishment at the center of each cell in the honeycomb.
The difference in hierarchy is by..
area or population required for a viable market.
The important features of all central place activities is that they tend to be evenly..
dispersed, and serve some minimum population requirement as a threshold market.
Comparison activities
goods or services whose optimal location pattern is clustering. (shopping malls)
The opposite of central place location patterns is..
clustering
The most important meaning of location is..
location within a matrix of urban activities
The location of a parcel is about its ____ or ____ to various nodes within the urban matrix.
linkages, access
The nature of this _____depends on the type of land _____ being considered.
location, use
A weak location for a central place or convenience activity may be a strong location for..
warehouses.
The "gravity" that draws economic activity into clusters is:
Demand for access or proximity
Spatial or distance relationships that are important to a land use are called its:
Linkages
Cities have tended to grow where:
Transportation modes intersect or change.
The economic base multiplier of a city tends to be greater if the city is:
Larger
The best example of a base economic activity would be a:
Regional sales office
Important supply factors affecting a city's growth or growth potential include all of the following except the:
Unemployment rate
Which influences will decrease the level of a bid-rent curve at the center of the city?
Faster travel time
In a system of bid-rent curves, assuming that households are identical except for the feature noted, which of these prospective bidders will bid successfully for the sites nearest to the CBD?
Households with the number of commuting workers.
A large university is an example of what kind of economic phenomenon?
Industry economies of scale.
Which of these are true about agglomeration economies?
they result from demand created by multiple industries, they create a readily available supply of highly specialized goods and labor, they tend to reduce risks in real estate, they occur in larger cities.
historically cities tended to form at the..
intersection of different modes of transportation.
the theory underlying the concept of economic base is that..
cities exist to serve the economic world at large.
The size of an economic base multiplier depends on the amount of..
leakage from the local economy.
the customary analysis of a city's economic base tends to focus on..
external demand, which tends to be short-term phenomenon.
cost efficiencies that arise in a city due to concentration of an industry are called..
industry economies of scale, whereas cost efficiencies arising from concentration of multiple industries are called agglomeration economies.
the economic incentive that gives rise to bid-rent curves is the desire to..
reduce commuting time.
a person who commutes on foot will always outbid a person who commutes by ___ for space near downtown because the pedestrian commuter's cost of traveling is far ____.
car, greater
the Burgess concentric model of urban form was conceived in an era when the dominant form of transportation was by ___ and the principal method of moving goods within factories was by ___.
railway, elevator
the radial or "pie slice" pattern in the Hoyt sector model of urban form probably can be explained by the dominance of the ___(fixed rail transit) for intraurban transportation at the time the model was formulated.
streetcar
One of the most profound forces bringing change in urban form in the united states is the ___. Whereas cars were a novelty in 1915, most households owned one by about 1930.
automobile
the demand for space for horizontal factories was greatly accelerated in the 1920s by the development of...
assembly line production
modern office structures and retail facilities were not possible before the development of ____ and ____.
air conditioning and fluorescent lighting
the essential feature of a convenience good or central place activity is that households, in acquiring it, go to the...
closest source
the location tendency of comparison activities is to ____, whereas the location tendency of convenience activities is to___.
cluster, disperse