How Urban Economic Theory helps Sell House Fast

How Urban Economic Theory helps Sell House Fast

Urban Economic Theory is essentially about the supply and demand of land and the distance-cost relationship. Spatial structure and urban growth theories attempt to explain how urban land use develops. Accessibility has been the key for the way that most land use has ever developed. As far back as 1826, Heinrich von Thunen was discussing the subject arguing that the greater the accessibility of a location meaning the lower the cost of movement in terms of distance, time, and convenience the greater the comparative advantage and the greater the demand for property at that location, hence the creation of the Central Business District (CBD) (Balchin et al1995).

This can be seen in the way that lawyers' offices have been traditionally located near to the law courts, or the way that stockbrokers have traditionally been located near the Stock Exchange. So, the more central the location, the higher the feasibility to develop intensely - the distance cost relationship. As the surrounding areas of the CBD prevent any outwards development, the development of the CBD is upwards with land intensification. However, this too hasa limit and as prices and land values in the CBD continue to rise, some development is forced to move into the surrounding areas. This gradually leads to an invasion' of the surrounding areas and can build up a complex land use structure as areas all

gradually evolve from one use to another the most rational use of the land.

Balchin et al (1995) however criticise most theories arguing that they "are unsatisfactory because they fail to take into account sufficiently suburbanisation, decentralisation, the development of sub-centres, greater flexibility of location, improvements in technology and transportation, and the effects of central and local government policies" (1995:18). Thus, not only are property researchers and theoreticians faced with difficulties unravelling the complexities of ongoing urban property development but, further, they have also tended to ignore the complex decision-making process that goes into choosing an alternative location (or the highly inefficient property market conditions). McMaster and Watkins (2000, in Leishman and Watkins 2004) argue that analysts need to learn more about the market process

including the consumer decision-making process. For example, in choosing to move to an out-of-town business park, an occupier will be making a trade-off with the advantages of being located in the CBD. However the trade-off is not just concerned with a lower rent, there are many additional attributes that would be gained by the move. Each company will hold different attributes important (some companies for example are far more unlikely to even consider a move out of the CBD), however it is still essential for developers to realise what attributes may be attractive enough to make a company choose to move away from the CBD.

So, while there is a set of reasonably established (but complex) factors influencing the way urban land is developing, a key question addressed in this project is why occupiers choose one location over another. Existing theories have over-looked this issue, focusing on rental values, which clearly decrease when a move is made away from the CBD. However, these theories have not been flexible enough to adapt to more recent phenomena emerging, such as advancements in IT which could mean that companies become less location sensitive, or even new business theories, which could serve to alter the nature of business and therefore effect occupier requirements in sell house fast.

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