Urban Growth and District Analysis

Chapter: Urban Growth and District Analysis

Introduction

Understanding the dynamics of urban growth and the characteristics of different districts is crucial for real estate appraisal. This chapter explores the scientific underpinnings of urban growth patterns, examines various district types, and provides insights into how these factors influence property values. We will delve into established urban models, analyze the forces that shape districts, and discuss practical applications for appraisers.

1. City Origins and Growth Patterns

• 1.1 Siting Factors and Urban Genesis:

  • The origin of a city, referred to as its “siting,” significantly influences its subsequent growth and land use patterns. Cities often arise due to specific advantages related to:

    • Transportation: Seaports, river crossings, and intersections of trade routes.
    • Resources: Proximity to power sources (e.g., coalfields for manufacturing) or natural resources.
    • Strategic Importance: Defensive locations, commercial hubs, or political centers.
    • Amenity: Climate, scenic beauty, recreational opportunities, leading to specialized communities (e.g., retirement areas).

  • 1.2 Growth Vectors:

    • From its initial site, a city expands based on several factors:
      • Land Availability and Topography: The presence of developable land, or constraints caused by terrain (mountains, rivers, wetlands), influences the direction and density of growth.
      • Technological Advancements: Innovations in transportation (e.g., railroads, automobiles), construction (e.g., high-rise buildings), and infrastructure impact urban sprawl and densification.
      • Government Policies and Public Services: Zoning regulations, infrastructure investments (roads, utilities, public transportation), and urban planning initiatives shape growth patterns.
      • Market Forces: Supply and demand for housing, commercial space, and industrial areas drive development in specific locations.
    • Where land is scarce, cities tend to experience increased land use density, often through high-rise buildings or infill development. Development corridors concentrate new construction along accessible routes.
  • 1.3 Transportation’s Role:
    • Transportation improvements (e.g., highways, public transit) are major drivers of urban growth.
    • Accessibility: Improved transportation expands the market reach of urban centers, allowing them to serve larger populations and economic activities.
    • Spatial Organization: City growth typically radiates from the central business district (CBD) along major transportation routes. Freeway systems can lead to suburbanization and decentralization.
    • Mathematical Representation of Accessibility:

      • A basic measure of accessibility (A_i) to a location i can be expressed as:

        A_i = Σ_j (S_j / D_ij)

        Where:

        • S_j represents the size or attractiveness of destination j (e.g., employment opportunities, retail space).
        • D_ij is the distance or travel time between location i and destination j.

2. Conceptual Models of Urban Growth

• Several “social ecology” models attempt to explain and predict urban land use patterns. These models provide frameworks for understanding how cities evolve spatially.

  • 2.1 Concentric Zone Theory (Burgess Model):
    • Describes urban growth as a series of concentric rings expanding outward from the CBD. Each zone has distinct characteristics and land uses.
    • Zones:
      1. CBD (Central Business District)
      2. Transition Zone (Industry and low-income housing)
      3. Working-Class Zone (Modest homes)
      4. Residential Zone (Higher-income housing)
      5. Commuter Zone (Suburbs)
  • 2.2 Sector Theory (Hoyt Model):
    • Argues that urban growth occurs in sectors or wedges extending from the CBD along transportation corridors.
    • Key Idea: High-income residential areas expand outward, influencing the direction of growth and creating distinct sectors.
  • 2.3 Multiple Nuclei Theory (Harris and Ullman Model):
    • Posits that cities develop around multiple growth centers or nuclei, each with its specialized function (e.g., industrial parks, shopping centers, universities).
    • Factors:
      • Certain activities require specialized facilities (e.g., large areas for industrial plants).
      • Similar activities cluster to benefit from agglomeration economies.
      • Dissimilar activities may repel each other.
  • 2.4 Axial (Radial) Corridor Theory:
    • Combines elements of the Sector and Concentric Zone theories, emphasizing the role of transportation corridors in shaping urban growth along radial axes.

• Practical Application:

  • Experiment:
  • An appraiser can overlay these models onto a city map and analyze current land uses, zoning regulations, and transportation networks to understand the city’s growth history and predict future development patterns.

3. Characteristics of Real Estate Districts

• A real estate district is a geographically defined area characterized by a specific mix of land uses and shared value influences. Districts can be residential, commercial, industrial, or mixed-use.

  • 3.1 Value Influences within Districts:

    • The factors that affect property values in districts are similar to those affecting larger market areas (e.g., economic conditions, demographics, interest rates). However, the emphasis and relative importance of these factors vary depending on the district’s type and function.
    • Examples:
      • Residential Districts: School quality, neighborhood safety, proximity to amenities, commute times.
      • Commercial Districts: Traffic volume, visibility, accessibility, tenant mix.
      • Industrial Districts: Access to transportation, availability of labor, zoning regulations, environmental factors.
    • Four forces influencing real estate demand: Utility, scarcity, desire, and effective purchasing power.

  • 3.2 Key Factors Affecting Land Value:

    • Public Utilities: The availability of essential services like water, sewer, electricity, and internet connectivity is crucial for all types of districts.
    • Taxes: Property taxes and other local taxes impact the desirability of a district and are reflected in property values. High taxes can deter investment, while low taxes may attract businesses and residents.
    • Zoning and Land Use Regulations: Zoning laws dictate the permissible uses of land within a district and can significantly influence property values. Changes in zoning can lead to redevelopment and shifts in land values.
    • Environmental Factors: Environmental conditions, such as air and water quality, proximity to hazardous sites, and flood risks, can impact property values, especially in residential and industrial districts.
    • 3.3 Market Participant’s Idea of an Area’s Desirability:
    • A market participant’s idea of what makes an area desirable can be studied by analyzing comparable sales. The dollar and percentage differences among the sale prices of similar properties in different locations can provide the basis for this analysis.

4. One-Unit Residential Districts

• 4.1 Defining Characteristics:
  • Predominance of owner-occupied single-family homes.
  • Often characterized by community spirit and active homeowner associations.
• 4.2 Subdistricts:
  • Custom-built subdivisions.
  • Attached housing (condominiums, townhouses).
  • Senior housing.
  • Rural housing.
• 4.3 Value Influences:
  • Access to workplaces: Commuting time and proximity to employment centers.
  • Transportation service: Availability of public transportation and ease of access to major roads.
  • Access to amenities: Proximity to shopping centers, cultural facilities, parks, and recreational areas.
  • School quality: Reputation and performance of local schools.
  • Residential atmosphere and appearance: Street appeal, landscaping, and maintenance of properties.
  • Protection from unwanted intrusion: Buffer zones between residential and commercial/industrial areas.
  • Private and public land use restrictions: Covenants, conditions, and restrictions (CC&Rs) and zoning ordinances.
• 4.4 Impact of Telecommuting:
  • The growth of the telecommuting workforce is impacting residential districts, particularly in rural and exurban areas, as commute times become less critical.
  • The increased demand for larger homes with dedicated workspace can drive up property values in certain areas.

5. Multifamily Residential Districts

• 5.1 Defining Characteristics:
  • Predominance of rental occupancy and higher density than single-unit districts.
• 5.2 Subdistricts:
  • Multistory/high-rise buildings.
  • Garden apartments.
  • Row houses, townhouses.
  • Cooperative and condominium apartments.
  • Master-planned communities.
  • Mixed-use buildings.
• 5.3 Value Influences:
  • Access to workplaces, transportation, and amenities: Similar to single-unit districts, but proximity to public transportation is often more critical.
  • Vacancy and tenant turnover rate: Indicators of the district’s stability and desirability.
  • Proximity to employment and linkages: Highways and interstates.
  • Parking: Availability of parking for tenants and guests.
  • School districts:
  • Inventory levels:
  • Foreclosures and short sales:
  • Frequency of weather-related problems: Flooding, tornadoes, fires.

6. Commercial Districts

• 6.1 Defining Characteristics:
  • Concentration of retail stores, offices, and service establishments.
• 6.2 Types of Commercial Districts:
  • Highway Commercial Districts: Located along major roads or freeways, catering to passing traffic.
  • Retail Districts: Shopping centers, strip malls, and downtown retail areas.
  • Downtown Central Business Districts (CBDs): The traditional core of a city, with a mix of retail, office, and government uses.
• 6.3 Value Influences:
  • Trade Area: The geographic area from which a commercial district draws its customers. A healthy trade area is essential for the economic viability of the district.
  • Traffic Volume and Visibility: High traffic counts and prominent signage are important for retail businesses.
  • Accessibility and Parking: Easy access and ample parking are critical for attracting customers.
  • Tenant Mix: The types and quality of businesses in a district can influence its overall appeal and attract specific types of customers.
  • Proximity to other land uses: The compatibility of surrounding land uses can affect the desirability of a commercial district. For example, proximity to residential areas can provide a steady customer base.

7. Office Districts

• 7.1 Defining Characteristics:
  • Concentration of office buildings, ranging from small, low-rise structures to large, multistory buildings.
• 7.2 Types of Office Districts:
  • Central Business Districts (CBDs): Typically the largest concentration of office space in a city.
  • Suburban Office Parks: Planned developments with a mix of office buildings, amenities, and green space.
  • Strip Developments: Office buildings located along major traffic arteries.
• 7.3 Value Influences:
  • Location and Accessibility: Proximity to major transportation routes, airports, and residential areas.
  • Building Configuration: Floor plate size, ceiling height, and the availability of amenities.
  • Physical Characteristics: Visibility, attractiveness, quality of construction, and condition of properties.
  • Competition: The presence of existing or anticipated competition can affect rental rates and occupancy levels.
  • Parking and Transportation: Adequate parking and access to public transportation are crucial for attracting tenants and employees.
  • Vacancy and Rental Rates: Indicators of the health of the office market and the demand for office space.
    • Equation (Vacancy Rate)
    • Vacancy Rate = (Number of Vacant Units / Total Number of Units) * 100

8. Retail Districts

• 8.1 Defining Characteristics:
  • Concentration of competing retail locations.
• 8.2 Types of Retail Districts (Classified by Trade Area Size):
  • Regional Shopping Centers: Serve a wide geographic area (hundreds of thousands of people).
  • Community Shopping Centers: Serve a neighborhood or group of neighborhoods.
  • Neighborhood Shopping Centers: Serve the immediate surrounding area.
  • Specialty Centers: Focus on a specific type of merchandise or theme.
• 8.3 Value Influences:
  • Purchasing Power: The income and spending habits of the population in the trade area.
  • Location and Accessibility: Proximity to major roads, intersections, and transportation routes.
  • Visibility and Signage: Prominent visibility and effective signage are crucial for attracting customers.
  • Parking: Ample and convenient parking is essential for retail success.
  • Tenant Mix: A diverse and complementary mix of tenants can attract a wider range of customers.
  • Competition: The presence of competing retail centers can affect sales and rental rates.
  • Equation (Retail sales)
    • Retail Sales = Population * Disposable Income * Retail Sales Factor
      • Retail Sales Factor: This factor takes into account consumer preferences, trends, and shopping habits specific to the local market area.

Conclusion

Understanding urban growth patterns and the characteristics of different real estate districts is essential for accurate property appraisal. By applying the theories and concepts discussed in this chapter, appraisers can better analyze market areas, assess the factors that influence property values, and provide reliable valuations. The integration of theoretical models with practical observations allows for a more informed and comprehensive approach to real estate appraisal in the context of dynamic urban environments.