Contemporary Modifications to the Land Rent Theory

Contemporary Modifications to the Land Rent Theory

In most contemporary cities the land rent theory is still relevant, but requires modifying some of its basic assumptions:

  • The downtown area is not necessarily the most accessible location. The rapid extension of highway systems has spurred developments in new locations away from the CBD, notably in suburbia (E). This has favored the emergence of sub-centers (D) having a concentration of retailing, commercial, distribution, and manufacturing activities.
  • Improvements in transportation and telecommunications have made several activities far more tolerant to distance, but still dependent on accessibility. The urban land use pattern thus tends to be far less coherent, more specialized, and dispersed.
  • A significant share of the land, notably nearby central areas, is captured and not available on real estate markets. Governments, institutions, parks, industries, and transport infrastructures occupy a large part of most central areas and this ownership can last for several decades (if not several centuries for historical landmarks). This caused an imbalance in the price-fixing mechanism in central areas with less land available (thus higher prices) that have favored urban sprawl.