Source: adapted from R.L. Morrill. (1970) The Spatial Organization of Society.
Land Use Values and Activity Sectors
In an urban area land use value tends to vary according to the distance from the point of maximum accessibility, usually the central business district (CBD). Therefore, for each activity sector, such as commercial, multi-family or single family residential, land costs increase with proximity to the city center and decrease if they are located further away. Land costs are thus inversely proportional to distance from the CBD, but this function varies by the type of economic activity able to bid to occupy a specific location. For the commercial sector, the value curve represents three peaks where values increase, while, generally, values decline with distance from the city center. This implies clusters of commercial activities (central places) at specific urban and suburban locations to service local demand. The curves for both residential sectors (single and multiple family) also follow a general trend towards lower values but in a less dramatic fashion for single family residences (almost a straight line stretching far from the center) while the curve for multi-family housing land follows a more pronounced curve. It is important to note that costs vary with distance and that demand functions (and rent) indicate a propensity for more commercial real estate in the center at the expense of residences. The opposite applies with distance from the center. Therefore, a commercial site located outside the center would cost less but would yield correspondingly lower profitability. This perspective provides a basic understanding of the spatial organization of cities at a large scale, particularly in a market economy. It provides only a partial explanation since factors like geography (rivers, rugged terrain, marshes), history (the changes in the importance of a city, including the structure of its economic activities) and political (the location of institutions such as churches, seats of government and education) can play a significant role.