Structural Density and Redevelopment _

# Structural Density and Redevelopment _ - Structural Density...

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Structural Density and Redevelopment Why are tall buildings concentrated in the downtowns ? Why are tall buildings more common in the downtowns of large cities?

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Developers combine land and structural inputs to produce floor space F : Rentable floor space in a building per acre (this is called FAR, floor to land area ratio) K: Structural inputs in a building per acre (this is called SD, structural density) P: Rent per unit of rentable floor space R: Rent per acre of land paid by developer of building. r: The price of capital inputs
Developers make zero economic profits PROFIT/acre = PF –rK – R = 0 PF: Rental revenue from floor space/acre rK: Cost of structural inputs/acre R: Rent per unit of land R = PF –rK This is the highest bid a developer will pay per acre

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Suppose the building’s tenants are consumers Y: income Z: cost of other goods consumed f: floor space demanded by consumer T: transport cost/mile (e.g. commuting cost to center) d: distance from center Y-Z-Pf-Td =0 The above equation says that the consumer spends all his income
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Structural Density and Redevelopment _ - Structural Density...

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