![]() ![]() For the purpose of this exercise, we will also include Southern Downtown ("SODO") as part of the industrial district. This area serves as the headquarters for several corporations (like Starbucks and Uwajimaya) as well as a major location for industrial buildings. Let's go a little further south to Seattle's formal industrial district. Office space in and around the CBD ranged from $25 to $55 per square foot per year Retail space in and around the CBD (including the Pike Market retail area) ranged from around $32 to $70 per square foot per year ![]() Single-bedroom apartments in the heart of the CBD ranged from $3200 to $3700 per month Using the parameters as defined in this map as of November 2022: 2 - Seattle's downtown area, including the CBD All prices shown are in US dollars.įirst, take a look at the map produced by the Office of the Seattle City Clerk, defining the general downtown area and the CBD within it:įig. Let's take a look at a few general patterns in Seattle, Washington, to determine the applicability of the bid rent theory. Many of these assumptions do hold true in many cases, but we will discuss the strengths and weaknesses of the bid rent theory a bit later. Profit/affordability proportional to population density is the single greatest determining factor for the desirability of a location for commerce.īid rent theory presents an urban layout that is in many ways very similar to the Concentric Zone Model or the Hoyt Sector Model. Transportation costs will be constant throughout the city i.e., transportation costs are lower when travelling within the CBD than when travelling from the residential district to the CBD because the geographic distance is shorter. The CBD will inherently be the most desirable area for a majority of people. Bid Rent Theory AssumptionsĪlonso made several assumptions about the internal structure of cities in formulating the bid rent theory:Ĭities will generally have distinct and recognizable districts, notably a centralized business district. 2 This book was significant in that it was one of the first modern attempts to explain rent costs in cities.Īlonso's ideas about land use and bid rent theory were later adapted for use in agricultural geography to explain the spatial distribution of intensive farming and extensive farming. After several positions in academia, Alonso wrote Location and Land Use: Toward a General Theory of Land Rent, which was first published in 1964. ![]() He is credited with creating the bid rent theory.Īlonso was born in Argentina but moved with his family to the US in 1946 when he was around 14. William Alonso (1933-1999) was an urban planner and economist. The bid rent theory implies that cities will organically create zones based on building function, that is to say, industry and commerce will not naturally be in the same areas of the city. These factors drive bid rent down relative to bid rent in the CBD. Social opportunities decrease in less densely populated areas, making them less attractive to residents.Īdditionally, the cost of transportation (both in terms of time and money) outweighs the benefit of cheaper rent outside the CBD. If production costs are fixed, the goal then becomes to reduce transportation costs as much as possible, which is why the densely populated CBD is the most desirable area for commerce.Ĭommerce will not be as common because businesses will want to maximize profits by being located in as dense an area as possible The "rent" in bid rent refers to revenue after production and transportation costs have been subtracted. Population density and commerce continue to increase in proportion to each other. Most cities' CBDs have a positive feedback loop in place: most commerce, retail activity, social opportunities, and urban conveniences are located in the CBD because that's where the population density is higher-and most people want to live in the CBD because that's where most commerce, retail activity, social opportunities, and urban conveniences are located or are taking place. CBDs are often built upon an original, historic "town centre." The CBD is the "heart" of the city in everyday language, we might call the CBD "downtown" or "the city centre," though some cities may classify their CBD as a part of downtown, as we will see later. Bid rent theory: Land/property/rental unit costs increase the closer one gets to a city's central business district.īid rent theory (which you may alternatively see written out as "bid-rent theory") builds upon very general urban patterns identified by urban geographers:Ī city will include a central business district (CBD), where most commerce takes placeĪ city will include an industrial district, where most manufacturing takes placeĪ city will include one or more outlying residential districts
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