47 47

Land Utilization and the

Land Utilization and the
Rental Value of Real
Rental Value of Real
Estate
Estate
LDM GROUP
LDM GROUP
Franklin Templeton Asset Group
Franklin Templeton Asset Group
48 48
Economic Factors in
Economic Factors in
Land Use Decisions
Land Use Decisions

Location choice is primarily

Location choice is primarily
economic decision
economic decision

Economic models investigate

Economic models investigate
land development patterns
land development patterns

Market imperfections create

Market imperfections create
deviations, yet systematic
deviations, yet systematic
pattern is discernible
pattern is discernible

Clusters of stores for multiple

Clusters of stores for multiple
nuclei that create peaks in
nuclei that create peaks in
local land values
local land values
49 49
Economic Factors in
Economic Factors in
Land Use Decisions
Land Use Decisions

Friction of space
Friction of space

Linkages
Linkages

Transfer costs
Transfer costs

Processing costs
Processing costs
50 50
Figure 3.2
Figure 3.2
51 51
Figure 3.3
Figure 3.3
52 52
Figure 3.4
Figure 3.4
53 53
Figure 3.5
Figure 3.5
54 54
The Market for Rental
The Market for Rental
Space
Space

Competitive bids for best

Competitive bids for best
space create highest rents;
space create highest rents;
rents tend to decline as
rents tend to decline as
distance from 100 percent
distance from 100 percent
location increases
location increases

Overlapping of uses
Overlapping of uses
55 55
Market Structure and the
Market Structure and the
Need for Market Research
Need for Market Research

Atomistic markets (price takers) have Atomistic markets (price takers) have
little need for market research; sellers little need for market research; sellers
deliver homogeneous product to deliver homogeneous product to
whatever buyer is currently in the market whatever buyer is currently in the market
and sell for established and sell for established market price market price

Price searchers (those who operate in Price searchers (those who operate in
monopolistically competitive or monopolistically competitive or
oligopolistic markets) face more complex oligopolistic markets) face more complex
problem; control over market price is problem; control over market price is
closely related to the extent that their closely related to the extent that their
product is distinguished from closest product is distinguished from closest
substitute substitute

Each piece of real estate is unique with Each piece of real estate is unique with
respect to exact location respect to exact location

Product differences desensitize buyers to Product differences desensitize buyers to

price differentials price differentials

Price searchers with access to market Price searchers with access to market
intelligence benefit intelligence benefit