Office development in the central city

Abstract

This study pursues the thesis that the conventional concepts of urban ecology and land economics should not be invoked to explain the distribution of office space in the central city. First, it is argued that the concept of general metropolitan accessibility provides an unsatisfactory basis for explaining the continued concentration of office activities in the central city. Second,it is wrong to assume that the occupiers of office space were responsible for its development and therefore competed on the land market. Third, it is argued that the mechanisms implied in the graphical models used to describe competitive bidding are misleading for describing the operation of property markets controlled by investors. Finally, it is concluded that intermediaries in the property market played an important in perpetuating the concentration of office activities in the central city. 4 In presenting these arguments a new paradigm of office location is introduced. It is argued that office activities concentrated in the central city to gain the agglomeration advantages of local accessibility, functional convenience and prestige. The introduction of insurance companies and property companies as intermediaries in the office market perpetuated office concentration by providing rental accommodation and forcing owner-occupiers to assume the role of investors. The increased concentration of office space in established office districts allowed office activities to cluster more closely together and therefore enhanced the local agglomeration advantages of the central city. In addition a new model is introduced to explain the operation of land markets controlled by investors. It is argued that major investors used their financial strength to financially exclude rivals from low risk locations. A profit niche existed in areas where demand was high and competition from major investors was low. This allowed smaller rivals with limited financial resources to enter the property market. Beyond this area demand was lower and the profit niche disappeared so that the users of space were left to develop their own premises or modify existing buildings. Show more