Study shows huge disparity in U.S. urban land value, with NYC making up 10%

A recently-published study by economists at the University of Illinois and the University of Michigan shows that 48 percent–almost half–of the total value of America’s urban land can be found within the borders of five of what Citylab’s Richard Florida calls “superstar metro areas:” New York, Los Angeles, San Francisco, Washington, D.C., and Chicago. According to the study, the value of America’s urban land is a total of $25 trillion as of 2010—more than double the nation’s 2006 GDP. That’s an average of $511,000 per acre or $100,000 for the typical residential lot of a fifth of an acre. But in NYC, which makes up a whopping 10 percent of this total, an acre of land is worth more than $5 million.

Map: Martin Prosperity Intsitute via CityLab

The study comes at a time when land in general, especially in less populous areas of the country, is undergoing a value shift. The study confirms the obvious: Economic inequality is a serious and growing problem, but spatial inequality is worse. One acre of central land in New York City is worth approximately 72 times more than an equivalent acre of central Atlanta or Pittsburgh, and almost 1,400 times more than the Rust Belt and Sunbelt metro equivalent land. This massive gap in the value of urban land serves as a call to focus on the trend of geographic inequality in today’s America.

Map: Martin Prosperity Intsitute via CityLab

Though it tends to do so, the overall value of a metro area’s urban land doesn’t always follow population. New York’s is highest at a total of $2.5 trillion, followed by Los Angeles at $2.3 trillion. But the third most valuable urban land ($1.1 trillion) can be found in Washington, D.C.  which has the nation’s sixth largest population (in third-most-populous Chicago, urban land is worth $863 billion). The New York metro area also has the highest average price per acre at more than $5 million, followed by San Francisco, Honolulu, and Jersey City–directly across from Manhattan—where land is worth $3.3 million per acre. Los Angeles is fifth at $2.7 million per acre.

Chart: Metropolitan Land Values study via CityLab

The biggest shock is the gap between land values of those superstar cities and other American metro areas. The average price per acre in Chicago is only, $600,000 in Boston and $539,000 in Denver. In the sunbelt, land is worth even less: Phoenix stands at $452,000, Dallas at $305,000, Houston at $272,000 and Atlanta at $251,000. Even lower are traditional rust belt cities like Buffalo ($162,000) and Pittsburgh ($156,000). And those are just the bigger numbers.

On average, the value of central urban land is about four times that of  land over 10 miles from a city center. In superstar cities, the difference is far greater: In Chicago, Washington D.C., and Philadelphia, central land is about 30 times more valuable than the land that surrounds it; in New York and Denver, it’s about 20 times more valuable, and in Boston, San Francisco, Seattle, Portland, Austin, Dallas, and Houston, its value is 10 times higher. The high price of central urban land is seen as following the clustering of economic activity that has defined an urban revival that reached critical mass with the 21st century.

[Source: CityLab]

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