Academic journal article The Journal of Real Estate Research

Strategic Significance of the Inner City to the Property Discipline

Academic journal article The Journal of Real Estate Research

Strategic Significance of the Inner City to the Property Discipline

Article excerpt

Abstract Central to strategies for and involvement in the inner city real estate market is their ability to attract people. A central part of the overall metropolis of a place, the inner city is the mechanism that mediates the larger top-down global concerns and the more intimate, personal concerns of day-to-day life. Places compete with one another for people, business and capital. Ultimately, the inner city is the magnet that shapes and informs decisions concerning urban form, as manifested by a particular typology of spatial patterns, in which a household chooses to live, and that influences that household's quality of life.

Introduction

Central to strategies for and involvement in the inner city real estate market is to recognize the role and importance of place. The inner city is part of the larger global place construct. Each place in the global place construct is in competition with other places for people, business and capital. As people can choose where they wish to be, attracting people to a place depends on that place's appeal.

Several significant socioeconomic forces influence the competitive position of a place including: (1) growing emphasis on place choice; (2) decreasing rates of population growth absolutely and especially in developed countries; and (3) increasing global competitiveness. The implications of these three forces for places and property investing are profound. With more people in developed countries having more inclination and ability to choose their location, employing in those choices a global competitive standard, places are increasingly in competition with other places throughout the world. Consequently, place competitiveness has emerged as a much more significant consideration in the twenty-first century than it has been in any other period in history.

The inner city real estate market is most often perceived in narrow rather than broad terms, emphasizing an inward-looking, rather than external, orientation. In turn, the inward-looking orientation is more often concerned with the consequences of problems of the past, rather than the opportunities of the future. This paper advances a new approach to understanding the significant strategic role of the inner city, focusing on opportunities rather than problems.

This paper proposes a paradigm shift in the study and practice of real estate, in response to the need to transform the conventional wisdom of spatial dimension of real estate from the current, micro-location perspective, emphasizing local character, to a broader concept, emphasizing a local-global duality that integrates the twenty-first century themes of globalization, securitization, institutionalization and increased corporate effectiveness in real estate involvements. While real estate has transformed from a primarily local to an increasingly globalized market, it is clear that classroom teaching, academic research, professional practices and investing strategies, and in many instances, places and circumstances, age lagging behind this transformation.

Inner City in Competition

Place Competition

The inner city is in competition with other places for people, capital and business. To date, most thinking about, advocacy for, and activism for, advancing the inner city has lacked a strategic sense of both its role and importance in the larger context of place competition. For example, while Porter (1995) identified a number of competitive advantages of the inner city, his model was primarily directed to the interests of business enterprises.

Recognition of the strategic significance of the inner city can lead to enhanced understanding of place and the competitive choices concerning place. While there are powerful reasons for business enterprises to give more consideration to the inner city, this is a too-narrow view. Lacking in the debate concerning the role of the inner city is adequate appreciation of (1) the strategic significance of the inner city as the center of the metropolis, (2) the role of the inner city as the nexus of the urban experience that combines contextual place and personal place and (3) the strategic significance of the inner city as the functional center of gravity of the real estate discipline. …

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