ABSTRACT
Metropolitan growth represents the most important source of increases in the (aggregate) demand for commercial space and housing, and, as such, it merits special attention. We sometimes say that real estate, especially commercial real estate, is “the economy in a box.” Most products are made in manufacturing spaces (or boxes), distributed in warehouse and retail spaces, and the services are provided in office spaces or boxes. Simply, real estate is highly durable and, therefore, most of the demand for new space comes from economic growth. For example, for the aggregate demand for office space to increase in a metropolitan area, local employment and businesses need to grow so that the firms will want to lease additional space in order to house the additional employees and equipment required for producing the additional output. For this reason, metropolitan growth analysis leads the macro analysis of specific property markets (office, industrial, retail, etc.) and site-specific analysis. 1 Within this context, 56this part of the textbook elaborates on metropolitan growth concepts and analytical processes. In particular, this chapter places metropolitan growth analysis into perspective and discusses the different patterns of metropolitan growth, their causes, their mechanisms, and their implications for real estate market analysis. Chapter 4 presents an example of a broad-brush metropolitan-growth analysis process for a specific metropolitan area.
