{"id":3212,"date":"2018-05-23T09:45:35","date_gmt":"2018-05-23T07:45:35","guid":{"rendered":"http:\/\/variances.eu\/?p=3212"},"modified":"2018-05-23T10:00:18","modified_gmt":"2018-05-23T08:00:18","slug":"whats-manhattans-land-worth-try-canadas-entire-gdp","status":"publish","type":"post","link":"https:\/\/variances.eu\/?p=3212","title":{"rendered":"What’s Manhattan’s Land Worth? Try ‘Canada’s Entire GDP’"},"content":{"rendered":"

Suite \u00e0 une \u00e9tude r\u00e9alis\u00e9e par des \u00e9conomistes de Rutgers University aux US, cet article de CityLab analyse la hausse fulgurante du terrain immobilier \u00e0 Manhattan\u00a0: en 2014 la totalit\u00e9 du terrain \u00ab\u00a0constructible\u00a0\u00bb \u00e9tait estim\u00e9\u00a0autour de 1,7 trillions de dollars US, plus que le PIB du Canada. L\u2019\u00e9tude identifie plusieurs facteurs, Wall Street et ses primes, le boom de l\u2019\u00e9cosyst\u00e8me Tech, l\u2019effet Google et l\u2019attrait de capitaux \u00e9trangers.<\/p>\n

Un article s\u00e9lectionn\u00e9 par\u00a0Fr\u00e9d\u00e9ric Smadja\u00a0<\/strong>(2000), le correspondant de Variances.eu aux Etats-Unis : l\u2019article, r\u00e9dig\u00e9 par\u00a0Richard Florida<\/strong><\/a><\/span><\/span>, \u00a0a \u00e9t\u00e9 pr\u00e9c\u00e9demment publi\u00e9 dans\u00a0\u00ab\u00a0CityLab<\/span><\/span>\u00bb<\/strong><\/a>.<\/em><\/p>\n

\n

A new study traces the astonishing increase in the value of Manhattan\u2019s land since 1950.<\/em><\/strong><\/p>\n

Our biggest urban problems today\u2014growing inequality, rampant gentrification, housing unaffordability, and increasing segregation\u2014all have roots in the staggering cost of urban land. Nowhere is this as true as in Manhattan, home to some of the world\u2019s most valuable real estate.While the city has long been a global capital, the value of its land has traveled an uneven path. Back in 1626, the Dutchman Peter Minuit \u201cbought\u201d Manhattan, \u201cthe island of many hills,\u201d from the Lenape people for $24 worth of trinkets. Since then, most of the hills for which it was named have been flattened, some new land has been created, and the island has become one of the priciest places in the world. Determining just how valuable that land is, however, is a tricky proposition.A new\u00a0study<\/span><\/a>\u00a0by economists from Rutgers University tackles this question with a methodology that not only provides an estimate for the current value of the land, but also its growth in value over time.<\/section>\n
The forthcoming paper in\u00a0Regional Science and Urban Economics<\/span>\u00a0<\/span><\/em><\/a>estimates that in 2014, the developable land in Manhattan\u2014excluding parks, roads, and highways\u2014was worth between $1.54 and $1.95 trillion, for an average of $1.74 trillion. That figure is significantly larger than the combined market capitalization of the world\u2019s three largest corporations that year, and similar to the economic output of Canada, the world\u2019s 10th-largest economy.The researchers (Jason Barr, Fred Smith, and Sayali Kulkarni) arrived at that number by analyzing the prices of vacant parcels of land in Manhattan. This enabled them to avoid the problem of disentangling the land value from the value of the structure that sits on top of it. Using data on all vacant land transactions from 1950 to the first quarter of 2015, they built a land value index that represents the change in Manhattan\u2019s land value over time, adjusted for inflation.The graph below, from the study, charts the land value index over those 65 years. (The Y axis is compressed to show the massive scale of the index in a reasonably-sized graph.) Over that time, the value of Manhattan land grew at an annual rate of 5.5 percent, adjusted for inflation. But, as the graph shows\u2014and as anyone familiar with New York City knows\u2014the rise of Manhattan\u2019s land value has been far from linear. Indeed, the study identifies three major real estate cycles in Manhattan.<\/p>\n

Manhattan Land Value Index, 1950-2014<\/em><\/h4>\n
\"\"

(Barr et al.\/Regional Science and Urban Economics)<\/p><\/div>\n<\/section>\n

The index begins in 1950 with a value of 100. The value of Manhattan land was relatively flat during 1950s and \u201860s\u2014the period of the great suburban boom. It then plunged during the dark days of New York City\u2019s fiscal crisis in the mid-70s, reaching a low point of 43 in 1977. Over the course of the first real estate cycle, from 1950 to 1977, land values actually shrank at an annualized rate of -3.1 percent.<\/section>\n
Land values were back over 50 by 1980 and then increased steadily to a high of 572 in 1988, until being leveled by the economic downturn of the early \u201990s, which was also when the city\u2019s crime rate peaked. During this second cycle, which ended in 1993, land values grew at an annualized rate of 6.5 percent.Since the mid-1990s, the value of Manhattan land has surged upward, passing 1,000 before the economic crash of 2008. It then dipped slightly during the Great Recession but surged to 3,384 by the end of 2014. During this third and most recent complete\u00a0<\/strong>real estate cycle, from 1993 to 2009, the value of Manhattan land grew at 17 percent annually, a substantial<\/strong>\u00a0increase in growth in land values over the previous two cycles. Manhattan land is now in the midst of fourth cycle, which, so far, has shown similarly high growth rates.Of course, not all land is created equal\u2014or, as a real estate professional would say, \u201clocation, location, location.\u201d Corner lots are significantly more valuable than mid-block lots, according to the study, and lots in close proximity to Broadway, which runs the length of the island, also have higher values.So what is driving these substantial changes?<\/p>\n

The recent surge is often attributed to the outsize compensation and bonuses on Wall Street. But the study does not find any significant connection between the performance of the S&P 500 and the land value index.<\/p>\n<\/section>\n

What seems to matter more is the overall employment rate in New York City. This would, in turn, seem to be a proxy for the recent back-to-the-city movement of jobs and people. Over the past two or three decades, Manhattan has seen increased demand for its land as affluent people and large corporate headquarters moved back into the city, as well as startups and more established tech companies.Today,\u00a0Manhattan trails only San Francisco<\/a><\/span><\/span>\u00a0as a location for VC-backed high-tech startups.\u00a0Google<\/a><\/span>\u00a0has become one of the largest landowners in Lower Manhattan. And, of course, the past decade or so has seen a tremendous influx of\u00a0foreign capital<\/a><\/span>\u00a0into Manhattan real estate, which is now viewed as a safe vehicle for storing capital, much like gold.<\/p>\n

Manhattan Land Value Index and Total NYC Employment<\/em><\/h4>\n<\/section>\n
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(Barr et al.\/Regional Science and Urban Economics)<\/p><\/div>\n

For New Yorkers, and those who aspire to be New Yorkers, the study provides empirical data for what you already know: Manhattan real estate is expensive, and it has gotten even more so in recent years.<\/p>\n

Perhaps the 1960s and 1970s, the period so romanticized by New Yorkers and others as an era of tremendous creativity fueled by cheap real estate, was the exception. With increasing demand from businesses and people for limited space, it has now become prohibitively expensive for all but the affluent to live in Manhattan, contributing to the sorting by class and geography that is dividing our cities and our nation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Suite \u00e0 une \u00e9tude r\u00e9alis\u00e9e par des \u00e9conomistes de Rutgers University aux US, cet article de CityLab analyse la hausse fulgurante du terrain immobilier \u00e0 Manhattan\u00a0: en 2014 la totalit\u00e9 du terrain \u00ab\u00a0constructible\u00a0\u00bb \u00e9tait estim\u00e9\u00a0autour de 1,7 trillions de dollars US, plus que le PIB du Canada. L\u2019\u00e9tude identifie plusieurs facteurs, Wall Street et ses […]<\/p>\n","protected":false},"author":42,"featured_media":3216,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[140,133],"tags":[],"class_list":["post-3212","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-immobilier","category-themes","et-has-post-format-content","et_post_format-et-post-format-standard"],"_links":{"self":[{"href":"https:\/\/variances.eu\/index.php?rest_route=\/wp\/v2\/posts\/3212","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/variances.eu\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/variances.eu\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/variances.eu\/index.php?rest_route=\/wp\/v2\/users\/42"}],"replies":[{"embeddable":true,"href":"https:\/\/variances.eu\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3212"}],"version-history":[{"count":0,"href":"https:\/\/variances.eu\/index.php?rest_route=\/wp\/v2\/posts\/3212\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/variances.eu\/index.php?rest_route=\/wp\/v2\/media\/3216"}],"wp:attachment":[{"href":"https:\/\/variances.eu\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/variances.eu\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/variances.eu\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}