The total value of America’s urban land is astounding, adding up to more than $25 trillion as of 2010—that’s roughly more than double the nation’s total economic output or GDP in 2006, according to a recent study by economists at the University of Illinois and the University of Michigan. Nearly half the total value of America’s urban land, 48 percent of it, is packed into just five superstar metro areas: New York, Los Angeles, San Francisco, Washington, D.C., and Chicago, with land in and around the urban center being the most valuable by far.
The study by economists David Albouy and Minchul Shin of the University of Illinois, and Gabriel Ehrlich of the University of Michigan, used data from CoStar, a national real-estate database, covering land transactions from 2005 through 2010. The data contains detailed information on the address, lot size, and price for each transaction, and covers 69,000 land sales that span more than 75,000 square miles.
The study organizes these data points across America’s 300-plus metros, and estimates not just the total value of urban land, but the average land price per acre. It also estimates the average price per acre in the urban center, which is defined as the area within 10 miles of city hall, or the mayor’s office. (In New York City, the Empire State Building is used as the city center instead.)
Across the entire United States, the total value of urban land, averaged across the period from 2005 to 2010, was slightly more than $25 trillion. That breaks out to an average of $511,000 per acre, or $100,000 for the typical residential lot of roughly a fifth-acre (or $2,000 for a typical parking spot). Over the course of the study period, the total value of urban land peaked at more than $28 trillion—2.2 times more than the U.S. GDP in 2006, before the economic crash—but then fell to $18 trillion, or 1.3 times GDP, in 2009.
The table below shows the value of urban land for metros with an average value of more than $1 million per acre.
|Metro||Total Land Value||Average Land Value per Acre||Value of Central Land per Acre||
Ratio of Central to Average Land Value
|New York, NY||$2.5 trillion||$5.2 million||$123 million||22.3|
|Los Angeles-Long Beach, CA||$2.3 trillion||$2.6 million||$16 million||5.5|
|Washington, DC-MD-VA-WV||$1.1 trillion||$1.2 million||$37 million||32.6|
|Orange County, CA||$820 billion||$2.6 million||$3.2 million||1.3|
|Seattle-Bellevue-Everett, WA||$658 billion||$1.3 million||$9.9 million||10.1|
|San Francisco, CA||$622 billion||$3.2 million||$25 million||9.3|
|San Diego, CA||$551 billion||$1 million||$10 million||8.7|
|San Jose, CA||$458 billion||$2.3 million||$3.5 million||1.6|
|Oakland, CA||$447 billion||$1.4 million||$5.4 million||3.3|
|Miami, FL||$427 billion||$1.7 million||$4.4 million||3.2|
|Honolulu, HI||$416 billion||$3.3 million||$16 million||7.0|
|West Palm Beach-Boca Raton, FL||$322 billion||$1.3 million||$5.9 million||5.3|
|Fort Lauderdale, FL||$318 billion||$1.3 million||$3.5 million||3.1|
|Bergen-Passaic, NJ||$287 billion||$1.4 million||$4.1 million||3.7|
|Stamford-Norwalk, CT||$172 billion||$1.5 million||$2.7 million||3.2|
|Santa Barbara-Santa Maria-Lompoc, CA||$126 billion||$1.2 million||$2.5 million||2.8|
|Jersey City, NJ||$98 million||$3.3 million||$9.5 million||8.8|
|San Luis Obispo-Atascadero-Paso Robles, CA||$64 million||$1.1 million||$1.5 million||1.6|
|Santa Cruz-Watsonville, CA||$53 million||$1.1 million||$2.2 million||4.3|
The value of urban land tends to follow population, but not entirely. New York has the highest urban land value at $2.5 trillion, followed by Los Angeles at $2.3 trillion. But Washington, D.C., the nation’s sixth largest metro in terms of population, has the third most valuable total urban land, at $1.1 trillion. This is considerably more than that of Chicago, the country’s third largest metro, where urban land is worth $863 billion; more than five times that of Dallas, the fourth largest metro; and more than five times that of Houston, the fifth largest metro.
New York also has the highest average price per acre, at more than $5 million. Next in line are three metros—San Francisco, Honolulu, and Jersey City across from Manhattan—where land is valued at $3.3 million per acre. Los Angeles is fifth, at $2.7 million per acre, with Orange County and San Jose following closely at $2.6 million and $2.3 million per acre, respectively. Average land values exceed $1 million per acre in a dozen additional metros, including Miami, Seattle, Oakland, Washington, D.C., and San Diego.
The gap between the land values of these superstar cities and the rest of American metros is shocking. The average price per acre is just $663,000 in Chicago, $600,000 in Boston, $539,000 in Denver, and $486,000 in Minneapolis–St. Paul. It’s less in Sunbelt metros like Phoenix ($452,000), Dallas ($305,000), Houston ($272,000), and Atlanta ($251,000), and even less in Rust Belt metros such as Buffalo ($162,000) and Pittsburgh ($156,000).
Urban land value per acre is lowest of all in smaller Rust Belt and Sunbelt industrial metros, such as Jamestown, Glen Falls, and Utica, New York; Jackson and Saginaw, Michigan; Longview and Sherman, Texas; and Fitchburg, Massachusetts, where urban land falls between $50,000 and $60,000 per acre.
Land values are highest by far in the central areas of superstar cities. In New York, the value of an acre of urban land in and around the city center is $123 million. Chicago ranks second, with central urban land valued at roughly $37 million an acre, followed closely by Washington, D.C. ($36 million), and then San Francisco ($25 million), Los Angeles and Honolulu (roughly $16 million), Philadelphia ($13 million), and San Diego ($10 million). These are mainly larger, denser cities with well-developed central business districts.
Across the United States, the value of central land is roughly four times that of average land, 10 miles away or more. But in some metros, especially in superstar cities, the difference is much greater. In Chicago, Washington D.C., and Philadelphia, central land is about 30 times more valuable than surrounding land; in New York and Denver, it’s roughly 20 times more valuable; and in Boston, San Francisco, Seattle, Portland, Austin, Dallas, and Houston, it is about 10 times more valuable. Indeed, central land tends to grow more valuable in larger metros. The high price of central urban land is a byproduct of the clustering of economic activity that defines the urban revival.
The study confirms something that is becoming increasingly obvious: Economic inequality is bad, but spatial inequality is even worse. An acre of central land in New York City is worth approximately 72 times more than an acre of central Atlanta or Pittsburgh, and almost 1,400 times more than the same in many small Rust Belt and Sunbelt metros. This enormous gap in the value of urban land provides a telling window into the trend of spatial inequality in America today.