When people picture a city skyline, they are often picturing the downtown area. In this lesson, we'll explore downtown areas, including their relationship to the central business district of a city and characteristics of them.
Jordan is starting his own business, and he's really excited. He wants to open a store in the downtown area of his city, and he can just imagine how much success he'll have!
Downtown, also called the central business district or CBD, is the geographic and commercial center of a city. It's where most of the businesses are and is often directly in the middle of the city as well.
Let's look closer at the characteristics of a central business district, including how land is used.
Jordan has decided that the downtown area of his city would be perfect for his new store. There are a lot of people who work in that area and, therefore, a lot of people who might be his customers.
A concentration of retail and office buildings is the major characteristic of a central business district. Retail businesses are stores, like Jordan's, that sell merchandise to customers. Offices, on the other hand, could be for any type of business, including government, banks, or other businesses.
Whether retail or office, the point is that a central business district is primarily about business. Because of that, and because of limited space, CBDs often have small residential numbers. Compared to other parts of the area, most downtowns have fewer residences and more businesses. Jordan's city is no different: despite the fact that there are a lot of businesses and stores in the area, there aren't very many apartment buildings or homes. Jordan himself lives in a different part of the city, like the suburbs.
A final characteristic of central business districts is that they often contain skyscrapers. When you think about a city's skyline with the big skyscrapers, you are often thinking about the downtown area. This is particularly true of newer cities, like those in the western part of the United States, when compared with older cities, like those in Europe that have been around for centuries.
As we've seen, downtown areas are mostly businesses and have low residential numbers. In addition, there are many skyscrapers. But why, if that's where the businesses are, are there low residential numbers? And why are there more skyscrapers in a CBD than in most other parts of a city? The answer to both of those questions is, at least in part, space. Central business districts only have a finite amount of space. Retail, office, and residential needs all compete for land in small CBD areas, so rents are generally high. The further out from the downtown area you move, often, the lower the rents are.
Jordan can attest to this. When looking at possible places for his store, he's noticed that the places in the downtown area are really expensive, but if he moves half an hour outside of downtown, the rent for his store will be half the price! That sounds like a good deal, but remember that Jordan wants to be downtown because there are a lot of people working in that area. If he moves further out, he will have fewer possible customers, so for him, it might make sense to pay the higher rent for the better location.
Jordan's not the only business owner who thinks that way. In general, commerce (or retail) is willing to pay the most in rent, followed by industry (or office buildings), followed by residential (or homes). This makes sense if you think about it. Retail stores require lots of people to come and visit them, so location is most important to them. Office buildings too can benefit from being centrally located, but less so than retail spaces. Finally, people can happily live anywhere, so residential buyers and renters are less likely to pay a premium for space in a downtown area.
A downtown, also called central business district or CBD, is the geographic and commercial center of a city. There are several common characteristics of a CBD, including the fact that there is a concentration of retail and office buildings, few residential buildings, and that they often contain skyscrapers. Rents are high in a CBD, and retail stores are willing to pay the most in rent, followed by office buildings, followed by residential renters.
After you've completed this lesson, you'll have the ability to:
- Define downtown, or central business district (CBD)
- Describe the characteristics of CBDs
- Explain the pros and cons of having a business in the CBD