City Growth Potential

City Growth Potential project is a joint collaboration between MIT Center for Real Estate's Price Dynamics Platform the Sustainable Urbanization Lab. 

We structure this project in a two-stage analysis. In the first stage, we capture the link between emerging industries and city growth potential. For every new industry, certain cities will be more suitable for it to grow and expand in than others cities. The acceptance and adaptability of cities may vary by the characteristics of the industry itself and city attributes. For instance, if the growth and expansion of a particular industry depend heavily on information exchange and knowledge spillover, then cities with advanced transportation connectivity and/or that serve as a hub in the national transportation network will be suitable to cultivate such an industry. Other attributes, such as amenities, pre-existing industrial structure, and research capacity, are all likely to make a difference.

In the second stage, we link the city's growth potential with the real estate market. For the first layer, industry development requires the provision of office and production space accordingly, and the recruitment of laborers requires housing supply and commercial supporting facilities as well. For the second layer, when the entry of emerging industries facilitate economic growth of a city, the total productivity, economic vibrancy and city openness would increase and create new real estate market potential, perhaps most of which mainly focuses on commercial property. In this case, the changing growth potential may further affect real estate asset price dynamics and investment performance.

Which cities grow in population, surface area, and income per person? Why do some cities grow faster than others? How does this growth affect real estate prices? To help answer these questions, in this project, we analyze cities’ growth potential around the world. More specifically, we investigate the links between industry growth, transportation infrastructure, human capital, city growth, and real estate prices.

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cfclab@mit.edu

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