Real Estate: Where And When (November 1990 | Volume: 41, Issue: 7)

Real Estate: Where And When

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Authors: John Steele Gordon

Historic Era: Era 10: Contemporary United States (1968 to the present)

Historic Theme:

Subject:

November 1990 | Volume 41, Issue 7

It is a very old joke among real estate brokers that only three things determine the value of a parcel of land: location, location, and location. The reason the joke has been around so long, of course, is that it is mostly true. What’s more, it is true not just on the microeconomic level of a city lot but on a macroeconomic level as well. New York City became the great American metropolis not because of its magnificent natural harbor but because of where on the globe that harbor was located.

What the joke does not take into account, however, is the dimension of time. For instance, around the turn of the 19th century, my great-greatgreat-grandfather, whose name I bear, exchanged 35 near-wilderness acres in Tennessee for a horse and a saddle. It was, I suppose, a fair deal at the time. Today, alas for the family fortune, those acres are located at the very heart of downtown Nashville.

Time, to be sure, is the peculiar province of historians, not real estate brokers, and over the course of history, when has proved quite as important as where, for while a city cannot move, the tides of history most certainly can. When Venice was at the height of her glory, her location directly on the trade routes with the East made her a great power. Then the rise of the Ottoman Empire interrupted those routes, and the full-rigged ship opened the world’s oceans to commerce. Venice’s once-incomparable location became a grave disadvantage, and she sank to the status of an exquisite backwater.

Unless politically created like Washington, D.C., cities are not located where they are out of sheer whim. Every city has an original raison d’être. Sometimes this is technological: London is located at the first point from the sea where the Thames could be bridged by the Romans. Sometimes it is military: Paris began because the Ile de la Cité at its heart was a natural fortress, moated by the Seine. Sometimes it is a natural resource, such as the freshwater springs that brought forth Los Angeles.

 

Most cities, however, come into being for economic reasons. Many arise at points where two streams of commerce join—such as St. Louis at the junction of the Missouri and Mississippi rivers—or at a point where shippers have to break bulk—that is, transfer freight from one means of transportation to another. The Dutch created New Amsterdam at the tip of Manhattan Island because it was the obvious place to switch beaver pelts from Indian canoes to oceangoing sailing ships.

From the beginning, New York’s location had many natural advantages over other American ports. It was more centrally located than either Boston or Charleston and much closer to the open sea than either Philadelphia or Baltimore. Moreover, the Raritan River in New Jersey, the rivers of southern New England, Long Island Sound, and the mighty Hudson—great avenues of commerce in the preindustrial era—all