THE RENT GAP AT THE METROPOLITAN SCALE: NEW YORK CITY'S LAND-VALUE VALLEYS, 1990-2006

In his rent gap theory, Neil Smith argues that development is most likely to occur in areas where the capitalized land rents differ substantially from the potential ground rents that could be obtained if the land were converted to its highest and best use. At the metropolitan scale, the rent gap appears in the form of abberations vis-a-vis the monotonically decreasing rent gradients of the classic monocentric city. This study utilizes public use microdata sample (PUMS) data for 1990, 2000, and 2006 to test Smith's hypothesis that as capital flows into these land-value "valleys," the rent gradient shifts upward and outward, displacing the land-value valley farther from the CBD. It is concluded that from 1990 to 2006 there were two visible land-value valleys, and, consistent with Smith's hypothesis, as the first valley closed the second expanded.