Why infill commercial development isn’t so common

mip1Davis has not been able to develop larger tracts of land to attract firms working on innovation and partnering with UC Davis. Opponents of several proposed projects have claimed that developers can instead assemble the numerous infill parcels that already exist within city limits to create the needed innovation parks. Now a new study in the leading journal, American Economics Review, finds that in Los Angeles, assembling a group of parcels for such projects faces sale prices 15% to 40% more than a single parcel project. And that doesn’t include the typical per parcel transaction costs that are compounded by multiple purchases. The bottom line is that infill development for larger projects face a high cost premium that must be acknowledged.

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