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Optimization of subdivision development

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Abstract

Optimal lot size and configuration are determined by the maximization of profit per unit of land area. Lot value is assumed to be a Cobb-Douglas function of frontage and depth. The cost of developing a lot is assumed to be related to lot area, frontage, and a fixed cost parameter. The forms of the value function, the cost function, and the objective function are rationalized. The impacts of changes in the value and cost function parameters on optimal frontage, depth, frontage to depth ratio, and lot area are investigated.

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References

  • Colwell, Peter F, and Scheu, Tim. “Optimal Lot Size and Configuration.” Journal of Urban Economics (March 1989), 90–109.

  • Colwell, Peter F., and Sirmans, C.F. “Area, Time, Centrality and the Value of Urban Land.” Land Economics (November 1978), 514–519.

  • Edelson, Noel M. “The Developer's Problem, or How to Divide a Piece of Land Most Profitably.” Journal of Urban Economics (October 1975), 349–365.

  • Kowalski, Joseph G., and Colwell, Peter F. “Market Versus Assessed Values of Industrial Land.” AREUEA Journal (Summer 1986), 361–373.

  • Scheu, Tim. “Site Valuation and Optimal Development.” Unpublished dissertation, University of Illinois, 1985.

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Authors and Affiliations

  1. University of Illinois at Urbana-Champaign, 61801, Urbana, IL, USA

    Roger E. Cannaday (Associate Professor of Finance) & Peter F. Colwell (ORER Professor of Real Estate)

Authors
  1. Roger E. Cannaday
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  2. Peter F. Colwell
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Cannaday, R.E., Colwell, P.F. Optimization of subdivision development. J Real Estate Finan Econ 3, 195–206 (1990). https://doi.org/10.1007/BF00216592

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  • DOI: https://doi.org/10.1007/BF00216592

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