ancient cities

and the networks and relationships between agents.
What is needed is a thick understanding of real
estate that identifies the type and composition of
agents involved in the real estate sector and reveals
the interests and strategies they adopt. The nature
of the relationships between actors, their actual
roles, and their relative influence in the negotiation
of particular projects are analyzed in turn.
These works focus on agents and differ from the
neoclassical and Marxist approaches in being concerned
with the details of how the development
process takes place, rather than making generalizations
and engaging in abstractions. Agents are not
treated as homogeneous entities but are clearly differentiated.
Institutional scholars have noted the
importance of how developers interact with other
intermediaries within the development process.
Classifications of Real Estate Assets
As a whole, urban real estate assets form markets
that are stratified according to type, quality, and
location. Real estate includes several key classifications.
First, a prevalent classification divides the
real estate sector into residential and commercial
assets. Residential assets include multifamily housing
and detached houses, whereas commercial
assets are made of three major property types.
These are retail (e.g., shopping centers), industrial
(factories and warehouses), and office buildings. A
second classification takes note of the quality of
properties. Properties have diverse qualities; some
properties are of top quality in terms of age, facilities,
and architecture, whereas other properties
may be older, less equipped with contemporary
facilities, and of poor architecture. Top-quality
office buildings are known as Class A and command
much higher rents than lower quality ones
(Class B or C). Finally, location is of critical importance.
In spite of evidence of globalization, real
estate remains a local business. At the metropolitan
scale, office buildings located in the central
business district are different from those in suburban
locations. Land scarcity and agglomeration
tend to drive up land prices, producing taller buildings
that dominate the urban skyline (e.g., lower
and midtown Manhattan, Chicago’s Loop). On
the other hand, land in the suburbs is more easily
available and is also less costly, a fact that makes
development less dense (sprawl) and less tall. The
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different types of real estate do not negate interdependencies
between different property types. For
example, the concentration of office buildings
attracts residential development for office employees
who wish to live nearby; the concentration of
office buildings may also attract hotel development
that caters to business travelers.
Agents, Time, and Space
Real estate involves numerous agents, such as
developers, architects, engineers, and brokers, all
of whom are vital in the functioning of real estate
markets. The developer is a pivotal agent who initiates
and coordinates the development process.
Developers conceive opportunities for development
when others are unaware of them. As property
owners, they also engage in the buying and
selling of properties. Landowners are important
because they hold the product without which real
estate development cannot exist. Leasing agents
and real estate brokers bring together buyers, renters,
and sellers; they match demand and supply. In
addition, city planners and local authorities decide
which projects to approve and thus are capable of
steering property development to different locations
and uses.
Similar to many economic processes, the performance
of real estate markets is cyclical. This is best
described by building cycles. As a result of the time
lag between initiation and completion of a project,
demand and supply are not fulfilled instantaneously.
Extensive real estate development for a
specific period usually results in an oversupply,
leading eventually to a decline in new development
as the surplus is absorbed. The 1980s building
cycle resulted in massive real estate development
in many cities across the world. Enormous amounts
of office space were completed in cities such as
London, New York, and Tokyo. This cycle
was followed by a severe downturn during the
1990s; for a substantial amount of time, office
buildings experienced high vacancy rates, and
development was anemic. More recently, stagnant
demand for downtown office space and an
increased demand for housing have led to the
upsurge in residential development in downtowns
and in near-downtown areas.
Real estate markets have been studied at multiple
spatial scales because real estate has both