Quote:
Originally Posted by Canadian Mind
That right there is a case of economic efficiency.
If FSR is no limitation, then in theory you could build as high as you can go and make more money for every floor you build. IIRC, it was said somewhere on SSP that your greatest return on investment is around the 800 foot mark for office buildings and 600ish for residential. Higher then that you still make money, but as a percentage of profit it begins to drop.
Example, 600 foot tower costs 500 million to build, but you get 600 million back (20% return). 800 foot tower costs 650 million to build, but you get 800 million back (23% return). 1000 foot tower costs 850 million to build, but you get 1 billion back (15% return).
So, if there is demand for a 600 foot tower, but view cone restricts you to 450 feet, you are forced to build an economically inefficient building. This is offset somewhat by the reduced demand (and thus higher prices), but is still inefficient compared to the 600 foot tower you could have built and made more money on.
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Ok good I understand what we're talking about now when we talk about "economically inefficient" in this hypothetical sense.
My position that I'm working from is that in the real world the value of the land has a relationship to the zoning. I would expect the price of the land zoned for an 800 ft tower to reflect the potential value if one built a 800 ft tower there. So next door, which happens to be zoned for 600 ft, one would expect it to be a less expensive piece of property supposing there is no effect from people speculating that the zoning could be changed.
So in the real world scenario I've just explained doesn't the lessened price of the land that has been rendered economically inefficient due to zoning changes compensate the developer somewhat?
(I am a layperson, not a developer, not an economist, so honestly genuinely curious about this topic and well willing to believe my initial assumptions were incorrect)
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