From Today's City to Tomorrow's City: An Empirical Investigation of Urban Land Assembly

Because cities are constrained by the boundaries of land ownership, fundamental urban modifications require land delineation changes. We evaluate whether there is enough land assembly—the joining together of two or more parcels of land—to put land to its highest value use. We hypothesize that in the absence of market frictions such as holdouts, the price of land sold for assembly should not exceed the price of land sold for other uses. Empirically, we find that to-be-assembled land in Los Angeles trades at a 15 to 40 percent premium and conclude that significant frictions prevent assembly. (JEL K11, P14, Q21, R14, R30, R52, R58)