Movements in the field of transportation are shaping what we can expect to see in the last few years of this cycle.
They’re affecting how land will be utilised in the next.
Remember, infrastructure and the innovation that advances it is part of what gives land its value and turns the real estate cycle.
The energy needed to fuel the new forms of transport, however, is what drives the longer Kondratieff cycle.
Transportation increases the economic rent of land.
But it can also, just as easily, steal some of it back…
Consider the elevator.
It’s the most valuable piece of real estate in a high-rise building.
Without elevators, the fancy penthouses and upper-floor apartments with stunning views would be worth little to nothing.
Before the electric elevator was invented, wealthy folk lived on the lower floors of apartment buildings, leaving the poor to climb stairs to the top floors.
Imagine for a moment that you could purchase the elevator in a building and charge for each trip.
Your ‘elevator tollbooth’ would give you a perfect means of extracting a large proportion of income and, therefore, economic rent (land value) from the site.
Without free access to the elevator, the building would be a walk-up, and rents would fall.
The more you were able to charge for each elevator trip, the less a tenant would be able to pay to rent (or buy) the apartment.
This would reduce the value of the real estate.
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