Bid Rent

Bid rent theory is a geographical economic theory that refers to how the price and demand on real estate changes as the distance towards the Central Business District (CBD) increases. It states that different land users will compete with one another for land close to the city centre. This is based upon the idea that retail establishments wish to maximise their profitability, so they are much more willing to pay more money for land close to the CBD and less for land further away from this area. This theory is based upon the reasoning that the more accessible an area, the more profitable.

This translates into the use of land. Building designs that sprawl out would be mor likely to be found on the outskirts of the city. Suburbs are ideal for families as the land is cheaper and you can get more home for the price and have a yard (in other words detached single homes). The closer one moves into the city, the more dense the population is (to make use of every inch because costs are higher). This changes the way land is used. Think about this and add to it.