I was a little surprised there’s not more in land. “The only thing they’re not making more of,” etc. etc.
A little light poking showed that the most expensive land in the US is in high-end residential real estate, which is largely owned by rich individuals rather than by corporations.
I guess businesses know better than to build on expensive land. They build on cheap land—or land containing something much better than dirt and rock that they can extract—and then they make stuff on that land.
The only exception would be for hotels and high-end retail, I suppose? And it looks like hotels didn’t make the cut and high-end retail was dwarfed by commodity retail.
Seems like public corporations make ownership decisions close to the finance-theoretical ideal where they minimize the assets they hold that aren’t part of their production function to increase return on capital, and people who want to hold claims on rents buy them separately, consistent with the model I advanced in The Domestic Product.
Oh yeah, I was surprised by that too. I broke out land separate from buildings in most of my notes specifically for that reason.
Turns out the buildings (and, implicitly, building permits in high-density areas) are generally worth a lot more than just land itself. At least based on whatever black magic these accountants are using.
I was a little surprised there’s not more in land. “The only thing they’re not making more of,” etc. etc.
A little light poking showed that the most expensive land in the US is in high-end residential real estate, which is largely owned by rich individuals rather than by corporations.
I guess businesses know better than to build on expensive land. They build on cheap land—or land containing something much better than dirt and rock that they can extract—and then they make stuff on that land.
The only exception would be for hotels and high-end retail, I suppose? And it looks like hotels didn’t make the cut and high-end retail was dwarfed by commodity retail.
So, uh, never mind.
Seems like public corporations make ownership decisions close to the finance-theoretical ideal where they minimize the assets they hold that aren’t part of their production function to increase return on capital, and people who want to hold claims on rents buy them separately, consistent with the model I advanced in The Domestic Product.
Oh yeah, I was surprised by that too. I broke out land separate from buildings in most of my notes specifically for that reason.
Turns out the buildings (and, implicitly, building permits in high-density areas) are generally worth a lot more than just land itself. At least based on whatever black magic these accountants are using.