Rent Gap Theory Research Articles

Territorial Stigma and Rent Gap Production: The Logics of Gentrification in Gresham and Middlehaven, Middlesbrough

AbstractRent gap theory has long been a staple of gentrification studies, and given that gentrification and territorial stigma have been shown to be closely related, the distinct ways in which the rent gap operates in territorially stigmatised spaces demands attention. This paper examines how governance approaches within territorially stigmatised spaces shape the particular ways in which rent gaps are opened. It illustrates how the rent gap theory has operated in practice across two contexts within Middlesbrough, a town in the North East of England. By tracing the governance approaches which shape the form that rent gap production takes across these contexts, this paper provides evidence for how the rent gap theory operates in practice in stigmatised areas, and indicates how the form which the process of rent gap production takes is contingent upon the particular logics of governance operating within a locality at the point of production.

Integrating the rent gap into the ground rent theory. Measurement and implications for different models of agriculture

The aim of this paper is to establish a conceptual framework for the rent gap theory in agriculture and to identify potential implications of the rent gap for socio-economic processes occurring in agriculture and rural areas. From an empirical perspective an attempt was made to determine the state and dynamics of the rent gap phenomenon in agriculture in Poland, considering the regional division. The authors used income approach and Capital Asset Pricing Model (CAPM) for estimating the capitalization rate. It was found that rent gap is a permanent phenomenon in Polish agriculture, the dynamics of which largely depends on macroeconomic factors. A widening rent gap may result in the withdrawal of land from farming and a decline in total factor productivity in agriculture. Thus, the implications of the rent gap may relate to food security. Measuring the rent gap can be a step towards determining the quasi-market value of environmental amenities of land.

Reaping the premium in urban redevelopment

IntroductionThis paper investigates new new-built premium in urban redevelopments. Constructing new homes on urban redevelopment sites entails additional investments in reshaped lay-out, refurbished infrastructure, and upgraded outdoor areas. These improvements are expected to yield new-build premiums when the new units are put on the market, with ‘premium’ defined as the extra price that a developer asks for, compared to similar units in the second-hand market, in nearby locations. We askDo urban redevelopment schemes create extra new-build premiums? Does the organisation of redevelopments affect the size of the premium and who harvests it? Method and dataIn focus here are redevelopment schemes in Oslo, Norway, 2002–2015. It distinguishes between four types of developments: greyfield, brownfield and two kinds of infill. This distinction is applied to compare new-build premiums in various redevelopments. As the value-added from upgraded redevelopment may spill over to adjacent neighbourhoods, we also analyse whether such neighbourhoods experience hikes in house-prices. Our dataset consists of sales transactions from approx. 90,000 second-hand house sales and 19,000 new house sales. Results/findingsThe premium for new-builds in relation to second-hand sales varies significantly among the types of development. Units in small infill developments entail significantly higher new-built premiums than units in large brownfield- or greyfield redevelopments. Moreover, some schemes show a negative new-build premium. Examination of existing houses nearby shows a hike in prices in the time-span in question. We conclude that the new-build premium is low, and that developers fail to harvest full new-build premiums in urban redevelopment schemes. DiscussionIn interpreting our findings, we revisit ‘rent-gap theory’ and its emphasis on attracting investment to rundown central areas. Concurrence in scale, design and time helps to explain the differences across types of redevelopments, and why what might be expected to be new-build premiums instead raise prices in existing neighbouring areas.

Spatial factors affecting the functional diversity of regenerated brownfields: The case of Silesian Voivodeship (Poland)

Abstract Until 1990, the Silesian Voivodeship was one of the most industrialised regions in Central Europe. The restructuring of the national economy after the change of the political system, in particular the extensive deindustrialisation, resulted in the emergence of substantial quantity of post-industrial brownfields. During the research we identified a total of 125 post-industrial brownfield sites that had undergone a regeneration process between 1990 and 2019. The total value of these regeneration projects was estimated at over EUR 1.7 billion. About 55% of the projects were carried out by public bodies, 40% by private enterprises and 5% by non-governmental organisations. The EU aid from structural funds was used in 37% of projects. The aim of the paper is to provide new empirical evidence about the role of spatial factors on the regeneration and new functional use of the brownfields. The analysis has revealed that there is a statistically significant relationship between the distance from the city centre and the functions of regenerated brownfield sites: commercial services were located closest to the centre, whereas manufacturing plants and investment zones were found at the greatest distance from the city centre. The research has also shown the crucial role of post-industrial heritage for projects related to redevelopment for public services, which was insignificant for other project types. These results have been interpreted in the context of the rent gap theory and the brownfield redevelopment potential model (the so-called ABC model).

Rent Gaps, Gentrification and the ‘Two Circuits’ of Latin American Urban Economies

AbstractRecent research in Latin America, and our own analysis of Brazilian cities, indicate that aspects of rent gap theory – in particular, the assumption that strong links exist between rent gaps and gentrification – do not fully account for observed empirical conditions. Drawing on Milton Santos' theory of “two circuits” of urban economies in the global South, we seek to develop an expanded framework better suited to explaining the Latin American context. Specifically, we argue that important socio‐spatial processes combine to embed what Santos called the “lower circuit” in certain parts of the city. This “territorialisation” of space by the lower circuit impedes the entry of the upper circuit, thus constraining expected rent gap capture and gentrification. We argue that only by taking both circuits into account, and considering how they become territorialised in urban space, can we properly grasp the relationship between rent gaps and gentrification in Latin American cities.

Review of Matthias Bernt (2022): The Commodification Gap: Gentrification and Public Policy in London, Berlin and St. Petersburg. London: Wiley.

Debates about the most widely used theory of gentrification—the rent gap theory—and the universally adopted metaphor of the seesaw of capital that lies at its core have grown ever louder over the last decade as gentrification research has gone truly global. This includes both generalized debates around theoretical inconsistencies concerning the role of stigmatization, […]

Unfolding touristification in retail landscapes: Evidence from rent gaps on high street retail

Touristification is an emerging concept used to enable the understanding of how various stakeholders interfere and transform a neighbourhood through tourist activities. This study develops a touristification rent gap theory to examine how an influx of tourists causes an increase in retail rents. We hypothesise that ceteris paribus, a higher tourist-concentrated area, will have higher demands for tourist-specific goods and services that increase retail rent gaps. To test the hypothesis, we conduct both time series and cross-sectional data analyses. The time series analysis confirms a strong association between tourists’ spending and retail rents. In the cross-sectional analysis, we use a neighbourhood clustering method to endogenise the demarcation of retail habitats. The result suggests that touristification is not merely a subset of gentrification and that the two phenomena should be investigated as distinct but simultaneous processes. The finding also reveals that areas with more tourists will make the retail rent gaps of small shops higher. Destination management should be aware of significant touristification effects that threaten the original retail markets of local neighbourhoods.

The moral rent gap: Views from an edge of an urban world

For more than 40 years, Neil Smith's rent gap theory of gentrification has been one of the most influential concepts in critical urban research. In recent years, however, the rent gap has been challenged as an economically deterministic tool suitable only for the study of inner city land parcels in certain types of deindustrializing cities of the Global North. But what if the rent gap was never really about economics, but instead about moral outrage? And what happens when moral and ethical questions about access to urban space are extended across multiple human generations? This article develops the concept of the moral rent gap: juxtapositions, tensions, and often irreconcilable contradictions in the present use of urban land in the context of intergenerational debts and responsibilities. Parcels of urban land are not clear, Cartesian locations, but are portals into multidimensional transformations of space and time produced through diverse, competing moral claims to the benefits of urban life.

Touristification, Airbnb and the tourism-led rent gap: Evidence from a revealed preference approach

Over the past decade, the global rise of home-sharing platforms, such as Airbnb, has catalysed the process of ‘touristification’ in major tourism cities. Touristification, a term recently used to describe tourism-induced gentrification, leads to a morphological transformation of a community into a tourism commodity. However, less is understood about the effects of this process, when it is triggered by short-term accommodation platforms, in reshaping urban housing markets. Therefore, in this case study, we apply the rent gap theory to the process of touristification and hypothesise that, ceteris paribus, (1) touristification can create a new potential ground rent that brings about a tourism-led rent gap (i.e., net positive externalities), whereas (2) in a low-density neighbourhood the urban conflicts caused by touristification can lead to a negative rent gap (i.e. net negative externalities). This study's instrumental evidence from the revealed preference approach confirms two opposing forces of the Airbnb listing density on house-type versus apartment-type accommodation rents. Further, its empirical findings imply that in framing policies for effective destination management, policymakers should consider the positive as well as the negative externalities associated with touristification.

Towards a political economy of violence: Property and revanchism in West Thessaloniki

Encompassing data from a year-long field-based work in the neighborhood of Ksiladika, Thessaloniki in Northern Greece, I divulge a campaign of vigilant evictions of migrant squatters by local property owners. To contextualize this vigilant violence historically, I point to the distinct trajectory of the Greek property regime, carved by the minimal involvement of the state in welfare provision, the role of the family as a welfare substitute and a valorized norm hybridizing familism with a laissez-faire ethos linked to the possession of (residential) assets. Geographically, I marry Wacquant’s conceptualization of advanced urban marginality with rent gap theory to unearth the specificity of Ksiladika, a space at once relegated yet loaded with the promise of revaluation. I suggest that this violence is linked with what local impoverished landholders perceive as an opened rent gap that is what drives their pursuit to reorganize space according to the dictates of the markets as a way to secure, valorize and restore their property with its attendant meanings vis-a-vis the social reproduction squeeze brought about the economic restructuring of the Greek economy. Advancing Wacquant’s conceptualization of advanced urban marginality as an effect of the neoliberal state crafting on a global scale I suggest (i) that the schematization of a neoliberal Janus-like centaur state that performs liberalism for the privileged and punitive paternalism for those at the social bottom needs due to the expanding zone of precarity is no longer reserved for the marginalized and (ii) that neoliberal governing is attained not merely by the penal apparatus of the state, but via a diversified repertoire of state responses, including the governing through the precarized subjects who internalize the postulates of the ideology of self-reliance mediated through possession of (residential) assets in times when the resource is scarce.

The Gentrification of Airbnb: Closing Rent Gaps Through the Professionalization of Hosting

In this article, we argue that it is analytically productive to think about the professionalization of hosting on Airbnb in terms of (commercial) gentrification. More precisely, we believe that rent gap theory is helpful to advance our understanding of why and how professionalized hosting has become an increasingly salient phenomenon and for centering the active role of Airbnb as a platform operator. We develop the notion of platform-scale rent gaps to explain the economic logic that drives Airbnb to professionalize its hosts and gentrify its platform. We then discuss Airbnb’s professionalization programs and tools, showing how some of its most substantial resources primarily cater to large-scale property managers who, like Airbnb itself, seek to identify and close rent gaps on the platform. This consequently creates the conditions for uneven business development opportunities among hosts, which we illustrate by focusing on how two different types of hosts have sought to professionalize their business in Berlin. Finally, we conclude by speculating on the relationship between the gentrification of the Airbnb platform and urban gentrification.

Rent gap governance

While gentrification in some contexts has been analysed as a profit-driven process best explained by the rent gap, state governance, e.g. through social mixing, has elsewhere been seen as the main driver of this urban process. With the concept of rent gap governance, the aim of this article is to show that profit and governance can be mutually constitutive parts of gentrification in the neoliberal city. Even when gentrification is a political premise, the rent gap can remain important, but its formation and closure might be unconventional. Empirically, the article centres on Denmark’s 2018 ‘Ghetto Law’, a social-mix policy aiming to govern a racialized surplus population by reducing non-profit housing in stigmatized areas through privatization of housing and land and new-build. Building on recent elaborations of rent gap theory, I suggest three mechanisms for rent gap governance in the Danish case: increased potential rent, depressed ground rent, and subsidized and envisioned rent gaps. I ground this model with a case study of the sale of the non-profit housing complex Schackenborgvænge. I analyse rarely-available qualitative and quantitative data and consider the immediate social consequences of the sale. The result is a murky picture of localized rent gap governance.

Transnational displacement by short‐term rentals in Japan’s depopulating society: Dilemma between rent gap emergence and inbound tourist accommodations

AbstractThe influence of the so‐called “Airbnb effect” on local housing markets has grown into a global concern for affordability crisis, gentrification, and displacement. We analyzed the impacts of short‐term rental (STR) on the rental housing market and explored the relative factors for the rent gaps in Tokyo and Osaka: two major metropolitan areas in Japan. This research builds upon the rent gap theory by Neil Smith and clarifies the rent gaps by following previous work. Our results demonstrate that landlords in Osaka, more depopulated with unoccupied housings, have already removed a significant number of residential rental units from the housing market, and those of Tokyo, less depopulated with less unoccupied housings, is likely to evict their tenants to shift more profitable touristic short‐term rentals when their long‐term rentals’ rent revenue decreases. We concluded that the rent gaps affected by the depopulated societal context require tougher limits on touristic short‐term rentals to mitigate “transnational displacement.” The future of community livability depends upon municipalities’ ordinance as well as their strategies: how to leverage unoccupied housing to survive an era of shrinking economy.

Differentiation under capitalism: Genesis and consequences of the rent gap

Uneven development theory and its corollary (i.e. rent-gap theory) are either excessively general or insufficiently flexible to expound the variations of gentrification with unique historical trajectories. A representative example is education-led gentrification in China. The lacuna restricts the explanatory power of rent-gap theory and justifies the fault line between the rent gap and two important phenomena: the forms of displacement identified by Marcuse and territorial stigmatisation. This paper recasts Neil Smith's insights about uneven development from two perspectives, temporal and social differentiations, and elaborates how the interplay between both differences engenders territorial stigmatisation and displacement. Moreover, as two diametrically opposed phenomena, territorial glorification (e.g. super-gentrification and education-led gentrification) and territorial stigmatisation are simultaneously situated in one framework, which is evaluated in education-led gentrification in Nanjing. Redirecting the empirical research from global cities to less established but more representative urban centres, this research shows the potentially wide applicability of the theoretical framework.

Agent-Based Simulation of West Asian Urban Dynamics: Impact of Refugees

Rapid international migration of significant populations generates profound implications for countries in West Asia, Europe, and other regions. The motivation of this work is to develop an agent-based model (ABM) to capture the existence of such migrant and refugee flows, and to explore the effects of these flows on urban dynamics. Advances in agent-based modelling have led to theoretically-grounded spatial agent models of urban dynamics, capturing the dynamics of population, property prices, and regeneration. In this article we leverage such an extant agent-based model founded on the rent-gap theory, as a lens to study the effect of sizeable refugee migration upon a capital city in West Asia. In order to calibrate and validate the simulation model we construct indices for housing prices and other factors. Results from the model, implemented in NetLogo, show the impact of migration shock on the housing market, and identify the relative efficacy of housing intervention policies. Our work progresses towards a tool for policy makers asking what-if questions about the urban environment in the context of migration.

Potential rents vs. potential lives

The seeking of potential rents directs flows of investment into built and natural environments, suffusing volatility into urban and rural landscapes, generating gentrification and other forms of land use change, and displacing lives and livelihoods to make space for ‘improvement’, ‘highest and best use’, ‘revitalization’, or the like. In this paper we argue that potential rents are captured at the cost of potential lives, and that rent gap theory, long central (and limited) to gentrification theory, is more widely applicable to the dynamics of land use change and uneven geographical development in capitalist societies. By reading David Harvey’s analyses of rent and accumulation by dispossession as a sophisticated formulation of rent gap theory, we relate the seeking and capturing of potential rents to the power of landed developer interests and a broadened conceptualization of rentiership. We furthermore relate the seeking of potential rents to an ideology of limitless accumulation, and the striving to rein in potential rents to ideas of degrowth and the need for a culture and a politics of limits. Brief vignettes from the ‘primary sector’ (fisheries in the Baltic Sea, dairy farming in Europe, and small-scale farming in Sweden) suggestively illustrate our central argument that the seeking and capturing of potential rents stand in stark opposition to potentials for wellbeing and flourishing of human and non-human lives. We conclude that constraining potential rents – founded as they are on faith in limitless growth – requires a culture of self-limitation and politically imposed limitations commensurable with post-capitalist societies.

The impacts of Airbnb in Athens, Lisbon and Milan: a rent gap theory perspective

ABSTRACTThe 2007–2008 Global Financial Crisis profoundly impacted the housing markets, particularly of the so-called PIGS countries. Main cities in Portugal, Italy and Greece have seen a sharp decrease in house prices and rent value since 2010. At the same time, the rise of Airbnb has contributed to the reframing of housing market demand in cities, with an increase of temporary lettings in prime urban tourist areas. Understandably, this has direct implications for local residents, with renters’ displacement, tourism gentrification and raising cases of tourismphobia. This article provides insights from three cities – Athens, Lisbon and Milan – to show how the dynamics in the housing market and the boost of Airbnb over the last decade are steadily changing the urban populations of the aforementioned cities. This research builds upon the rent gap theory and the Luke’s’ Power Theory to illustrate how Airbnb is fostering a new form of urban displacement at a faster rate than traditional housing gentrification, with the renting of prime residential areas to tourists.

Uneven Neighborhood Recovery: Hurricane Damage and Neighborhood Change in the Houston–Galveston Region since 1970

Despite the growing number of natural disasters around the globe, limited research exists on post–disaster patterns of neighborhood change. In this paper, we test two theories of neighborhood change, the “recovery machine” and “rent gap,” which predict opposing effects for low socioeconomic status (SES) neighborhoods following damage from hurricanes, tropical storms, and other natural hazard events. The recovery machine theory posits that after natural hazard events, local communities experience patterns of recovery based on their pre–disaster SES and access to resources, suggesting that wealthier neighborhoods will recover robustly while lower status neighborhoods languish. In contrast, the rent gap theory suggests that developers will identify a profit opportunity in the depressed values created by damage from natural hazard events, and seek to redevelop low SES areas. We use fixed effects models with census data from 1970 to 2015 to test the impact of damage from natural hazards on neighborhood change. We find substantial recovery and change in low–income neighborhoods, but not in the high–income neighborhoods supporting the rent gap theory. We conclude that natural hazard events resulting in damage produce uneven recovery by socioeconomic status of neighborhoods, potentially leading to displacement of low SES groups.

Urban renewal simulation with spatial, economic and policy dynamics: The rent-gap theory-based model and the case study of Chongqing

Urban renewal has been an essential strategy for urban development in China. The decision to redevelop land in the process of urban renewal will help to optimize urban spatial layout, guide functional positioning, and improve the physical environment, to solve the urban land resource shortage problem and achieve sustainable development. This research aims to simulate the dynamic trend of land-use change by using the Cellular Automata (CA) model; with various complex settings, the actual urban renewal status, as well as three scenarios for future development, are simulated and analysed in the case study of Chongqing to assist and support stakeholders in making proper decisions for future urban planning.The study proposes a method to embed the rent gap theory, which states that when the value gap between the potential ground rent and actual ground rent is larger, the attractiveness of investing capital in land redevelopment is larger. In the process of CA simulation, the rent gap theory, as a transition rules of land-use change, can reflect the internal mechanism of urban development. When the location-based spatial characteristics are used, the macro-economic factors, such as GDP, interest rate and depreciation rates, can quantify the rent gap in the CA model. In addition, based on the background of China's "government-led" development, combined with the real situation, the endogenous and exogenous influencing factors of the policy are used as the quantitative factors of the rent gap theory and the second type of transition rule of land evolution, respectively, which can accurately reflect the urban development. The results show that the dynamics in the land redevelopment of Chongqing are well described by the model; additionally, the policy implications to manage the urban renewal are discussed in the research.

Rent gap reloaded: Airbnb and the shift from residential to touristic rental housing in the Palma Old Quarter in Mallorca, Spain

In light of the advent of Airbnb, rent gap theory can be helpful for understanding how tourist rentals affect residential rental housing. It is argued that on those properties currently rented to residents, rental payments are not only ‘actual ground rent’, but also ‘potential ground rent’. The shift from a residential to a touristic use of rental housing thereby creates a potential ground rent. Taking as a case study the Palma Old Quarter in Mallorca, Spain, this paper analyses the evolution of the stock, prices, and revenues of residential rentals vis-à-vis tourist rentals and finds that, because it is more profitable to rent to tourists than to residents, the number of houses listed on Airbnb has increased, housing affordability for residents has shrunk, and the threat of displacement has increased.