Rent-Gap

One of the more popular explanations for gentrification, the rent-gap hypothesis, first advocated by Neil Smith, approaches this issue in terms of the profitability of land in the urban core. In centrally located sites, actualized ground rents generally decline over time as the buildings and infrastructure age. During the post–World War II boom, low rents on the urban periphery were a major attraction to capital. Deindustrialization and the flight of people and capital to suburbia throughout the late 20th century played a major role in lowering the profitability of land, or devalorizing it, in the central business district (CBD). Low-income residents were incapable of generating rents that guaranteed a high rate of profit. Disinvestment from the urban core was manifested in abandoned buildings and lack ...