central business district

A CENTRAL BUSINESS District (CBD) is the nucleus or downtown of an urban area that contains the main concentration of commercial land use, with the highest percentage of retail shops, offices, and services such as banking and finance. Large cities are characterized by distinct retail sub-areas that have their own “walking district.” Some specialized clusters of nonretail activities can be found, such as law offices, medical facilities, and offices services. Applicable to any city, the CBD is found in global cities with international and financial business centers such as NEW YORK, LONDON, TOKYO, PARIS, Frankfurt, Zurich, Amsterdam, LOS ANGELES, HONG KONG, and SINGAPORE. In global cities where the CBD is strong, advantages include local expertise, world-class technology, specialized knowledge, and networking capabilities. There are slight differences in the patterns of CBDs around the world.

The concentration within a CBD is associated with high land values because of high accessibility. These characteristics of urban location are similar to the William Alonso model. The CBD has been identified as a district area after the general theories of city structure in the 20th century. There has been no specific defined geographic area for a downtown, unlike the boundaries of a city for example. In their pioneer work, the urban geographers, Raymond Murphy and James Vance (1954), found a number of indices by which the CBD could be physically delimited. However, their method required a large amount of land use and building use data, and thus it was rarely used. The CBD has the highest concentration of land uses and in general the tallest nonresidential buildings. It is spatially structured internally, with different specialist areas to benefit from the external economies associated with agglomeration. Vertical segregation exists also with uses that can afford the highest rent on the ground floors of high-rise buildings.

central business district

Methods for the delimitation of the CBD include mapping land use intensities referring to the central business height index, recording the percentage of the land uses of each floor of each building within the CBD, and calculation of high-level pedestrian flows. The Manhattan CBD is, for example, characterized by very high offices blocks and a lack of residential buildings, which has the result making the area deserted after offices hours. In the 1970s, planners introduced the development of a resident-friendly concept, such as gentrification, to bring night life back to the downtown area. The Marunouchi District, the heart of Tokyo’s CBD located near the Tokyo Station (through which more than 700,000 passengers each day commute), is characterized by the new massive Marunouchi building complex. It attracted more than 13 million visitors during its first six months.

However, characteristic of many CBDs, the three Tokyo core wards of Chiyoda, Chuo, and Minato have a nighttime population of 268,000 persons but a daytime population is 2.341 million persons. Some large cities as London and Tokyo have several CBDs. Moreover, if the CBD remains a strategic area for leading industries, it is reconfigured by technological and economic change. Many CBDs are facing several problems, such as congestion that has led to parking restrictions, and decline not only with the increasing growth of out-of-town developments with shopping centers and office parks very close to major highway intersections, but also with the cyclical decrease of business activity.

In New Orleans, LOUISIANA, after the oil industry collapse in the 1980s, almost all office inventory was abandoned as companies went out of business; and the occupancy of the CBD only ever achieved 90 percent of the capacity. After the technology bubble burst in San Francisco, CALIFORNIA, office space rates fell as much by half.


In booming economies such as in CHINA, infrastructures in new CBDs are being built. In BEIJING, workers are clearing the CBD of its aging textile factories and railroad workshops for a $20 billion complex. This new CBD is a way for China to create an image of a modern capital in line with London, Paris, and New York. The conventional CBD, as a highly concentrated core with international business, has been questioned in light of the information technology age. If centrality was synonymous with the CBD, today the new technologies and the organizational forms have changed the spatial correlates of centrality. Some questions on the future of financial districts have been raised, particularly when looking at the virtual configuration of the electronic system.

The informational economy tends to be concentrated in global cities, creating a new international division of labor. Global cities come at the top of the information hierarchy and are characterized by a high concentration of information flow and processing. The accessibility and centrality for a CBD is no longer justified, as was the case when face-to-face contacts were a necessity in business. However, clustering of services and proximity do produce agglomeration economies, and in a CBD, the services and marketing relations can, for example, enhance the quality of the services.