Spatial Reorganization in Urban Redevelopment: Evidence from an Earthquake in a Metropolitan Area

This study provides a new lens to look at urban redevelopment by focusing on the spatial reorganization within the redeveloped area. We begin by presenting a toy model of residents’ locational choice within a Metropolitan Area, which links crowded housing and market accessibility. A key ingredient in our model is the change in the location’s population bearing capacity before and after the redevelopment. Dense and high market accessibility locations stagnated due to crowded housing before the redevelopment, allowing for the expansion of less dense and low market accessibility locations. Redevelopment increased the land-use efficiency and relieved dense locations from crowded housing, allowing them to be denser and enter into a new phase of growth, at the cost of less dense locations. The urban spatial structure is thus reorganized. We then document substantial variation in population growth across locations within a Metropolitan Area of Japan, which underwent intensive redevelopment due to a seismic earthquake. Using the variation of pre- and post-redevelopment periods, as well as dense and less dense locations, in population growth, we find strong empirical support for the model’s predictions. Our results imply that urban redevelopment may be an appropriate strategy for developers to improve the spatial structure of a city, which is much needed for mega-cities.