Bid-Rent Curve and Growth Pole and Growth Center Cubao Central Business District

Bid-Rent Curve and Growth Pole and Growth Center

Cubao Central Business District

By: Archt. Merant B. De Vera, uap

Sept 10, 2011

In the past, Cubao was the heart of retail, shopping and commercial activities for the Metro Manila area and was recognized as “the first commercial business district” at the peak of its commercial success. But after sometime, the area saw a steady decline with the growth of new suburban destinations and a trend of disinvestments. New development has occurred in portions of Metro Manila but very little of this new development has occurred in the Quezon City area. Efforts sought to revitalize this area and return its historic vitality as a commercial center.

Cubao, south of Diliman is an imperative commercial area. At its heart is the Araneta Center along EDSA (C-4) and Aurora Boulevard (R-6). It is a 35-hectare commercial estate owned and developed by the Araneta family. Department stores and retail centers can also be found here, such as Plaza Fair, Rustan's, Shopwise Supercenter, and Makro. At the center is Araneta Coliseum, often called the Big Dome. Many musical concerts, ice shows, circus shows, religious crusades, wrestling, cock-fighting and basketball games are held in this 50,000-capacity coliseum. Seedy nightclubs also abound within the Cubao area.

Commercial establishments being mostly market-oriented have the tendency to locate in areas accessible from residential concentrations.  Hence, ribbon-type growth has been the dominant trait of commercial development in the city. Although not entirely undesirable, such type of development leads to traffic congestion.

In 1972, commercial strips along major roads were mostly concentrated at Quezon Avenue and A. Bonifacio Avenue.  Only the Cubao area could be considered a more prominent commercial node in the city although smaller commercial centers of neighborhood scale usually established around a public market, could be found throughout the developed residential areas in southern Quezon City, at the Balintawak Market area, at the Muñoz Market vicinity and at Novaliches Proper.

This type of land use was then a mere 0.88 % of the city's land area.  With the introduction of the "shopping center" type of commercial establishments in the mid-70s, activity in Cubao increased, followed by SM City in the northern area in the 80s, then at Broadway Centrum in New Manila.  In 1995, more commercial centers have emerged such as SM Centerpoint at Sta. Mesa, Ever-Gotesco Center at Capitol and Robinson’s Galleria Ortigas.  Simultaneously, intensification and continuing linear spread took place within the populated districts such that in 1995, commercial areas had tripled and reached 3.6 %.

To date, additional commercial areas are emerging. These are in Fairview (SM City site), North Triangle Business Center (where the MRT-3 main depot is located) and the Eastwood Cyberpark, the country's first free trade area for information technology at Bagumbayan where the headquarters of IBM and Citibank are located.  With this increasing commercial growth, areas for same are expected to double in size by the year 2012.

Growths of business activities have been generally slow and occurring mostly in the service sector. Presently, there is a predominance of small to medium scale type of business operations engaged mostly in the distribution of finished products or in the provision of basic personal services rather in the production of goods (as shown by the large 46 % share of Wholesale and Retail Trade Sector and 27 % share of Social/Personal Services as compared to the 12 % share of the Manufacturing Sector).  The number of large business establishments in the city is minimal although they contribute a big share in business revenue.  There is need to encourage further investment especially in capital and labor intensive industries.

In 1999, there are 55,438 registered firms in the city.  A fluctuating trend on the number of business firms was recorded from 1995 to 1999 (see Table 1.1).

With a big portion (9 %) of the city's land area being allotted for commercial/industrial development and the availability of manpower resources, there remains the great potential to substantially increase the number of big businesses in the city.    Incentive programs/projects directed towards the business sector should therefore be given more weight by the city government.

Classic land use theory holds that rent is a function of distance from the center of commercial activity. Land users bid against one another, paying higher rent for proximity to the center of business based on respective transportation costs. At one extreme, those with the highest transportation cost will outbid others for land nearest the center. Alternatively, for land far from the center, value drops to zero when it is no longer profitable for anyone to locate there; hence no rent will be paid for such land.

There are residential areas ranging from the upper-middle class, right through to the upper-upper class, in Cubao, Quezon City.

From its establishment in 1939, Quezon City’s character had always been mainly residential.  In the 1941 City Plan prepared by Arch. Harry T. Frost, 45% of the City’s original territories of about 8,647.39 hectares were allocated for residential.

While private residential developments were either existing or on-going in Galas, La Loma, Sta. Mesa Heights, San Francisco del Monte, New Manila, Cubao and Murphy districts, new residential developments in the Diliman area were undertaken by the PHHC (now NHA).  After the war, PHHC housing projects in the South Triangle, Kamuning and Kamias sections were constructed, followed by Roxas (Project 1), Project 2,3 and 4 (Quirino) in the 1950’s then in  the East (Central, Sikatuna) North (Bago Bantay, Pag-asa, Project 6) and West (Project 7, West Triangle) sections in the 1960’s.  PHHC projects outside Diliman, namely Project 8 (Toro Hills) and Gabriel Estate (Bgy. Sta. Lucia) were also undertaken in 1960’s.

In 1972, residential community comprised about 20.99% of the City’s urban area with the southern half being extensively occupied of residents.  In the northern half meanwhile, residential areas were concentrated in the west part and linear in manner along major roads like Quirino Highway from Balintawak to Novaliches and along Tandang Sora Avenue from Quirino Highway to Commonwealth Ave

Residential growth continued its northwards spread such that in 1985, new communities had established inward from both sides of Quirino Highway and Tandang Sora Avenue.  However, a more increased pace could be observed along Commonwealth Avenue (which by then was of more improved condition-widened  and  concreted)  where large  residential  developments  had  taken  place, like Filinvest Homes, Don Antonio, BF Homes and Mapayapa Subdivision,  Lagro served as the new satellite community in that part of the city integrating the linear growth from Quirino Highway at the west to that along Commonwealth Avenue at the east, even as large tracts of land in the midpart of the district remained vacant due to poor accessibility.  By then, residential uses made up 34.74% of the City’s urban area.  The southern parts of the City, meanwhile, had grown inwards, diminishing what used to be pockets of vacant lands.

This inward sprawl of residential communities prevailed until recent years.  With the opening of new subdivisions mostly in the Capitol area, City experienced noticeable expansion towards the north. However, since these developments were mostly privately-initiated and fragmented in the absence of firm control and direction, unrelated subdivisions with inadequate and uncoordinated services and facilities resulted.   The absence of new satellite growth during this period is being attributed to the fact that no new major roads were constructed at the time that could open new areas for urban development.

Employees of the different Malls (SM Cubao, Ali Mall, Gateway, Rustans, Isetann, and other Commercial establishments), whether they are commercial, Restaurant, and Office compete for the most accessible land within the CBD. Middle and Small scale business owners and entrepreneurs is willing to pay the highest rent and be located in the inner core just to enjoys the comfort of accessibility. The inner core is very valuable for them because it is traditionally the most accessible location for large population. This large population is essential for department stores, which require a significant income. As a result, they are willing and able to pay a very high land rent value. They make the most of the potential of their site by building many stories. As you move from the central core of Cubao Business District, the amount business is willing to shell out declines rapidly. Industry, however, is willing to pay to be in the outer core. There is more land obtainable for their factories, but they still have many of the benefits of the central core, such as a market place and good infrastructure and facilities such as MRT and LRT. As you move further out, so the land is less attractive to industry due to the reducing communication links and a declining market place. Because the householder does not rely heavily on these and can now afford the reduced is able to acquire property. The further you go from the inner core and outer core, the cheaper the property. This is why inner municipalities and districts areas are very densely populated with High Rise Residential Condominium such as Manhattan Graden City, and MRBs, while rural areas are sparsely populated and composed of semi and detached houses with gardens).

The Fig 1.1 shows the intersection point where two users are equally willing to locate at the same rent. The   axis is the distance from the center, and the   axis is the rent paid at that point on the earth. Higher bidders with higher transportation costs will locate to the left of this point. The lower bidder will locate to the right of this point

Impact Outline

Rapid population increase.  At present, the city has an estimated population of 2.3 M .  Growing at the rate of 3.6% per year, this is expected to reach 3.4 M by year 2010.

Population strain on services and facilities.  The city is under tremendous pressure to provide more services to address the needs of an enormous population.

Uneven distribution of population. This creates imbalances in the spatial distribution of services and facilities.

Shelter/housing needs.  The need for housing is becoming more and more pronounced and massive measures  are imperative to arrest further worsening.

Great disparity in income distribution. Families belonging to the upper income class, although making up only 16.75% of the total families in Quezon City, registered a very high average monthly income of about P123,585 which is way above the average income of the families of the middle and lower income (families falling below poverty line level)  classes which are P28,357 and P7,180 (poverty line level set by NSO), respectively.  This clearly shows great disparity in income distribution among the city’s households.

Sluggish growth in business activities.   Growth of business activities has been generally slow and occurring mostly in the service sector where there is a predominance of small to medium scale type of business operations. This is due to lack of government assistance/incentives and limited business facilities such as financial centers better office/commercial facilities.

Increase in the number of informal sectors.  The informal sectors (hawkers, vendors, beggars) are increasing such that urgent government intervention to address their needs is important.

Traffic congestion. Chokepoints are the intersections of major roads like Quezon Avenue and Araneta Avenue, Quezon Avenue and EDSA, Aurora Blvd. and EDSA, Commonwealth Avenue and Don Antonio and  Quirino Highway and Susano Road.

Mixed/conflicting landuse.  Incompatible and at times conflicting, land uses existing in a zone such as multi-family dwellings and commercial establishments in R-1 zones.  Another example are residential areas located very near or in the midst of hazardous industries.

Rapid Land Use Change. Most noticeable is the change from residential to commercial use along major roads such as Commonwealth Avenue, Quirino Highway, Visayas Avenue and Tandang Sora Avenue. Areas with significant commercialization include Lagro, UP-Philcoa, Don Antonio- Capitol Homes and Tandang Sora. Significantly, some 150 hectares of the NGC was converted into a Socialized Housing Project.

Urban blight.  Noticeable in the older sections of the City like in Galas and La Loma which first  absorbed the sprawl of  Manila.  Thus, these areas have become highly dense and congested with houses and establishments.

Urban Degeneration.  Noticeable in the older sections of the City like in Galas and La Loma which first absorbed the sprawl of Manila and old industrial areas in Balintawak.

Continued growth of informal settlements.  The increasing number of informal settlers occupying idle lands greatly hinders the development of these lands into more  suitable and productive uses.

In- and off-city growth centers.  Several in-city growth centers like the North and East Triangles, the Eastwood Cyberpark at Libis, etc. are expected to attract investments, generate employment opportunities and enhance economic development.  On the other hand, the off-city growth areas, i.e, RIZLAQUE, CALABARZON, Subic & Clark Ecozones, Fort Bonifacio Global City are also envisioned to boost business growth as these would have spin-off effects on the  service sector.

In the study undertaken jointly by national government agencies (DOTC, DPWH, NEDA, HUDCC, MMDA) entitled "Metro Manila Urban Transportation Integration Study (MMUTIS, 1997) it was forecasted that the continuing urban sprawl of Metro Manila will be most pronounced towards the north (Bulacan) and the south (Cavite, Laguna).   It will be less on the east (Rizal) due to constraints in terrain conditions.

With this growth scenario, the study advanced a road network framework development proposal which highlights the need to extend as well as expand Metro Manila's major transport infrastructures towards these north-south directions.   Being situated at the north-east part of Metro Manila, Quezon City will be traversed by several arterial roads designed to serve as the northern growth corridors and by secondary roads for lateral integration of existing suburban growth nodes in this region.

The extension of Mindanao Avenue and Commonwealth Avenue towards the proposed Circumferential Road 6 (C-6) and the planned extension of C-5 via Luzon and Republic Avenues are among the forthcoming significant road projects intended to promote this northwards expansion of Metro Manila.   Simultaneous thereto will be the construction of an LRT Line along Quezon Avenue-Commonwealth Avenue (LRT 4) and the proposed rapid rail system (NorthRail) which will utilize the existing north Luzon track of PNR until Clark International Airport.

Within Quezon City, major road proposals like the extension of Visayas Avenue towards Fairview, Congressional Avenue until Luzon Avenue and the widening of Litex Road are now being evaluated.  The City Government meanwhile is readying its propositions for the extension of Mindanao Avenue in North Fairview, Katipunan Avenue in Novaliches and Payatas, the widening of Tandang Sora Avenue and such other district-level road projects.  These are to provide the needed avenues to open new areas for urbanization, population dispersal and maximize capacities to accommodate the expected population