Commercial Real Estate Dictionary

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Definitions of Agglomeration
  • Agglomeration is the tendency of businesses to locate and concentrate in a given area, typically due to the advantages gained by being within proximity to other businesses.
    Many clothing companies are located in Los Angeles due to an agglomeration of garment contractors and industry suppliers.

What is Agglomeration?

In real estate and urban development, agglomeration occurs when related businesses and institutions locate in an area because of the advantages gained by being within proximity to each other.

Examples of agglomeration include Silicon Valley in California that is noted for its concentration of tech firms, the garment district in New York, or the entertainment industry in Hollywood.

As similar or dependent businesses concentrate together, other similar businesses are drawn to these areas because of the synergy and efficiency realized by operating their businesses in those locations. As a result, the surrounding local environment is more conducive to success and growth for specific groups of companies and industries than other locations.

The garment districts of New York or Los Angeles are examples of an agglomeration of garment manufacturing companies that locate in these areas due to the advantages of being located near each other. Being located near garment contractors and suppliers makes it easy to source materials, subcontract manufacturing processes and find employees efficiently to manufacture clothing in a highly competitive industry.

The farther out companies locate from these areas, the more costly, time consuming, and difficult it becomes to operate, attract talent, and find support.


Real Estate Terms

1. How much cash will be required to make your mortgage payments? Debt Service >>

2. Who can you go to to finance your construction or development project? Construction Lender >>

3. What professional can assist you in maximizing the value of your investment property? Asset Manager >>

4. How can we assess future commitment to infrastructure to support our communities and future development? Capital Improvements Projects >>

5. What measurement indicates if a property's financial performance can cover its debt? DSCR >>

6. What part of a city is the center of urban economic development? CBD >>

7. What allows property owners and professionals to estimate the market value of a commercial property? Comparable Property >>

8. What can landords do to entice prospective tenants? Concession >>

9. What critical factor do stores depend on to drive traffic? Anchor Tenant >>

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