A large part of the literature on urban land valuation uses the land residual method which relies on the assumption that structures are easily replaced: properties are valued at construction cost, i.e., the dollar amount required to bid resources away from other uses of the land plus materials...

In Rosen's (1974) model, implicit market prices can be interpreted as the present values of rents per unit of each hedonic characteristic. But when rents rise, there may be substantial value associated with the option to redevelop to higher intensity per unit land value. In the presence of...