Disappearing Distances

Test runs have been carried out this week on London’s new Elizabeth Line (aka Crossrail). When open next year, travel times across the capital will abbreviate considerably. But Crossrail is the tip of the iceberg. Technology is significantly driving down both the cost and time penalties associated with distance. Examples include the facilitation of small-scale local manufacturing, the option of delivering services virtually, the use of drones to lower human costs, and much quicker physical travel such as the Hyperloop. The cost of distance is precisely what creates the economic rationale for cities, and in turn, cities are what create real estate value. Consequently, as Bain noted in a paper on the subject last year, with declining costs of distance, those industries which take a long term bet on location may suffer: ‘The value of fixed assets—including real property, such as apartment buildings, shopping centres, telecom fibre and toll roads—may fall sharply’, whereas extra-urban values in desirable locations may rise in response.