Which principle of value states that higher value can be created when similar businesses coexist?

The principle of value that states that higher value can be created when similar businesses coexist is referred to as the competition principle. This principle suggests that when businesses that provide similar goods or services are located near each other, they can draw in increased customer traffic. This clustering can create a destination for consumers, enhancing overall visibility and attractiveness for all businesses involved.

For example, shopping centers featuring multiple retail stores can collectively benefit from the increased foot traffic that occurs when consumers are drawn to numerous shopping options in one location. This dynamic shows that the presence of similar businesses can elevate the performance and value of each individual entity, given that they can share customer bases and stimulate greater demand.

Other principles like contribution, progression, and assemblage deal with different aspects of real estate and value creation. Contribution speaks to how each part of a property contributes to its overall value. Progression describes how a property can gain value when improved properties surround it. Assemblage concerns the concept of combining multiple contiguous properties to create a higher total value than the individual parcels alone. While these principles are important, they do not directly address the value enhancement that occurs specifically from the coexistence of similar businesses.