Central Business District (CBD) | Characteristics, Examples, Pros and Cons

What is Central Business District (CBD)?

Central Business District or CBD as it is usually known, is generally the central area, the most frequently used and one of the most expensive areas of a city. It is the part of the city that most people go to work and shop, suggesting that it is a business hub of the city. This is particularly seen in big metropolitan cities around the world where their CBDs are the most well-used part of the city.

CBDs or city centre are the business hub and not the place where most people choose to reside. It is not the area that has luxury housing or dense communities like the suburban spaces that people choose to live in and buy property in. CBDs are the areas where big businesses and well-known companies are located inside the city, usually with skyscraper based buildings in world commercial and business hubs such as London and New York. These areas are of prime importance and part of high value real estate. Major transport routes pass through these areas of high importance and high concentration.

Although this is true, with the growth of mixed used areas around the world, millennials and students or young adults also choose to live in apartments close to the CBD so that they can easily commute to work, supermarkets and universities. This is seen to be convenient for young adults to live in and also make the most of what the CBD has to offer.

Cities usually have legal restrictions on the building height and functions based in the CBD which they have to strictly follow. For instance, in India we do not see many tall buildings apart from some cities such as Mumbai such that in New York, because in India we have legal restrictions and lower building height restrictions comparably to the western conglomerates.

History of Central Business Districts (CBD)

Central Business Districts are thought to have evolved from ancient day market square and trade areas because this was the place that most merchants and consumers conducted their everyday business duties.

Although such activity was usually spread out around the cities and villages, after some decades, most business men started to concentrate in a certain area of the city, where they would gain more wealth because it was the center that people visited the most in the city and found it most convenient to travel to and from.

Markets would later become concentrated in metropolitan area, where most of the business was conducted to target a specific group of population. In the 18th and 19th Centuries, businesses would be conducted in the transportation hubs of the city because most people would use the buses and trains where they would gather with friends and family, while also buying goods from merchants.

But in 20th and 21st Century these business and commercial activities grew rapidly with transportation also advancing rapidly with the commute of good and services. The CBD become more defined to a specific central location within the city. It also became the most sought out and expensive centers, defined with skyscrapers, office and government buildings, office buildings and serves as financial districts.

In the next few decades we can see the CBD evolve as a central district hub with lack of urban environment but as a mixed used center and a dense area where people concentrate.

Characteristics of a CBD

There are peculiar characteristics which applies to all business districts and downtown area. These features are common in central city all over the world. Most of these aspects are known and related to those working or owning a place in these business districts. However, its good to know about these characteristics.

  1. Exceptionally high land price & property values because this area under prime real estate. The prices are amongst the highest in the city because of their commercial values.
  2. CBDs are the areas with large footfall and focal point. This large footfall is due to number of reasons like accessibility & the service being offered by business districts.
  3. Many large cities might have multiple business districts and all of them functioning and serving something different.
  4. “Central” Business District, might not always be “centrally” located. Their location is highly influenced by multiple factors, major transport routes but not always.
  5. There will be lack of open and green spaces. This is attributed to high land prices.
  6. Rents are exceptionally high, this makes high density of offices too along with high worker’s density. This is primary reason of having skyscrapers & tall buildings in these areas.
  7. There will be high end shops and services available since such kind of commercial activities can afford to pay a high rent demanded in a CBD.

Other characteristics include large number of vehicles, international business and head office of various businesses. Though these areas are highly accessible (one of the reason why an area develops into CBD), but still vehicular movement is significant part. Banks & financial institutions are very prominent in these areas. These are the prime financial districts and presence of financial institutions, tallest buildings, lack of open spaces is common.

Central Business District CBD New York

Advantages of Central Business District (CBD)

One of the biggest positives about CBDs is that they are the places many people can find jobs and conduct business activities on a regular basis. It is most common to have a well-known office space and company in a CBD area.

Many start-ups are also functioning within the CBD spaces as they provide good areas for offices and retails to take place within the city. It is also positive as most people regardless of rich or poor would have visited the CBD at least once. Most people in the city would have heard about the CBD and visit the CBD regularly for many activities.

In some metropolitan area, malls and theatres are also located in the CBD area, such as Auckland City’s Queen Street. There are many other positives such as convenient shops and convenient apartment and residential facilities for young adults. Backpackers and hostels can also be found in the CBD. It is one of the most positive spaces for working class people and professionals.

Disadvantages about Central Business District (CBD)

One of the main negatives of a CBD is that it is not a place for retirees, poor people or older population. There are not many old age facilities in the CBD and the elderly population try to stay away from the CBD because it is mostly a place for the younger crowd.

Another negative is that CBDs are also not very family friendly spaces, although most working class parents would be working in or around the CBD. It might not be safe for their children, for instance, to visit the CBD on a regular basis in an urban area.

Most of the business activity is conducted in one area and not many other areas will have the same business activity as the CBD of the city. It is also inconvenient for housing and residential properties as more densely built properties are located in the CBD such as small apartments.

Examples of Central Business Districts (CBD)

Most cities these days have a CBD including cities in emerging nations. In the USA, CBDs are known as “downtown areas” or “city centers” where most of the commercial activities take place.

The most well known CBD is probably Midtown Manhattan in New York City, which is commonly shown in the movies and TV shows. Raffles Place in Downtown Core in Singapore is also a good example of a well used CBD that is also close to the waterfront and generates wealth with large businesses.

Europe was probably one of the most influential in starting a CBD in the ancient days, with an initiator of trade and transport. La Défense in Paris, is another example of a popular CBD that is well-used and also is a tourist hub. Paris is one of the most visited city in Europe and its location within the EU is very advantageous for it’s business areas. The largest CBD in Europe is located in Spain called ‘Downtown Port of Spain.’

In the emerging nations, such as India, New Delhi’s Connaught Place or CP as it is colloquially called, is one of the most popular and well-known CBD of the country. CP has a mix of bookstores, offices, restaurants, cafes, retail shops, supermarkets, and many other facilities that locals can benefit from on an everyday basis. In Bangalore City of India, Mahatma Gandhi (MG) Road and Vidhana Soudha are the CBDs of the city. Vidhan Soudha is also the center for governance in Bangalore city.

Many other CBDs can be found in cities all around the world, from Sydney to Botswana which are not listed in this article. Each city benefits enormously from their CBD as it is the economic hub of the district.


As indicated in this article, the CBD is the area that is most well-used and well-known center within the city. The CBD has a rich history, with businesses taking place in many areas throughout the city, particularly in the transportation hubs, which later became concentrated into one area of the city known as the Central Business District.

The CBD comes in many names, shapes and forms, with people in the city usually having a colloquial name for the CBD. All around the world, each big city, has a CBD where the business activity of the city is concentrated. They even result in formation of edge cities and satellite cities since they become saturated in some cases.

CBD is usually the hub for young adults and millennial population who make the most of the CBD on a daily basis. People use the CBD for many different reasons and there are many positives and negatives for the CBD. Most working class people would have used the CBD for their work at least once and most locals of the city would have visited the CBD.

After reading this article, it is worth it to give a thought about the uses of your city’s CBD. What do you think about your city’s CBD?

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