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.
Why Does Agglomeration Occur?
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 farther out companies locate from these areas, the more costly, time consuming, and difficult it becomes to operate, attract talent, and find support.
Examples Of Agglomeration
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.
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.