A third point to be considered and guarded against is the possible loss of value through changes in the internal structure of a city. In retail business property this most commonly occurs through the advance of the best retail district in the direction of the best residence district; in wholesale property through changes in the location of wharves or railroad terminals, and in residence property through changes of fashion or of transportation, and the encroachment of what are actually, though not legally, nuisances.

There is always going on in a city a movement of the retail stores in the direction of the best residence district, this being an effort on the part of the storekeepers to approach as closely as possible to their customers. As this district moves forward it leaves a vacuum behind it, which is rilled later by wholesale or other uses which are inferior from a rental standpoint. Unless the growth of a city is so rapid as to make its wholesale property worth as much as retail property was a few years before, there will be an actual drop in the value of the property so replaced by wholesale; and this has commonly occurred. Where there has been a change of axis of the main retail business streets of a city, there has always occurred a shrinkage of the values created by an anticipated growth of the business district in the line of its original direction. Many examples are to be found in American cities of the best retail business streets being parallel to a lake or river front during the growth of the city up to a population of perhaps 50,000, while after that point in population has been passed, the concentration of the best residence district at a distance from the water front has drawn business out toward these residence districts on lines at right angles to the water front and to the original business streets.

As regards wholesale and warehouse property, the chief danger to be guarded against arises, as I have said, through changes in the location of transportation terminals. The natural tendency of wholesale property is to place itself between its transportation facilities and the best retail business district, so that it may at the same time be able to handle its goods cheaply and yet be in a location convenient for its customers. Where the wholesale business of a city grew up through river transportation, as for example, in Savannah, and Portland, Ore., it is noticeable that of late years the predominance of railroads has been so great as to withdraw wholesale business very largely from locations occupied by it for half a century, with an increase of value near the railroad terminals and a corresponding decrease of value near the wharves.

In the case of residence property, purely social reasons are the predominant ones in establishing high values, and property of this character is, for this reason, liable to depreciate through changes of fashion. Changes of transportation are also of great importance in determining residence values. Improvements in street-car facilities enable people of a good social class to live at greater distances from the business center of a city and among surroundings which are pleasant. The general tendency of our street railway improvements of the last twenty years has been to equalize the value of residence property over considerable areas, and as a result of this to depreciate residence property which is close to business property, while rapidly enhancing the value of property further out, which is well located topographically. Residence districts at a distance from the business center of a city have an element of stability in the fact that they are less likely than those closer to the business center to be injured by the encroachment of nuisances. In the term "nuisances" may be included buildings for every kind of utility except residence, since homogeneity is necessary to the maintenance of value in a residence district.