Planopedia

Learn and explore the fundamental concepts of urban planning.


What Is a Central Business District (CBD)?

A central business district (CBD) is a geographic area sometimes referred to as downtown, but with key distinctions critical to an understanding of city and regional planning.


Paris Skyline

Paris (pictured here) and Mexico City are two global cities where the historic and cultural center of the city has been preserved and a central business district has grown in a different part of the city. | VLADJ55 / Shutterstock

A central business district is exactly what it sounds like—the area of densely concentrated commercial activity that forms a core of economic and population density in a city or region. In some cities, the central business district will also be called the financial district, but that's usually true in cities where the financial industry has a large footprint in the downtown office market. Central business districts usually include numerous kinds of business and commercial ventures—all of which are likely paying a premium to set up shop at the center of the economic action. 

The central business district, referred to frequently by its abbreviation, CBD, is a key term in planning because of its importance to so many intersecting issues of the city—the success of the local and regional economy, the movement of goods and people, the life and culture of cities, and more. CBDs will vary greatly between cities, with the transit oriented bustle of New York and San Francisco at one extreme, the more auto-oriented sprawl of Jacksonville and Riverside at the other, and many variations in between. The unique characteristics of different central business districts are influenced by development history, economic history, local and national politics, and culture, among other factors. 

Other distinctions lend more variation and subtlety to the definition of a CBD. In many cities, the CBD is distinct from the cultural or historic core. In some cities these other kind of urban cores overlap partially or completely with the CBD. Other cities have more than one CDB. Regions will often include more than one CBD, and in some regions, the CBD will cross multiple jurisdictions. The technicalities of these distinctions are why central business districts are generally considered distinct from the broader term "downtown," which might include more historically residential neighborhoods or CBD-adjacent historic and cultural centers of the city. 

A branding identity around the local CBD is a common economic development tool—an effort to attract businesses and residents to the area and also provide a steady economic base for the rest of the city and region. Beyond branding, CBDs are frequently associated with an extra layer of cultural and political prominence, in addition to economic clout, in some, but not all, cities. It's no coincidence that in many cities (but again, not all), the city's skyline is most recognizable as a symbol of the city because of the buildings located in the CBD. 

In recent years, central business districts have also provided the theater for planning innovations like dynamic parking pricing, congestion pricing, and car-free areas, and, in some cases, a growing residential population. The addition of residential population to the CBDs of many cities has itself been a hugely significant planning innovation of recent years.   

For the sake of data collection and official definition, the U.S. Census Bureau publishes American Community Survey data that can be used to compare and contrast CBDs around the country. Although the U.S. Census Bureau ended its official program to define CBDs by census tract in the early 1980s, analysts at think tanks like the Brookings Institution have since created their own methodologies for defining CBDs. As evidenced by a study published by the U.S. Department of Housing and Urban Development in the journal Cityscape in 2019, the question of how to define CBDs for the purpose of statistical analysis is the source of ongoing debate.

Finally, and critically, central business districts are neighborhoods—a specific and significant variety of neighborhood, but a neighborhood nonetheless.