The vertical city: Rent gradients, spatial structure, and agglomeration economies

The vertical city: Rent gradients, spatial structure, and agglomeration economies

Tall commercial buildings dominate city skylines. Nevertheless, despite decades of research on commercial real estate and horizontal patterns of urban development, vertical patterns have been largely ignored. We document that high productivity companies locate higher up, with less productive offices lower down and retail at ground level. These patterns reflect tradeoffs between street access and vertical amenities. Vertical rent gradients are non-monotonic, independent of nearby employment, and large. Doubling zipcode employment is associated with a 10.7% increase in rent, consistent with the presence of agglomeration economies. Moving up one floor has the same effect on rent as adding roughly 3,500 workers to a zipcode.

Crocker H. Liu, Stuart S. Rosenthal, and William C. Strange

Journal of Urban Economics

July 2018

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By |2018-07-18T13:09:54-07:00January 1st, 2018|Efficiency/Growth, Land Use Regulation, Reference|