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

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

Research output: Contribution to journalArticle

10 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)101-122
Number of pages22
JournalJournal of Urban Economics
Volume106
DOIs
StatePublished - Jul 1 2018

Keywords

  • Access
  • Agglomeration economies
  • Amenities
  • Commercial real estate
  • Rent gradient
  • Spatial structure
  • Vertical

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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