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Tall Buildings and Land Values: Height and Construction Cost Elasticities in Chicago, 1870–2010

Author

Listed:
  • Gabriel M. Ahlfeldt

    (London School of Economics and Political Science and Centre for Economic Policy Research)

  • Daniel P. McMillen

    (University of Illinois at Urbana-Champaign)

Abstract

Despite unprecedented vertical growth in large cities, the economics of skyscrapers remain understudied. We combine data on tall buildings with a panel of land prices covering 140 years to analyze the determinants of urban heights. We provide estimates of the land price elasticity of height, the height elasticity of construction cost, and the elasticity of substitution between land and capital for tall buildings. The land price elasticity of height increased substantially over time, and it is larger for commercial than for residential buildings, which suggests that the supply side helps to produce the typical segregation of urban land uses.

Suggested Citation

  • Gabriel M. Ahlfeldt & Daniel P. McMillen, 2018. "Tall Buildings and Land Values: Height and Construction Cost Elasticities in Chicago, 1870–2010," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 861-875, December.
  • Handle: RePEc:tpr:restat:v:100:y:2018:i:5:p:861-875
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/rest_a_00734
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Technology of Tall (Part III): Getting to the Core
      by Jason Barr in Skynomics Blog on 2019-10-23 12:27:08
    2. Skyscraper Bottlenecks (Part I): The Elevator
      by Jason Barr in Skynomics Blog on 2020-02-10 13:28:15

    Citations

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    Cited by:

    1. Melanie Krause & André Seidel, 2020. "The Geographical Determinants of Within-City Heterogeneity in Urban Density," CESifo Working Paper Series 8660, CESifo.
    2. Xu, Hangtian, 2020. "Land Price Fluctuations, Commercial-Residential Segregation, and Gentrification," MPRA Paper 98844, University Library of Munich, Germany.
    3. Ahlfeldt, Gabriel M. & Nitsch, Volker & Wendland, Nicolai, 2019. "Ease vs. noise: Long-run changes in the value of transport (dis)amenities," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    4. Ahlfeldt, Gabriel M. & Nitsch, Volker & Wendland, Nicolai, 2019. "Ease versus noise: long-run changes in the value of transport (dis)amenities," LSE Research Online Documents on Economics 102824, London School of Economics and Political Science, LSE Library.
    5. Liu, Crocker H. & Rosenthal, Stuart S. & Strange, William C., 2020. "Employment density and agglomeration economies in tall buildings," Regional Science and Urban Economics, Elsevier, vol. 84(C).
    6. Juan Carlos G Lopez & Richard J Arnott, 2020. "Is higher-quality land developed earlier?," Environment and Planning B, , vol. 47(9), pages 1560-1572, November.
    7. Jenny Schuetz, 2020. "Teardowns, popups, and renovations: How does housing supply change?," Journal of Regional Science, Wiley Blackwell, vol. 60(3), pages 459-480, June.
    8. Ahlfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2019. "The economic effects of density: A synthesis," Journal of Urban Economics, Elsevier, vol. 111(C), pages 93-107.
    9. Gilles Duranton & Diego Puga, 2020. "The Economics of Urban Density," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 3-26, Summer.
    10. Jason Barr & Jennifer Johnson, 2020. "Skyscrapers and the Happiness of Cities," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 46(2), pages 344-377, April.
    11. Xu, Hangtian, 2019. "The burst of the real estate bubble as a promoter of gentrification in Tokyo and Osaka, 1980–2017," MPRA Paper 96803, University Library of Munich, Germany.
    12. Daniel Arribas-Bel & Miquel-Àngel Garcia-López & Elisabet Viladecans-Marsal, 2019. "Building(s and) cities: delineating urban areas with a machine learning algorithm," Working Papers 2019/10, Institut d'Economia de Barcelona (IEB).
    13. Paul C. Cheshire & Gerard H. Dericks, 2020. "‘Trophy Architects’ and Design as Rent‐seeking: Quantifying Deadweight Losses in a Tightly Regulated Office Market," Economica, London School of Economics and Political Science, vol. 87(348), pages 1078-1104, October.

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