IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Is the Sky the Limit? An Analysis of High-Rise Office Buildings

  • Hans R. A. Koster
  • Piet Rietveld
  • Jos N. van Ommerren

Modern central business districts are characterised by high-rise office buildings. Helsley and Strange (2008) argue that skyscrapers are caused by agglomeration economies and a prize for being the tallest, so a reputation effect. We aim to test the relevance of this model by investigating the impact of building height on commercial office rents. The results show that firms are willing to pay about 4 percent more for a building that is 10 meters taller, which we interpret as the sum of a within-building agglomeration effect and a reputation effect. Using semiparametric techniques, we disentangle reputation effects from agglomeration effects and demonstrate that the reputation effect is substantial for tall buildings. For example, it is at least 17.5 percent of the rent for a building that is 6 times the average height.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.spatialeconomics.ac.uk/textonly/serc/publications/download/sercdp0086.pdf
Download Restriction: no

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0086.

as
in new window

Length:
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:cep:sercdp:0086
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Paul Cheshire & Christian A.L. Hilber, 2008. "Office space supply restrictions in Britain: the political economy of market revenge," LSE Research Online Documents on Economics 4372, London School of Economics and Political Science, LSE Library.
  2. Jason Barr, 2012. "Skyscraper Height," The Journal of Real Estate Finance and Economics, Springer, vol. 45(3), pages 723-753, October.
  3. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August.
  4. Yatchew,Adonis, 2003. "Semiparametric Regression for the Applied Econometrician," Cambridge Books, Cambridge University Press, number 9780521812832.
  5. Patrick Bayer & Christopher Timmins, 2003. "Estimating Equilibrium Models of Sorting across Locations," Working Papers 862, Economic Growth Center, Yale University.
  6. Ekeland, Ivar & Heckman, James J. & Nesheim, Lars, 2003. "Identification and Estimation of Hedonic Models," IZA Discussion Papers 853, Institute for the Study of Labor (IZA).
  7. Michael Storper & Anthony J. Venables, 2004. "Buzz: face-to-face contact and the urban economy," Journal of Economic Geography, Oxford University Press, vol. 4(4), pages 351-370, August.
  8. Arnott, Richard J. & MacKinnon, James G., 1977. "Measuring the costs of height restrictions with a general equilibrium model," Regional Science and Urban Economics, Elsevier, vol. 7(4), pages 359-375, November.
  9. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
  10. Grimaud, A., 1989. "Agglomeration economies and building height," Journal of Urban Economics, Elsevier, vol. 25(1), pages 17-31, January.
  11. Bertaud, Alain & Brueckner, Jan K., 2005. "Analyzing building-height restrictions: predicted impacts and welfare costs," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 109-125, March.
  12. Patrick Bajari & Matthew E. Kahn, 2005. "Estimating Housing Demand With an Application to Explaining Racial Segregation in Cities," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 20-33, January.
  13. Glaeser, Edward L & Gyourko, Joseph & Saks, Raven, 2005. "Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 331-69, October.
  14. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
  15. Daniel P. McMillen & Christian L. Redfearn, 2010. "Estimation And Hypothesis Testing For Nonparametric Hedonic House Price Functions," Journal of Regional Science, Wiley Blackwell, vol. 50(3), pages 712-733.
  16. Paul R. Milgrom & John Roberts, 1984. "Price and Advertising Signals of Product Quality," Cowles Foundation Discussion Papers 709, Cowles Foundation for Research in Economics, Yale University.
  17. Jason Barr, 2010. "Skyscrapers and the Skyline: Manhattan, 1895-2004," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(3), pages 567-597.
  18. Helsley, Robert W. & Strange, William C., 2008. "A game-theoretic analysis of skyscrapers," Journal of Urban Economics, Elsevier, vol. 64(1), pages 49-64, July.
  19. Eric Koomen & Piet Rietveld & Fernando Bacao, 2009. "The third dimension in urban geography: the urban-volume approach," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 36(6), pages 1008-1025, November.
  20. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1239-1276, December.
  21. de Jong, Peter & van Oss, S., 2007. "High Rise Ability," ERES eres2007_261, European Real Estate Society (ERES).
  22. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2010. "The Identification of Agglomeration Economies," Working Papers halshs-00535593, HAL.
  23. Eva Gutiérrez‐i‐Puigarnau & Jos N. Van Ommeren, 2011. "Welfare Effects Of Distortionary Fringe Benefits Taxation: The Case Of Employer‐Provided Cars," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(4), pages 1105-1122, November.
  24. Eichholtz, Piet & Kok, Nils & Quigley, John M., 2009. "Doing Well by Doing Good? Green Office Buildings," Berkeley Program on Housing and Urban Policy, Working Paper Series qt507394s4, Berkeley Program on Housing and Urban Policy.
  25. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
  26. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
  27. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 549-576.
  28. J. Vernon Henderson & Mohammad Arzaghi, 2005. "Networking Off Madison Avenue," Working Papers 05-15, Center for Economic Studies, U.S. Census Bureau.
  29. Gold, Bela, 1981. "Changing Perspectives on Size, Scale, and Returns: An Interpretive Survey," Journal of Economic Literature, American Economic Association, vol. 19(1), pages 5-33, March.
  30. Robert W. Helsley & William C. Strange, 2007. "Urban interactions and spatial structure," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 119-138, March.
  31. Daniel P. McMillen, 2010. "Issues In Spatial Data Analysis," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 119-141.
  32. Arthur M. Sullivan, 1991. "Tall buildings on cheap land: Building heights and intrabuilding travel costs," Journal of Urban Economics, Elsevier, vol. 29(3), pages 310-328, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cep:sercdp:0086. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.