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Residential Vertical Rent Gradients in the City

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  • Jayson Danton
  • Alexander Himbert

Abstract

We analyze the determinants of the bid-rent function for vertical locations within residential buildings using rooftop quality geocoded rental price data. We find that residential bidders value the ease of access that is intrinsically offered on the ground floor by paying between 1.5-3% ground floor premium. Our analysis shows that the ground floor premium is indeed a valuation of access similar to the valuation of access to the Central Business District (CBD) in a monocentric setting and that the ground floor premium is equivalent to moving between 250- 450 meters closer to the CBD in the cities in our sample. Our empirical framework provides a starting point for the analysis of vertical residential sorting. More precisely, we find evidence of heterogeneous house price spillovers at different vertical locations that manifest via gentrification.

Suggested Citation

  • Jayson Danton & Alexander Himbert, 2017. "Residential Vertical Rent Gradients in the City," Cahiers de Recherches Economiques du Département d'économie 17.11, Université de Lausanne, Faculté des HEC, Département d’économie.
    • Handle: RePEc:lau:crdeep:17.11
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    More about this item

    Keywords

    Rental Price Gradient; Vertical Gradient; Access; Amenities;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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