Is the sky the limit? an analysis of high-rise office buildings

Koster, Hans R.A., Rietveld, Piet and van Ommerren, Jos N. (2011) Is the sky the limit? an analysis of high-rise office buildings. SERC Discussion Papers (SERCDP0086). Spatial Economics Research Centre (SERC), London School of Economics and Political Science, London, UK.

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Abstract

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.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://www.spatialeconomics.ac.uk/SERC/publication...
Additional Information:	© 2011 The Authors
Divisions:	Spatial Economics Research Centre
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R30 - General R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R33 - Nonagricultural and Nonresidential Real Estate Markets
Date Deposited:	29 Jul 2014 15:54
Last Modified:	11 Dec 2024 19:06
Funders:	Economic and Social Research Council, Department for Business, Innovation & Skills (BIS), Welsh Assembly Government
URI:	http://eprints.lse.ac.uk/id/eprint/58467

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