We often talk about agglomeration economies in terms of their horizontal clustering within cities. But a new paper in the Journal of Urban Economics – summarized here by Richard Florida – has looked at the other dimension: the vertical clustering of economic activity within tall buildings.
Here is an excerpt from Florida’s piece in CityLab:
Economic activity is also sorted vertically, with higher-profile and more profitable firms occupying higher building floors. Law offices are disproportionately represented on the highest floors, taking up more than a third of floor space above the 40th floor, compared to 12 percent of floor space between the second and 40th floors. Finance, insurance, and real estate take up roughly 20 percent of floor space above the 40th floor, compared to 23 percent between the second and 40th floors. Business services, engineering, and miscellaneous other industries are also more likely to take up more space below the 40th floor.
The other takeaway is that there appears to be a greater rent premium attached to higher floors (vertical movement) than for being located closer to the central business district (horizontal movement). This surprised me. But I also don’t have access to the full paper. Is the dataset just US cities?
We often talk about agglomeration economies in terms of their horizontal clustering within cities. But a new paper in the Journal of Urban Economics – summarized here by Richard Florida – has looked at the other dimension: the vertical clustering of economic activity within tall buildings.
Here is an excerpt from Florida’s piece in CityLab:
Economic activity is also sorted vertically, with higher-profile and more profitable firms occupying higher building floors. Law offices are disproportionately represented on the highest floors, taking up more than a third of floor space above the 40th floor, compared to 12 percent of floor space between the second and 40th floors. Finance, insurance, and real estate take up roughly 20 percent of floor space above the 40th floor, compared to 23 percent between the second and 40th floors. Business services, engineering, and miscellaneous other industries are also more likely to take up more space below the 40th floor.
The other takeaway is that there appears to be a greater rent premium attached to higher floors (vertical movement) than for being located closer to the central business district (horizontal movement). This surprised me. But I also don’t have access to the full paper. Is the dataset just US cities?
Nevertheless, the idea of a vertical city interests me a lot. And I agree with the authors of the report that, for perhaps obvious reasons, it is far less studied compared to horizontal development patterns.
Nevertheless, the idea of a vertical city interests me a lot. And I agree with the authors of the report that, for perhaps obvious reasons, it is far less studied compared to horizontal development patterns.
This evening, when I was reading the internet, I came across this New York Times article from 2017 talking about how San Francisco has the lowest percentage of children of any of the largest cities in the U.S. It’s around 13% of the population. (Supposedly it was the second lowest in 2015. Pittsburgh was first.)
The article goes on to claim that the city has approximately the same number of dogs as it does children. That number is somewhere around 120,000. Not surprisingly, many blame the city’s prohibitive housing costs as the main culprit for the lack of kids. Families simply cannot afford to live in the city.
This got me searching for more information. Richard Florida looked at similar data back in 2015, but it’s important to note that he looked at metro areas and not the city propers. So the data doesn’t speak to whether families were forced to move out from the urban core to the suburbs in search of more affordable housing or for more space.
Nevertheless, he finds no statistical association between the share of children in a city and things like urban density, economic output per capita, or median home prices. He instead finds that the share of children is positively correlated with two main factors: immigration and with ethnicity – specifically people of Latin origin.
Click here if you’d like to read the rest of Florida’s analysis. And if any of you have additional data on this topic, please do share it below. I think I’m going to continue digging into this question of kids and cities.
We find three major cycles with land values reaching their nadir in 1977, just after the city’s fiscal crisis.
Since 1993, land prices have risen much faster than population or employment, at an average annual rate of 15.8%.
We estimate the entire amount of developable land on Manhattan in 2014 was worth approximately $1.74 trillion.
We estimate the long run return to Manhattan land values [since the island was first inhabited by Dutch settlers in 1626] to be about 6.4%.
What’s fascinating to me is the accelerated appreciation. The index starts at 100 in 1950, ends up slightly above that by 1993, and then simply takes off.
This evening, when I was reading the internet, I came across this New York Times article from 2017 talking about how San Francisco has the lowest percentage of children of any of the largest cities in the U.S. It’s around 13% of the population. (Supposedly it was the second lowest in 2015. Pittsburgh was first.)
The article goes on to claim that the city has approximately the same number of dogs as it does children. That number is somewhere around 120,000. Not surprisingly, many blame the city’s prohibitive housing costs as the main culprit for the lack of kids. Families simply cannot afford to live in the city.
This got me searching for more information. Richard Florida looked at similar data back in 2015, but it’s important to note that he looked at metro areas and not the city propers. So the data doesn’t speak to whether families were forced to move out from the urban core to the suburbs in search of more affordable housing or for more space.
Nevertheless, he finds no statistical association between the share of children in a city and things like urban density, economic output per capita, or median home prices. He instead finds that the share of children is positively correlated with two main factors: immigration and with ethnicity – specifically people of Latin origin.
Click here if you’d like to read the rest of Florida’s analysis. And if any of you have additional data on this topic, please do share it below. I think I’m going to continue digging into this question of kids and cities.
We find three major cycles with land values reaching their nadir in 1977, just after the city’s fiscal crisis.
Since 1993, land prices have risen much faster than population or employment, at an average annual rate of 15.8%.
We estimate the entire amount of developable land on Manhattan in 2014 was worth approximately $1.74 trillion.
We estimate the long run return to Manhattan land values [since the island was first inhabited by Dutch settlers in 1626] to be about 6.4%.
What’s fascinating to me is the accelerated appreciation. The index starts at 100 in 1950, ends up slightly above that by 1993, and then simply takes off.
