Residential Vertical Rent Gradients in the City

Jayson Danton and Alexander Himbert

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

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.

Keywords: Rental Price Gradient; Vertical Gradient; Access; Amenities (search for similar items in EconPapers)
JEL-codes: O18 R21 (search for similar items in EconPapers)
Pages: 28 pp.
Date: 2017-07
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:17.11

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