The Vertical City: Rent Gradients, Spatial Structure, and Agglomeration Economies: Insights from Crocker H. Liu, Stuart S. Rosenthal, and William C. Strange Using CompStak Data

At CompStak, we are proud to support research that sheds light on the economic dynamics of urban spaces and their impact on commercial real estate.

The Vertical City: Rent Gradients, Spatial Structure, and Agglomeration Economies” by Crocker H. Liu, Stuart S. Rosenthal, and William C. Strange, examines how the vertical growth of cities—through skyscrapers and high-density buildings—shapes rent gradients, spatial structures, and agglomeration economies.

The full abstract of the paper can be found below, offering a glimpse into the depth of research that leverages the precision and accuracy of CompStak data to assess market changes.

“Tall commercial buildings dominate city skylines. Nevertheless, despite decades of research on commercial real estate and horizontal patterns of urban development, vertical patterns have been largely ignored. We document that high productivity companies locate higher up, with less productive offices lower down and retail at ground level. These patterns reflect tradeoffs between street access and vertical amenities. Vertical rent gradients are non-monotonic, independent of nearby employment, and large. Doubling zipcode employment is associated with a 10.7% increase in rent, consistent with the presence of agglomeration economies. Moving up one floor has the same effect on rent as adding roughly 3,500 workers to a zipcode.”

Download the full paper here.