FALL 2009
RESEARCH PUBLICATION / SUSTAINABILITY
24-Hour Cities Part 1 of 3
24-Hour Cities and Office Rent Performance A research report prepared for the Steven L. Newman Real Estate Institute, Baruch College, CUNY by contributing author Hugh F. Kelly, CRE, Clinical Associate Professor of the Schack Real Estate Institute, New York University.
F
or more than a decade, it has been asserted that “24hour cities” outperform “9to-5 cities” for investors in commercial real estate. Since
1995, the widely-read survey of Emerging Trends in Real Estate1 has proposed that traditional market distinctions such as the comparison of central business districts (CBDs) to suburbs matter far less than the capacity of places to sustain activity well beyond the bounds of the traditional business day. Yet this claim, though often discussed, has never been rigorously examined. Though there are a number of investments firms that speak about programs of investing in 24-hour locations, a search of the academic and the industry literature failed to uncover any studies that took a serious and detailed look at the numbers that might support or refute the 24-hour city hypothesis.
Its assertions reflect the judgments of
hours. The cities included in each of the
an influential panel of experts. Given
proposed clusters are:
the wide circulation of the report, and its reputation in the U.S. commercial property industry, its claims can help to shape the outlook for this sector. The
This paper and two others to follow
‘principle of anticipation’ holds that the
attempt to bring together for the first
value of an asset is equal to the anticipated
time the component elements that
future benefits of ownership. Hence, any
would
quantitative
information such as the Emerging Trends
analysis of those claims, and the investor
report that helps articulate expectations
expectations they presumably reflect.
should be carefully examined.
permit
a
sound
Emerging Trends develops its annual report by a broad survey of hundreds of
developers,
investors,
lenders,
consultants, analysts, academics, and others
with
high-level
professional
interest in commercial property. The annual publication, therefore, represents the combined perspectives gleaned from the interviewing process, as interpreted by the report’s authors and editors.
This paper focuses on office rents for a hypothesized set of 24-hour cites, and a complementary set of 9-to-5 cities. Where data is available, information on the individual cities will be discussed, but the burden of the analysis will be carried by the groups of cities considered reflective of 24-hour status, versus those regarded as generally more tied to limited business
P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
24-hour markets
9-to-5 markets
Boston
Atlanta
Chicago
Dallas
Las Vegas
Los Angeles
Miami
Minneapolis
New York
Philadelphia
San Francisco
Phoenix
Washington, D.C.
Seattle
In each cluster, I have selected those cities most frequently mentioned by Emerging Trends, but added other cities (Miami and Las Vegas in the 24-hour group, Minneapolis and Seattle in the 9-to-5 group) that may fall somewhere 1 Emerging
Trends was originally a project of the Real Estate Research Corporation, and was co-published by the Equitable Life Assurance Society of the United States. It has experienced changing sponsorship over the years, and is now co-published by the Urban Land Institute and PricewaterhouseCoopers.
24-HOUR CITIES
FALL 2009
framework, as Kuhn (1962) described in his influential work, The Structure of Scientific Revolutions. The A-M-M model, in common with most economic equilibrium approaches, is grounded in Newtonian principles of physics and mechanics. Those fundamental sciences have, in the 20th century, advanced to accommodate stochastic elements unknown to Newton and are now pursued as
quantum
physics
and
quantum
mechanics. The still-powerful explanatory power of A-M-M as a theoretical model is confirmed by the evident tendency of most U.S. cities to sprawl outward and the persistent evidence that commercial, as well as residential, land uses grow away from the center in the majority of in between the two paradigmatic types.
become devalued vis-à-vis new sub-
U.S. metropolitan areas. This can be
The added cities serve to add some
centers, that should be manifested in
seen as an example of economic entropy
balance, too: bringing to the 24-hour
differential land rents. Changes in those
across the intrametropolitan, as well as
group some Sunbelt exposure, and
differential land rents would indicate if
the intermetropolitan geography of the
adding some coastal markets to the 9-to-
the value of agglomeration economies
United States.
5 grouping.
is
Theoretical considerations
appropriate measure of agglomeration economies, namely differential land rent between intense clusters of economic activity, such as the central business (CBD)
and
sub-centers
(the
death
of
distance
of the information economy in urban
Urban economic theory points to the
districts
falling
hypothesis), or rising (the expansion
of
metropolitan areas. In the monocentric city model canonically developed by Alonso, Mills, and Muth (A-M-M), land rents are highest in the CBD and then fall off with distance from the center. From the mid-twentieth century forward, the monocentric city model became less descriptive of actual metropolitan areas, as transportation and communication costs fell and the production of goods dispersed from urban centers. Sub-centers or ‘edge cities’ sprang up around cities. If the urban center has
centers hypothesis).
Researchers in complexity theory have been seeking to model elements of emergent
self-organization
against
the background of entropy posited by
During the 1980s and 1990s, the
Newton’s Second Law. This approach has
polycentric
character
promise both for understanding economic
of many U.S. metro areas becomes
clustering in multi-nodal cities and for
apparent. The stress such urban trends
24-hour downtowns as well. The work of
placed upon the A-M-M model was
Bettencourt, et al., (2007), which discerns
recognized by many investigators. By
differences in the ‘metabolism’ of cities,
1993, Mills himself had conceded that
namely their capacity to turn resources
the generality of the Alonso-Mills-Muth
into economic and social energy, may be
model could no longer be asserted as
an early example of the usefulness of this
a tenable proposition. Yet the power of
approach.
or
multinodal
2
the model can be seen by its continued use as a point of departure long after
Historical Rent and Vacancy Data
this concession. For many metro areas,
The empirical basis for this paper is
A-M-M still serves as an adequate
commercial office rents in major office
approximation of urban spatial trends.
markets of the United States. The
Far from rejecting the value of the model, exceptions prompt a search for
P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
a
more
inclusive
–2–
theoretical
See works by Greene, 1980; LeRoy and Sonstelie, 1983; Steen, 1986; Gin and Sonstelie, 1992; White, 1994; Baum-Snow and Kahn, 2005; Glaeser, Kahn and Rappaport, 2008 as cited in the bibliography. 2
24-HOUR CITIES
FALL 2009
theoretical link between land rents
research strategy for that paper was the disaggregation of the markets by size and by
and office rents is strong, and data on
concentration.
office rents is more readily available. The sample is derived from 122 major office markets in 52 MSAs over 21 years (19872007) in a database maintained by Torto Wheaton Research.
This analysis uses
data drawn from the sample, analyzing variation in real rents and occupancy. This paper does not develop and estimate here a multi-equation model seeking to regress the relevant variables of real estate markets. That is an objective of a larger project now underway. Nor does it examine the risk-adjusted returns and their impact on capital flows, themes that will be explored in subsequent papers in this series. The present focus is to use real office rents (expressed in constant 2007 U.S. dollars) and vacancy rates in many metropolitan
For purposes of analysis, data generously supplied by Torto Wheaton Research was segmented into four classes of commercial office markets.
The 49 markets with
complete data sets were sorted into four analytical groups, defined below, and listed in Table 1. The aggregate volume of these markets is 3.46 billion square feet of net rentable area, an average of just over 70 million square feet per market. The mean ratio of downtown space to total in the sample is 33.79%. I. Primary, Strong Core Markets are those above the sample mean for both the size of the metro market and the ratio of downtown space to total. Seven markets comprise this subset. II. Primary, Weak Core Markets are those above the mean in market size, but below the mean of downtown space as a percent of total inventory. There are six markets in this subset. III. Secondary Markets are those having between 35 and 70 million square feet of inventory. In the table below, the secondary markets having more than 33.8% of total in their downtowns are indicated by an asterisk (*). Sixteen markets are designated as “secondary”.
Table 1: Table 1
Markets by Analytical GroupingMarkets
by Analytical Grouping
markets over time to determine if the
Primary, Strong Core
Primary, Weak Core
Secondary
Tertiary
asserted superiority of 24-hour markets
Boston
Atlanta
Baltimore
Albuquerque
can be observed in the data series
Chicago
Dallas
Charlotte*
Austin
New York
Denver
Cleveland*
Cincinnati*
Philadelphia
Detroit
Kansas City
Columbus*
San Francisco
Houston
Miami
Ft. Lauderdale
that producer services activities tend
Seattle
Los Angeles
Minneapolis*
Ft. Worth
to cluster in large metropolitan areas
Washington, DC
Newark*
Hartford
(Drennan 2002), the paper explores the
Oakland*
Honolulu*
question as to whether central locations
Orange County, CA
Indianapolis*
command a premium over alternative
Phoenix
Jacksonville*
locations in the same urban area. If
Portland*
Las Vegas
Sacramento
Nashville
San Diego
Orlando
This paper builds upon work previously
San Jose
Riverside
co-authored with Matthew P. Drennan
St. Louis
Salt Lake City
of UCLA, now out for peer review
Tampa
Stamford*
normally used to measure real estate performance. Further, given the view that urban agglomeration economies decay with distance (Acs 2003) and
so, have such premiums increased, decreased, or disappeared?
(Drennan-Kelly, 2009). That research
Trenton
pointed to steady or enhanced real
Tucson
rents in some markets (expansion of the
West Palm Beach
information economy) and real declines
Wilmington
in other markets. A key element in the Source: Drennan-Kelly forthcoming Source: Drennan-Kelly (2009),(2009), forthcoming
P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
–3–
0 19 19 19 19 19 24-HOUR CITIES 8 9 9 9 8 8
7
IV. Tertiary Markets are those with less than 35 million square feet of office space. The remaining twenty markets
99
97
24-hour CBD Vacancy
Figure 1:
19
19
5
3
1
20
01
20
03
20
05
2FALL 00 7
2009
24-hour Suburbs Vacancy
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Full Sample of Markets $30
are included in this category. Tertiary markets whose downtowns comprise
$29
more than 33.8% of total inventory are
$28
indicated by an asterisk (*).
$27 $26
Table 1 has been slightly modified from
$25
its original form in Drennan-Kelly, by
$24
noting 24-hour markets in bold italic
$23
font, and 9-to-5 comparison markets in
$22
bold.
$21 $20
The hypothesized set of 24-hour markets
19
differs somewhat from the Drennan-
87
19
19
19
19
88
19
19
95
93
91
20
99
97
01
20
03
20
20
05
07
Kelly clustering of ‘strong-core, primary 24-hour city grouping includes Boston,
Suburbs
CBD
markets.’ The cluster considered in the
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Chicago, Las Vegas, Miami, New York, San Francisco, and Washington, D.C.
$12 per square foot, a narrower range than the primary strong core cluster. The reason for
Five of these are classified “strong
the difference is in higher suburban rents surrounding the 24-hour downtowns, suggesting
core, primary” in the Drennan-Kelly
a positive regional influence from 24-hour activity.
categorization. Miami is a secondary market, and Las Vegas a tertiary market.
Over the 21-year timeframe reviewed, real rents in 24-hour city downtowns have commanded a 28.8% premium over their adjacent suburbs (Figure 2). That rental premium
The presence of five markets common
has expanded sharply since 2000, and stood at 41% as the fourth quarter 2007. The
to each group yields the unsurprising
premium was at a low of 14% in 1997, but has been between 20% and 29.9% in twelve of
result that summary data for the ‘strong
the 21 years, between 30% and 39.9% in six of the years, and above 40% in 2006 and 2007.
core primary’ markets and the ’24-hour
Real rents surged most strongly in the late 1990s, coincident with the tech boom, but also
city’ markets are extremely similar. Both
reflecting the long and quite robust overall job expansion that characterized the national
clusters show substantially higher rents
economy toward the end of the last century. From 1987 to 2007, real rents grew most
than the average level of all U.S. markets. This is true within the CBDs and for the suburbs as well. The rent premium for
Figure 2
Figure 2:
For Set of 24-hour Cities, Downtown Rents Average 28.8% Higher their Respective Suburbs For Set of 24-hour Cities, Downtown Rentsthan Average 28.8% Higher than their Respective Suburbs
CBDs in both clusters is quite obvious, especially at market peaks.
50
Rents, in constant 2007 dollars per square foot
45
Drennan-Kelly found virtually no rent
40
premium discernable for downtowns
35
across the entire sample of MSAs provided by Torto Wheaton (Figure
30
1). The difference was only one or
25
two dollars per square foot (constant
20 19
2007 US$). For the primary strong core
87
markets, the differential ranges between
88
19
91
19
93
19
95
24-hour CBD Rents
$5 and $17 per square foot. The 24-hour city cluster registers a differential of $6 to
19
97
19
99
20
01
20
03
20
05
24-hour Suburbs Rents
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
19
–4–
20
07
Suburban R
28.8% Higher than their Respective Suburbs
Rents, in constant 2007 dollars per square
24-HOUR CITIES 50
FALL 2009
35
Rents, in constant 2007 dollars per square foot
30
45 strongly in the Manhattan office market
two decade time span averaged 2.42%
vacancy rate for 24-hour downtowns was
40 and showed gains in Las Vegas, San
lower than for the surrounding suburban
9.2 percentage25points, compared with
Francisco, and Washington’s downtowns 35
office markets. Not only were the
as well. For suburban markets in 2430
suburban markets more volatile than
12.5 percentage20points for the suburbs.
hour metros, Las Vegas, Miami, and 25
the 24-hour downtowns (with a standard
San Francisco posted gains in inflation-
deviation for their vacancy rates of
20
adjusted rents between 1987 and 19 19 19 2007. 19 88
87
95
93
91
4.08% 2.80% for 20 the 20 CBDs), 1vs. 20 19 20 but the 9
19
Over that period, 24-hour CBDs tended
03
01
05
07
variation was greatest at the upper end 24-hour Suburbs range Rents with a peak 19.7% of the vacancy
24-hour CBD Rents to have higher occupancy rates than
their
99
97
Source: Data courtesy of Torto Wheaton analysis by Hugh Kelly suburbs. Vacancies for Research; the 24-hour metro markets,
associated
and a
(Figure 3) were much less volatile in 24-
15.5% peak for the downtowns as a
hour downtowns, and over the roughly
group. The range of the mean annual
By contrast, performance in the 9-to15 5 cluster of markets is remarkably homogeneous
10
when 1
19downtown 19 is 19 19 88 95 93 91
98
7
compared to suburb. Since 1993, in
CBD Rents fact, suburbs have maintained a9-to-5 modest
premium over CBD rents, although this is
Source: Data courtesy of Torto Whe
not as dramatic as Drennan-Kelly found for ‘weak core primary markets.’ The likely reason is that two of the 9-to-5 markets posited for this study are Philadelphia
Figure 3: For Set of 24-hour Cities, Vacancy Average 242 basis points lower than their For SetDowntown of 24-hour Cities, Downtown Vacancy Average Respective Suburbs
242 basis points lower than their Respective Suburbs
25
F
and Seattle, both of which in thea 11 9-to-5 Suburbs Haveare Posted Drennan-Kelly ‘strong core primary’ in Most Dramatically
Figure 3
group. Furthermore, Minneapolis is a Vancancy Rate in Percent
secondary 25 market by size, but has a
Vacancy Rate, in percent
strong
CBD
inventory
concentration
20
20
at 45.6% of total MSA office space. All three of these market display real rents 15
15
that are, on average, very similar for their
10
downtowns10and their suburbs. For the seven posited 9-to-5 metros, a slim 0.5%
5
5
average real rent premium is measured in
0 19
19
19
88
87
91
19
93
19
19
19
95
24-hour CBD Vacancy
20
20
99
97
20
03
01
20
05
07
favor of the0suburbs (Figure 4), dwarfed 19 earned 19 19 by CBDs 19 by the 28.8% premium 8 9 9 8 8
7
19
95
3
1
in the 24-hour metro cluster. The 9-to-5
24-hour Suburbs Vacancy
9-to-5 CBD Vacancy markets failed to regain their prior peak
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
of real rents in the market cycle which
Source: Data courtesy of Torto Wheaton
reached its acme in 2000, and real rents in
$30
Figure 4: $29
2007 were 27.8% lower for 9-to-5 CBDs
Figure 4
$28 In 9-to-5 Metros, Very Little Difference in CBD In 9-to-5 Metros, Very Little Difference in CBD and Suburban Rents Overtime
Suburban Rents Overtime
$27 $26
Rental for 24-hou when compared with Premium 1987. For suburbs,
and
$12decades for CBDs the decline in realaveraged rents over two was about half as much – 13.9%, but still
Rents, in constant 2007 dollars per square foot
Rents, in constant 2007 dollars per squa
35
seriously lagging 25 the 24-hour city cluster.
$24
30
Only Seattle showed a gain in real rents 20
$23
25
15 managed to do so both in its downtown
20
and suburbs. Dallas’ downtown had the 10
$25
$22 $21 $20
between 1987 and 2007, and this market
most alarming drop in real rents over the
15
5
19
1 10 987
19
88
19
87
19
88
91 19 91
19
93 19 93
19
95
19
95 CBD
19
97
19
19
99
19
99 97 Suburbs
9-to-5 CBD Rents
01
20
03
20
05
9-to-5 Suburbs Rents
07
20
07
0
19 19a 1had The suburban 9-to-5198 markets 99 8 9 7
8
1
116 basis point advantage in average
3
1
Suburbs occupancy, consisting mostly differential in their
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
period, more than 50%.
20
05
03
01
20
20
20
20
–5–
descent to single-digit vacancy in the
Source: Data courtesy of Torto W
Wheaton Research; analysis by Hugh Kelly
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
24-HOUR CITIES
1996 – 1998 period. Throughout the 1990s, in fact, the suburbs boasted
Figure 3
higher occupancies than the downtowns , Downtown Vacancy Average the Respective 9-to-5 cluster of metro areas han in their Suburbs
FALL 2009
Figure 5:
Figure 5
Have 116 Basis Point Occupancy Advantage, 9-to-59-to-5 SuburbsSuburbs Have Posted a 116 Posted Basis PointaOccupancy Advantage, Most Dramatically in the 1992-1998 Period Most Dramatically in the 1992-1998 Period
(Figure 5). The vacancy rate range over
25
the period is smaller for the CBDs of the 9-to-5 group, at 9.87 percentage
Vancancy Rate in Percent
20
points, than the range for the associated 15
suburbs, at 13.84 percentage points. Yet both peaked at just above 22%
10
vacancy, the suburbs in the final years of the 1980s and the CBDs in 1993.
5
Since 2000, however, the CBD/suburb 1
19
2
2
2
0
2
00 00has been 99 0differential 00 01 97 occupancy very 3 5 9 7
markets when compared with 9-to-5 markets, when downtowns are matched with downtowns and suburbs with suburbs. The 24-hour downtowns have
e Difference in CBD and registered real rent premiums ranging ts Overtime
97
19
93
19
95
19
19
20
20
20
99
97
20
05
03
01
07
9-to-5 Suburbs Vacancy
9-to-5 CBD Vacancy
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Figure 6: Figure 6
Rental Premium for Premium 24-hour markets 9-to-5 markets has over averaged $12 for CBDs andhas $4 for Rental for over 24-hour markets 9-to-5 markets Suburbs since 1987
averaged $12 for CBDs and $4 for Suburbs since 1987
between $8.15 per square foot (in 1991, at the trough of the Savings and Loan
20
foot (in 2000, just before the bursting of the dot-com bubble). Much of the
15
spike in 2000, in fact, is due to the sharp 19
10
rental1 rise in2 the San Francisco area, with 2 2
97
99
00
00
00
Rents, in constant 2007 dollars per square foot
25
industry collapse) to $22.40 per square
20
07 5 3 and venture 9 1 its high-technology capital
5
concentration, and in New York, where Suburbs
0
20 20 1the 20 market was surging to a cyclical 20 99 stock 03 05 01 07 9
19
19
19
88
87
high-water mark. Over the 21 annual
9-to-5 Suburbs Rents
observations, the average premium for
24-hour CBDs has been n Research; analysis by Hugh Kelly
5
91
positive real
rental differential earned by 24-hour
4
19
88
87
24-hour Suburbs Vacancy
Figure analysis 6 illustrates the ton Research; by Hugh Kelly
19
19
narrow for 9-to-5 metro markets.
91
19
93
19
19
95
97
differential Suburbs Rents
19
20
99
01
20
20
03
20
05
07
differential CBD Rents
$12.11 when
compared with 9-to-5 downtowns. The
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
advantage does appear to carry over to the suburbs, but in a much attenuated
low point in the premium for suburbs
fashion. (This is consistent with the
was in the early 1990s, but slightly later
attenuation findings asisagglomeration Point Occupancy Advantage, he 1992-1998 Period of Rosenthal and Strange, 2005a and
This is undoubtedly related to the comparative vacancies displayed in Figure
Figure 7
and for a bit longer period than CBDs the have 7. On thissignificantly graph, the negative Vacancy Rates in 24-hour been lower scope than of downtown lull. The suburbs of the 24-differential the y-axis the degree to which in 9-to-5 market; Suburban hasindicates decreased over time
2005b). The suburban rent premium
hour metros did not seem to partake
for 24-hour markets vis-à-vis the 9-to-5
of the 2003 – 2007 cyclical upturn in
than in 9-to-5 markets, a condition that
panel is $4.19 in real dollars, about 35%
anything like the robust response of the
describes then entire period with one
of the premium earned by the downtown
24-hour downtowns. 1
vacancies are lower in 24-hour markets
Vacnacy in 24-hour offiice Markets compared with 9-to-5 markets, in percent
1
24-hour panel. As with the CBDs, the P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
0
-1
19
87
98
8
-2 -3 -4
–6–
19
91
19
93
brief
19
95
19
exceptional
19
9
20
period:
20
0
20
0
suburban
20
97 3 5 lower07in 1996 9 rates01were slightly vacancy
24-HOUR CITIES Figure 6
Rental Premium for 24-hour markets over 9-to-5 markets has averaged $12 for CBDs and $4 for Suburbs since 1987
Taken together, the evidence appears fairly convincing that the hypothesized 24-hour
markets,
especially
their
downtowns, have posted superior results
Rents, in constant 2007 dollars per square foot
25
FALL 2009
in inflation-adjusted rents and in office market
20
occupancy,
when
compared
with the posited 9-to-5 metros. Within
15
24-hour metros, there is a clear rental pricing differential with higher prices
10
in the central business district. Though
5
cyclical softening affects this differential,
0
19
19
19
88
87
91
19
93
19
19
95
97
differential Suburbs Rents
19
99
20
20
20
03
01
it has not entirely disappeared at any of
20
05
07
the years reviewed. Moreover, since 1996 24-hour CBDs have been able to sustain
differential CBD Rents
higher occupancy rates than either their own suburban areas or the 9-to-5 metros’
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
downtowns and suburbs. The next task to is evaluate what, if any
Figure 7:
Figure 7
Vacancy Rates in 24-hour CBDs have been significantly lower than Vacancy Rates in 24-hour CBDs have been significantly lower than in 9-to-5 market; Suburban difmarket; Suburban differential has decreased over time ferentialin has9-to-5 decreased over time
effect, these superior supply and demand fundamentals have had on investment pricing and returns, and this will be the subject of the following paper in this
Vacnacy in 24-hour offiice Markets compared with 9-to-5 markets, in percent
series. ■
1 0 -1
19
87
19
88
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
-2 -3
This research report is published by the Steven L. Newman Real Estate Institute, Baruch College, CUNY. The Newman Real Estate Institute gratefully acknowledges the support of the sponsors who make possible our efforts to promote critical thinking on topical issues for the real estate industry.
-4 -5 -6
The views expressed in the research report are those of the authors and not necessarily those of Baruch College, City University of New York, or any of its affiliated organizations, foundations, and sponsors.
-7 -8 differential Suburbs Vacancy
differential CBD Vacancy
Please address inquiries to Jack S. Nyman, Director, at:
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
Source: Data courtesy of Torto Wheaton Research; analysis by Hugh Kelly
and 1997 in the 9-to-5 markets. The
24-hour downtowns by 484 and 646 basis
sharply increasing rent differential for 24-
points. Over the same period, suburbs
hour downtowns (compared with 9-to-5
in 24-hour metros have never held an
downtowns) has fluctuated between
advantage of more than 368 basis points
$10 and $22 per square foot since 1996,
(in 2000), and have averaged just 106
(about the time of the early discussion
basis points of occupancy advantage
of 24-hour markets in Emerging Trends
over 9-to-5 metro suburbs in the 2001 –
in Real Estate), a period in which the
2007 time frame.
Tel: 646.660.6950 • Fax: 646.660.6951 www.baruch.cuny.edu/realestate
Stan Altman, Interim President, Baruch College William Newman, Founding Chair Richard Pergolis, Co-Chair Jack S. Nyman, Director
occupancy rate advantage has favored P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
Baruch College, CUNY 137 East 22nd Street Box C-0120 New York, NY 10010
–7–
24-HOUR CITIES
FALL 2009
Bibliography Alonso,W., “Location and Land Use: Toward a General Theory of Land Rent,” Harvard University Press, 1964. Baum-Snow, N., and M.E. Kahn, “Effects of Urban Rail Transit Expansions: Evidence from Sixteen Cities: 1970 -2000,” Brookings-Wharton Papers on Urban Affairs, 2005. Bettencourt, L.M.A., J. Lobo, D. Helbing, C. Kuhnert, and G.B. West, “Growth, Innovation, Scaling and the Pace of Life in Cities,” Proceedings of the National Academy of Sciences, April 24, 2007. Drennan, M.P. and H.F. Kelly, “Measuring Urban Agglomeration over Time with Office Rents,” (unpublished manuscript currently out for review), 2009. Gin, A., and J. Sonstelie, “The Streetcar and Residential Location in Nineteenth Century Philadelphia,” Journal of Urban Economics, Volume 32, 1992. Glaeser, E.L., M.E. Kahn, and J. Rappaport, “Why Do the Poor Live in Cities?,” National Bureau of Economic Research, Working Paper number 7636, April 2000. Greene, D.L., “Recent Trends in Urban Spatial Structure, Growth and Change,” January 1980. Kuhn, T.S., “The Structure of Scientific Revolutions,” University of Chicago Press, 1962. LeRoy, S.F. and J. Sonstelie, “Paradise Lost and Regained: Transportation Innovation, Income, and Residential Location,” Journal of Urban Economics, Volume 13, 1983. Mills, E.S., “An Aggregative Model of Resource Allocation in a Metropolitan Area,” American Economic Review, Volume 57, May 1967. Muth, R., “The Distribution of Population within Urban Areas,” Determinants of Investment Behavior, edited by Robert Ferber, National Bureau of Economic Research, 1967. Rosenthal, S.S. and W.C. Strange, “The Attenuation of Human Spillover Effects: The Manhattan Skyline Approach,” working paper, 2005. Rosenthal, S.S. and W.C. Strange, “The Geography of Entrepreneurship in the New York Metropolitan Area,” working paper, 2005. Steen, R.C., “Nonubiquitous Transportation and Urban Population Density Gradients,” Journal of Urban Economics, Volume 20, 1986. Torto Wheaton Research, Various data on office market rents, inventories, and vacancies, 1987- 2007. Urban Land Institute and Pricewaterhouse Coopers, “Emerging Trends in Real Estate,” Washington, D.C., Multiple Volumes, 1995 – 2008. White, M.J., “Housing and the Journey to Work in U.S. Cities, in Noguchi and Poterba,” Housing Markets in the United States and Japan, University of Chicago Press, 1984.
P: 646.660.6950 / 137 East 22nd Street, New York, NY 10010 www.baruch.cuny.edu/realestate
–8–
