Industry location patterns in metropolitan area office markets - Central Business Districts versus suburbs

This paper is an initial study of the location patterns among Information, Finance Insurance & Real Estate companies locating in Central Business Districts (CBD) versus suburbs, using SIC/NAICS codes at the zip code level. These patterns are initially studied through statistical analysis and then their effect on the probability of a company locating at a CBD versus the suburbs is determined through econometric modeling of real estate office market and economic parameters. In addition, the effect of all these factors on both areas’ vacancy rate is also studied. The studied cities include Atlanta, Boston, Chicago, Washington and Los Angeles with the study period being from 1998 through 2001, with quarterly data.

Attracting redevelopment in “inner-ring” municipalities of U.S. metropolitan areas – focusing on Los Angeles and Boston

This paper examines the underlying socio-economic conditions that are likely to explain redevelopment activity in the “inner-ring” municipalities of a metropolitan area. The area of study consists of 54 municipalities within Los Angeles county limits and 33 municipalities in the Boston metropolitan area. The time length covered is from 1970 through 2000, focusing on the rate of change in socioeconomic and development conditions from 1970 to 2000 and 1980 to 2000. Among the selected municipalities for the two metropolitan areas, we focused on two groupings based on income - those with median household income within the 20th – 50th percentile and those within the 51st – 100 percentile. The results indicate that local socioeconomic conditions appear to have greater impact on property values in the Los Angeles area than in Boston. Although, new residential activity seems to be influenced by socioeconomic trends in Los Angeles, the empirical analysis in both cities indicates that other factors, such as public incentives, may impact new development activity more significantly.

Is Terrorism Eroding Agglomeration Economies in Central Business Districts? Lessons from the Office Real Estate Market in Downtown Chicago

The attacks of September 11, 2001, and more recently the Madrid and London downtown train bombings, have raised concerns over both the safety of downtowns and the continuous efforts by terrorists to attack areas of such high density and significance. This article employs building-level data on vacancy rates to investigate the impact of an increased perception of terrorist risk after 9/11 on the office real estate market in downtown Chicago. Chicago provides the perfect laboratory to investigate the effects of an increase in the perceived level of terrorist risk in a major financial district. Unlike in New York, the 9/11 attacks did not restrict directly the available office space in downtown Chicago. Moreover, the 9/11 attacks induced a large increase in the perception of terrorist risk in the Chicago Central Business District, which includes the tallest building in the U.S. (the Sears Tower) and other landmark buildings which are potential targets of large-scale terrorist attacks. Our results show that, following the 9/11 attacks, vacancy rates experienced a much more pronounced increase in the three most distinctive Chicago landmark buildings (the Sears Tower, the Aon Center and the Hancock Center) and their vicinities than in other areas of the city of Chicago. Our results suggest that economic activity in Central Business Districts can be greatly affected by changes in the perceived level of terrorism.

Selling Prices/sq.ft. of Office Buildings in Downtown Chicago – How Much Is It Worth to Be an Old But Class A Building?

This paper examines office building sales in downtown Chicago for the period 1996 to 2007. Our analysis provides a conventional OLS approach and an exploration of spatial dependence. We find some evidence of spatial lag and spatial autocorrelation in our dataset but the results are similar to the OLS approach. The results indicate that high occupancy is a statistically significant factor only for Class B properties, suggesting that a low occupancy rate is a negative sign for these buildings of lower quality. Class A property receives a 44% price/ sq. ft. boost due to the premium classification. This increase becomes more pronounced (90%) for floor plate efficient, neoclassical/ revival fac¸ade and/or famous Class A properties built before 1972 when the comparison is with Class B properties of the same age.

Regional Warehouse Trip Production Analysis: Chicago Metro Area

This research report provides primary research data and analysis on heavy truck trip generation and characteristics from regional distribution centers (RDC) and similar facilities in an effort to facilitate future public policy making regarding roadway transportation needs as well as land-use and economic development decisions. The report also provides secondary data and information on intermodal freight transportation - its growth and its economic impacts ??? to provide a regional, national, and international context for the research. The primary data was obtained from a field survey of 12 distribution centers of various scales (7 of them regional) in Northeast Illinois. The 12 facilities and their supervisory personnel were visited by the research team and analyzed in depth for their general business characteristics (e.g. type of goods, number of employees, hours of operation etc.), property characteristics (e.g. location, facility size, ceiling height) and their truck trip productions (e.g. number of arrivals-departures, geographic distribution of inbound-outbound movement, volume per quarter etc.). The findings of this research project in reference to the 12 facilities indicate the uniqueness and significant complexity of the distribution centers. There is clear evidence of an increase in size (sq. ft & ceiling) and automation (racking systems) of the newer facilities as well as 24-hour operations. The comparison of daily heavy truck movement shows significant arrival concentration between 8am-10am and 8pm- 6am. In contrast the heaviest departure activity is between 4-6pm. The majority of originating freight is from the Midwest with the outbound distributions also being allocated regionally then nationally and internationally (minimal allocation). Another result was the increased volume concentration in the third quarter of each year between July and September. The above results along with the significant expansions of RDC facilities in the last few years indicate the additional need for studying the locations of the various facilities and the heavy truck traffic volume they generate. The results should also be useful in determining the economics benefits/costs and impacts of these facilities for purposes of making infrastructure investment, economic incentive, and land use decisions.Illinois Center for Transportation R27-15published or submitted for publicationis peer reviewe

Impact of the Internet on International Real Estate Office Markets

The present study examines the impact of the Internet on the real estate office market through a survey of real estate professionals in traditional companies in Boston/U.S. and London/U.K. This survey captures professionals' opinions on the use of the Internet and how it affects their business. The results from both cities indicate differences when using the Internet versus traditional practice. The Internet seems to affect the role of the transaction participants, the length of the process but not the participants' earnings or transaction steps. It is currently used as a listing service, information-gathering resource and communication tool.

The Influence of Socioeconomic Conditions on the U.S. Internet Office Market

This paper focuses on the Internet, as a resource in the fulfillment of companies' needs to lease or buy office space in the U.S. A measure of this Internet use is introduced by two indexes considering the companies' preferences and the office stock in U.S. states and cities. The results indicate that the Internet is utilized more for leasing than for selling office properties. Moreover, relationships are defined between the introduced indexes and local socioeconomic characteristics. Economic variables such as employment, Finance Insurance & Real Estate and high tech employment, firm size, and income have significant effect on the Internet office leases and sales.

Economic resilience during COVID-19: the case of food retail businesses in Seattle, Washington

The first year of COVID-19 tested the economic resilience of cities, calling into question the viability of density and the essential nature of certain types of services. This study examines built environment and socio-economic factors associated with the closure of customer-facing food businesses across urban areas of Seattle, Washington. The study covers 16 neighborhoods (44 census block groups), with two field audits of businesses included in cross-sectional studies conducted during the peak periods of the pandemic in 2020. Variables describing businesses and their built environments were selected and classified using regression tree methods, with relationships to business continuity estimated in a binomial regression model, using business type and neighborhood socio-demographic characteristics as controlled covariates. Results show that the economic impact of the pandemic was not evenly distributed across the built environment. Compared to grocery stores, the odds of a restaurant staying open during May and June were 24%, only improving 10% by the end of 2020. Density played a role in business closure, though this role differed over time. In May and June, food retail businesses were 82% less likely to remain open if located within a quarter-mile radius of the office-rich areas of the city, where pre-pandemic job density was greater than 95 per acre. In November and December, food retail businesses were 66% less likely to remain open if located in areas of residential density greater than 23.6 persons per acre. In contrast, median household income and percentage of non-Asian persons of color were positively and significantly associated with business continuity. Altogether, these findings provide more detailed and accurate profiles of food retail businesses and a more complete impression of the spatial heterogeneity of urban economic resilience during the pandemic, with implications for future urban planning and real estate development in the post-pandemic era

Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago

The attacks of September 11, 2001, and more recently the Madrid and London downtown train bombings, have raised concerns over both the safety of downtowns and the continuous efforts by terrorists to attack areas of such high density and significance. This article employs building-level data on vacancy rates to investigate the impact of an increased perception of terrorist risk after 9/11 on the office real estate market in downtown Chicago. Chicago provides the perfect laboratory to investigate the effects of an increase in the perceived level of terrorist risk in a major financial district. Unlike in New York, the 9/11 attacks did not restrict directly the available office space in downtown Chicago. However, the 9/11 attacks induced a large increase in the perception of terrorist risk in the Chicago Central Business District, which includes the tallest building in the US (the Sears Tower) and other landmark buildings which are potential targets of large-scale terrorist attacks. We show that, following the 9/11 attacks, vacancy rates experienced a much more pronounced increase in the three most distinctive Chicago landmark buildings (the Sears Tower, the Aon Center and the Hancock Center) and their vicinities than in other areas of the city of Chicago. Our results suggest that economic activity in Central Business Districts can be greatly affected by changes in the perceived level of terrorism.Terrorism Real estate Cities Tall Buildings 9/11