Association for Public Policy Analysis & Management

This paper estimates the impact of new high-rise buildings on nearby residential rents in New York City, which contributes to the debate over whether increasing market-rate housing supply can result in less expensive housing nearby. In order to solve the selection bias that developers are more likely to build new high-rise buildings in areas with rising housing prices, I compare changes in rents of residential properties near completed new high-rise buildings with changes in rents of residential properties near approved new high-rise buildings which have not been completed, and exploit the completion timing. Using 2003-2013 NYC residential property annual income extracted from the Notices of Property Value (NOPV), I find new high-rise buildings cause nearby residential rents to decrease one percentage point. The residential rent elasticity with respect to new housing units within 500 feet is -0.07.