Disruptive Technologies and Real Estate Pricing
You don’t need a degree in urban land economics to know that real estate prices generally increase with elevation, or to understand why, since most of us appreciate a great view.
But this hasn’t always been the case. In ancient Rome, for example, the poor tended to live on the upper floors of apartment buildings where views were best but it was a long walk up and the risk of perishing in a fire was much higher.
The introduction of elevators in office buildings in the 1870s led to the construction of much higher buildings, but it wasn’t until the 1920s that their wider adoption, together with improved fireproofing, slowly brought about a change in public perceptions and relative values.
The idea that “higher is better” seems so obvious today that it never occurred to me to question it – until I recently stumbled across the CBS News article “High-rise living may affect survival after cardiac arrest”.
The article discussed a study in the Canadian Medical Association Journal that suggests residents of high-rise buildings who suffered heart attacks were more likely to survive if they lived on the first few floors, while the odds were significantly worse for those living above the sixteenth floor. According to one commentary on the study, the causes included issues with building access and, ironically, elevator delays.
Even if such factors never end up materially impacting real estate values, they at least show that our assumptions about such values are not unassailable, any more than those of early New Yorkers. Like them, it sometimes takes us a long time to appreciate the effect of “disruptive technologies” that may be taking shape all around us.
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