The view from your office window — what’s it worth?
A new study puts the rental premium of view access at about 6 percent, guiding commercial developers and city policy alike.
Balancing a desire for density with the need to preserve views and daylight is a common challenge facing urban development (one that Sidewalk’s Delve product recently tackled for the One Portal Way project in West London). On one hand, a cluster of tall buildings can provide enough tenant space to meet a project’s financial goals. On the other hand, if tenants can’t get a good look outside or feel the sun on their backs, they might not be willing to lease the space for quite as much — or at all.
The question of just what daylight or a view is worth is therefore an important one for developers considering how to make this tradeoff. It’s also helpful information for cities aiming to protect view access for as many residents and workers as possible. A new study provides the first measure of the value of views for commercial office tenants in cities, building on 2020 research measuring the value of daylight.
The new research, published in an upcoming issue of the journal Landscape and Urban Planning, finds that office spaces with high view access have about a 6 percent premium over those with low view access. That figure is a smidge higher than the premium for office spaces with high daylight access, which is about 5 percent. Taken together, the findings not only provide a financial incentive for developers to optimize for daylight and views, they can also help cities develop more equitable building codes.
“By measuring that tenants are paying more for daylight and views, we show that these attributes are valued in financial terms,” Irmak Turan of the Illinois Institute of Technology, first author of the new study, tells Sidewalk Talk via email. “How can we ensure that everyone has access to such qualities in the workplace? While this research does not lead to a direct policy answer, it suggests that there may be economic mechanisms by which to push for equitable workplace settings.”
Turan draws a comparison to the New York State Tenement House Act of 1901, which required buildings to have windows that ensured access to light and air. “Our interest is to measure the value of attributes like daylight and views such that they can provide guidance for best practices in office building design,” she says.
Let’s dive deeper into the work.
What they did: Measuring views
It goes without saying that views are extremely important to urban environments. The ability for city residents and workers to see green space, in particular, has been shown to have clear benefits for mental health and productivity. But while researchers have measured the positive (if very wide-ranging) impact that views have on residential property values, no previous study had done so for work settings, despite the fact that — at least pre-pandemic — people spend substantial parts of their lives inside offices.
To explore this question, Turan and research collaborators from MIT (Andrea Chegut, Daniel Fink, and Christoph Reinhart) created two measures of office views. The first measure, called “minimum view potential,” tracks how much of the outside can be seen from any particular point inside an office space (assuming a 120-degree cone of vision). The second measure, called “spatial view access,” assesses how much of an office achieves a certain minimum view potential (in this case, 3 percent).
In simpler terms: Does a worker have an outside view, and if so, how much of the office does the worker have a view from? They defined a “view” as being able to see a combination of landmarks, other buildings, green spaces, water, or the ground. Views of the sky — while important to tenants—were categorized as daylight access, not views, for the purposes of this study.
As an example, take the 7th floor of 17 State Street in Lower Manhattan. Standing at a single spot near a window, a worker on this floor casts some 6,111 sightlines, and 959 of them look outside onto something other than the sky, meaning this spot has a minimum view potential of 16 percent. But the floor as a whole has 389 distinct standing spots, and 93 of these meet the threshold minimum view potential, meaning the office has a spatial view access of 24 percent.
For the study, the researchers applied these two view measures to more than 5,100 unique office floors in Manhattan, using a wide set of environmental and building data, including a 3D model released by the City’s Department of Information Technology and Telecommunications. To calculate the value of a view, they then analyzed data on commercial office rental contracts (via Compstak). Finally, they combined this data with their previous study on daylight access to get a sense of both amenities for office spaces.
What they found: Calculating premiums
All told, 16 percent of office spaces in the study met a minimum view threshold. Half of these (8 percent) had “high views,” defined as a spatial view access of 10 percent. The other half (8 percent) had high views as well as “high daylight,” defined as 55 percent of spatial daylight access.
The average rent of all the spaces in the study was just under $50 per square foot. Using a model that controlled for many factors across spaces — such as building amenities, lease duration, and building class — the researchers then calculated the rent premium for high views. Simply put, they wanted to know how much more the Manhattan office market had been willing to pay for high views, compared to low views, all else being equal.
They found that spaces with high view access had a 6.3 percent premium over those with low view access. So taking the average cost of $50 per square foot, that space with high views would rent for $53.20. Spaces with high daylight have a 5.3 percent premium over those with low daylight, meaning the average space with just high daylight would rent for $52.60 per square foot.
Interestingly, the researchers found that the combined premium for high view and high daylight access was only 6.5 percent — not much more than either amenity in isolation. The researchers found this result “somewhat surprising” and worthy of further study. Turan doesn’t believe that people see daylight and views as more or less the same amenity, and instead thinks measuring a person’s visual experience is just very complicated.
“What we know from environmental psychology research is that both daylight and views, separately and together, have positive impacts on the health and wellbeing of occupants,” she says via email. “The reality, therefore, is likely more nuanced than the results suggest.”
What comes next: Expanding access
The need for nuance speaks to one of the limitations of the current work: it doesn’t assess the quality of an outside view, merely whether one exists at all. In fact, the vast majority (88 percent) of the sight lines categorized in this study looked onto adjacent buildings, versus far more interesting things like landmarks, greenery, or water. High-quality views would no doubt command a far greater premium than what’s reported in this work.
The lack of green views is concerning from a public health perspective. While architects are increasingly incorporating vertical green spaces throughout building facades, the trend tends to be confined to luxe towers. As cities strive for stricter green building standards around things like energy efficiency and building materials, they should also push for more literal green buildings, too. The new research suggests that developers could recover the cost of such requirements through view premiums, and the city as a whole would be better for it.
There is also the question of when — or whether — urban office spaces will fully recover from the changing work patterns brought on by the pandemic. While the exact balance of in person to hybrid to remote work remains to be seen, Turan believes post-pandemic workers are “increasingly aware of how the office environment impacts their safety, comfort, and health.”
“Employers (i.e. the tenants) are also recognizing the importance of building attributes that affect their employees,” she says via email. “With the growing recognition, it is possible that these qualities have an expanding impact on office rent prices in the future.”
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