Designer Buildings and the Economic Value of Signature Architecture

Abstract

This study investigates whether commercial offices designed by signature architects in the United States achieve rental premiums compared to commercial offices designed by non-signature architects. Focusing on buildings designed by winners of the Pritzker Prize and the Gold Medal awarded by the American Institute of Architects, we create a sample of commercial office buildings designed by signature architects drawing on CoStar's comprehensive national database. We use a combination of hedonic regression model and a logit model to estimate the various price determinants. The results of the hedonic analysis suggest that, compared to buildings in the same submarket, office buildings designed by signature architects have rents that are 5-7% higher and sell for prices 17% higher. The results from the second-stage logit estimation suggest a rental premium of approximately 5% for signature architects in large architectural practices while the sales price premium identified in the first stage hedonic regression was not confirmed.

Keywords: commercial real estate appraisal, rental price determination, design and branding of architecture

JEL Classification: R33, M31, C31, C25