Jason M. Barr October 23, 2019
The Too-Tall Debate
A common assumption about many of the world’s tallest buildings is that, from an economic point of view, they are too tall. Their heights, it is argued, don’t produce an income that justifies their expense. They are monuments, not moneymakers. This was a common refrain in the early 20th century when planners and reformers were attempting to limit building heights in large cities across the U.S. The Founding Fathers of modern zoning—the members of the New York City Heights of Buildings Commission—were convinced that skyscrapers were bad economics. In their 1913 report they wrote:
Few skyscrapers pay large net returns. Most of them pay only moderate returns. The cost per cubic foot of tall buildings is greater than that for low buildings. The exact difference can only be approximated because there are so many factors which affect the problem. However, the very tall buildings demand many things out of proportion to their increased bulk. All piping has to be made disproportionately heavier; special pumps and relays of tanks have to be provided, foundations often call for special construction, wind-bracing assumes an important place, long-run elevators are more costly than short-run elevators, the extra space taken up by the express run of the elevators is an additional cost. Thus in the aggregate the total cost per cubic foot of a very tall building may be 60 to 75 cents per cubic foot where a low building of the same class would cost only 40 to 50 cents per cubic foot.
By focusing only on their expenses, they naturally assumed that there’s too many “extras” to make a skyscraper a competitive investment. In 1930, the economist and architect, W. C. Clark and J. L. Kingston, respectively, in their book, The Skyscraper: A Study in the Economic Height of Modern Office Buildings offered a hearty rebuttal to the complaint:
This is the contention that the tall building is an economic fallacy,—that even from the private owner’s point of view it does not “pay” and therefore should not be permitted. Now the solicitude of the critic for the poor building owner who foolishly insists on putting money into unprofitable investments is somewhat amusing and hardly consistent with the claim that the latter is a robber of values that rightfully belongs to others, that he who is allowed to build a tall building is given an economic advantage which should be compensated for by heavier taxation, etc. However, if we are willing to overlook such patent inconsistencies, we will recognize in this “economic fallacy” argument an ingenious flank attack upon the position of the skyscraper enthusiast.
And even today the complaint is frequently heard that buildings like the Burj Khalifa are extravagant because they will, allegedly, never turn a profit. And while this might be true from time to time, there is little evidence to show that skyscrapers are systematically bad investments. Rather, around the world, on average, developers appear quite rational in their decision making.
The Efficiency Problem
Of the many arguments that detractors put forth against skyscrapers is that they are an inefficient building type, since up to 30 to 40% of the total floor area—which is used for elevators, stairwells, and plant and equipment—generates no income. A 10-story office building may be able to rent 85% of its area, while for a 50-story tower, that number might fall to 70%. If you telescope only on the efficiency ratio—rentable area divided by total building area—you will naturally conclude that there’s too much “wasted space” in the taller building. But from the point of view of the developer, the aim is to get the most profit from a lot. This requires the balancing of a trade-off between the costs and benefits of going tall. Thus, efficiency ratios are only one side of the equation.
Going to taller is beneficial in that it adds extra floors to the structure which have both user and market values. The occupants like to be higher up because they get better views and other economic and social perks, and they are willing to pay a premium to be in the sky. However, adding extra floors also means additional costs. First is that the central core needs to be expanded to provide for more elevators. This expansion creates two types of problems. First, these additional elevators are expensive—they are costly to purchase and operate, requiring a lot of energy. Second, the extra shaft space for the elevators means less rentable space on the lower floors. Third, as mentioned above, going taller requires extra materials to make the building more stable—extra steel or concrete for wind bracing, and thicker columns at the base.
But from the point of the view of the developer the question becomes: do the costs of going taller get “paid for” by the income generated by more floors at the top of a taller building? That is, when does height win over efficiency? This answer to this “optimal height” question is determined, of course, by many things, such as the size of the lot, local building regulations, and the state of the economy. But most importantly, in central city locations were rents or prices are high, going taller is beneficial because of the height premium on the higher floors and the demand to be at these central locations.
Core Tech 2.0
And, developers are not passive actors–simply choosing between height or efficiency. Rather, they are actively engaged in playing the game of “beat the core,” by engaging in a kind of space race to increase the efficiency of new buildings. Architects, engineers, and building suppliers work with developers to figure out ways to either reduce the number of elevators or to arrange the core within the structure to get more usable space. So how has core technology advanced over the years?
In another post, I discussed the evolution of elevator technology from the point of view of vertical transportation—the eternal battle to get occupants to their destinations in the quickest and most stress-free manner as possible. Developers have an incentive to move people faster because they can likely charge higher rents per square foot in buildings with better accessibility. And, if elevators are faster, they can allow for a taller building.
But elevators come with many costs. First they produce a large electric bill, that can account for 2-10% of a building’s total energy costs. They also require frequent maintenance and supervision. And, historically, elevators have had to be accompanied by large machine rooms for the motors. In recent years, many technological advances have made it possible to reduce the number of elevators. First, and arguably most important, has been the implementation of software and computing technology, known as Destination Dispatching Systems, that can allocate elevators in a manner the moves the most amount of people in the shortest time possible. This is also combined with zoning, where certain cabs only stop on specific floors. And elevators only for the highest floors are reached through sky lobbies. These innovations combined with using two elevators in the same shaft—double deckers—have made each car more productive.
But Wait, There’s More!
A host of other technologies are also making vertical movement less costly to provide. This includes machine-room-less technology that puts the motors and other equipment directly in the hoistway, obviating the need for a separate room. Additionally, traditional elevators systems used a gearbox to turn a pulley over which the rope passes to move the cab up or down. Today’s elevators can be run gearless, reducing energy usage by up to 25%. Finally, like breaking in automobiles, elevator breaking produces heat, which is normally dissipated through a heat resister. Today, regenerative technology can harness the heat and reuse it to power the elevator, reducing total energy use. In short, gearless, machine-room-less elevator systems with regenerative drives have reduced total energy usage by about 65% as compared to the older technologies (see Figure 3 in Al-Kodmany, 2015).
Another strategy to reducing the core is to construct a mixed-used building. In many cities where tourism and residential demand are growing faster than office demand, a mixed-use structure is more profitable on several fronts. First, it better matches the supply with need, while also diversifying the occupant mix, thus generating more revenues. And second, it allows for a reduction of the core. The reason is that a single-use office building has peak loads—seemingly everyone shows up to work between 8:00am and 8:30am, and everyone wants to leave between 5:30pm and 6:00pm. These peak usages require a large number of elevators on hand, despite the fact that for much of the rest of the day, many of the elevators sit idle.
A mixed-use building, with say offices on the lower floors, a hotel above those, and residential apartments on top, can generate a much smoother flow of people into and out of the elevators. The office workers will want the elevators during rush hours, while the tourists and residents will likely use them during the rest of the day. Thus, fewer elevators are needed to accommodate the traffic and this can further help reduce the number of shafts.
Traditionally, the core has been placed in the center of the building. But various innovations in building technology and design have “liberated” the core from the center. This means that today, its location can be placed in different parts of the building and which can potentially increase efficiency and improve building quality. For example, cores can be moved to the outside perimeter of the building, and allow for greater unobstructed floor spaces, as well as more flexible layouts. Core placement can also reduce energy usage. In hot and tropical climates, a core on the perimeter can shade the occupied spaces. In the cases of the superslim, Manhattan luxury towers on “Billionaire’s Row,” developers can strategically move the core to one side of the building, where the views are less valuable. For example, by placing the core toward the west or south, more units can have views of Central Park to the north.
As I have discussed, developers are eager to increase the income-generating areas of their buildings. But the question remains: are these technological innovations reducing the number of elevators and increasing building efficiency rates over time? To this end, I have constructed a data set to see if there’s evidence that buildings are, in fact, becoming more efficient over time. (More information is available here.) The data contains the efficiency rates of 66 office or mixed-use buildings completed since 1955, along with information about usage, heights, gross floor areas, and the cities in which they reside.
The results of the statistical (regression) analysis support the hypothesis that buildings are getting more efficient. In fact, the analysis suggests that, on average, efficiency rates have improved by about 0.1 percentage points per year, or by about 5 percentage points in the last 50 years. Note that in the sample, efficiency rates range from 60% to 86.4%, with a mean of 76.8%. Thus, on average, a building with a 75% rate 50 years ago would likely be at 80% today. If the building has one million square feet of total floor area (92,903 square meters), that translates into 50,000 more “billable” square feet (4,645 square meters).
Unless Star Trek transporter technology is invented, the core can never be eliminated. There will always be a need for elevators, stairwells and other service areas. And the core can play an important structural role, often acting as building’s spine of sorts. But perhaps the future is not so much about shrinking the core as it is bending it. Someday the ropeless maglev elevator may make getting through a building something like being in a Pac-man video game–moving horizontally as well as vertically. In the next post, we take up how the skyscraper battles against the elements of earth, wind and fire.