Building the Skyline

The Birth & Growth of Manhattan's Skyscrapers

by Jason Barr 2 Comments

Why Do We Build Cities in the Sky?

Jason M. Barr             May 7, 2024

On May 14, my book Cities in the Sky: The Quest to Build the World’s Tallest Building was released by Scribner Books. You can order a copy and sign up for my email list here.

Cities in the Sky tours the world’s greatest cities, from Chicago to New York to London and then to Asian metropolises, to see why they are building their skylines. Along the way, the book busts myths and misconceptions about skyscrapers. Cities in the Sky addresses the good, bad, and ugly for cities that have embraced vertical skylines, offering a glimpse into the future to see whether cities around the world will continue their journey upward.

“With a global view and his eyes cast skyward, Barr provides an enjoyable, expansive study of a subject he loves.” —Kirkus Reviews

Ever Upward

Skyscrapers remain controversial in the 21st century, yet they’re becoming more numerous and taller. Since 2000, seven times more skyscrapers (150 m/492 ft. or taller) have been completed worldwide than in the entire 20th century.

The Empire State Building, the world’s tallest structure for 40 years, is now ranked 53rd. The Willis (Sears) Tower was the record holder from 1974 to 1998, but today, it ranks a mere 25th. The Burj Khalifa, the current world’s tallest, is twice as tall as the Empire State Building, at 828 meters (one-half mile).

We are climbing our way to the heavens.

Why Do We Build Upward?

But why do we build upward? The short answer is that the humans of Planet Earth have been getting wealthier. In 1960, per capita gross domestic product (GDP) was $3,600. Today it’s over $11,000. Intimately tied to this economic growth is the corresponding rise in urbanization. In 1960, the world population was three billion, with two out of three people living in rural areas. Today, the world population is eight billion, and nearly 60% of us live in urban areas. In other words, six decades ago, the world’s cities housed one billion people. Today, they hold nearly five times that amount. Urbanized living is our present and future.

And why do these cities exist? Because they are our economic, social, and cultural engines. Manhattan alone—a mere 23 square miles—generates 3.3% of the United States Gross Domestic Product (GDP). Shanghai accounts for 3.7% of China’s GDP, while London generates a whopping 20% of the U.K.’s GDP.

Book Cover for Cities in the Sky by Jason Barr. To be released by Scribner Books on May 14, 2024. Pre-order here.

The Ecosystem

People move to the cities for jobs but stay for socializing, education, and consumption. In this way, vibrant cities generate positive feedback loops. Companies set up shop and hire workers, who then spend their income on food, clothing, shelter, and fun. Their money circulates locally, creating more jobs, and so on. Vibrant economies attract more people and companies, and the economic growth continues. Density also creates a whole host of positive spillovers—people learn from each other and become more productive, and cities can offer a wider variety of goods and services than otherwise.

But what is a city? It’s fundamentally an ecosystem—a place where people live and work, along with the institutions that support them: buildings, transportation, access to goods and services, social networks, governmental services, and so on. If we want to understand why so many skyscrapers are rising, we must see them as one component of the urban ecosystem.

Since cities are dense clusters of humans who frequently want to be at the same place at the same time because of a location’s convenience to other people or amenities, the only way to accommodate this demand is to go upward. To take an example, a quarter-acre (1,012 m2) lot can reasonably shelter 25 people. But if the location is in high demand, then stacking those shelters by creating 20 “lots” (i.e., floors) on top of each other can hold 500 souls. The skyscraper pinches geography by producing land in the sky.

Lower Manhattan Skyline. Photo by Jason Barr.

Cities in the Sky

Chicago, 1885

In Cities in the Sky, I take a global view to put the skyscraper in a larger historical context. In Part I, I begin with the birth and growth of the tall building in the late 19th century and early 20th century. First, we visit Chicago in the 1880s to see if the Windy City was really the birthplace of the skyscraper, as the conventional wisdom would have you believe. The answer is not so clear—New York and Chicago were each developing the technologies at about the same time.

But what is definitely true is that the Home Insurance Building (1885), designed by William Le Baron Jenney, was NOT the first skyscraper. Instead, its designation as such resulted from a public relations campaign by the Chicago School architects who decided to circle the wagons around Jenney because they wanted to box out other claimants.

New York,  the Roaring Twenties

Then, from Chicago, it’s off to Roaring Twenties Gotham, where we visit the Empire State Building and chronicle its rise to become the world’s tallest building. Though the building was half empty during the Depression and was labeled the “Empty State Building,” the truth is that the building has been very profitable over the long run. The skyscraper was not so much a vision of grandeur but rather a grander vision that benefited Gotham and has served as an inspiration to the rest of the world.

Just as crucial for skyscraper history was New York’s implementation of zoning regulations, which paved the way for cities to find a balance between the benefits of tall buildings and regulating some of their downsides, like shadows and congestion. The 1916 codes incentivized the wedding cake style because skyscrapers had to be set back as they rose to allow more sunlight on the street. The regulations inspired the Art Deco aesthetic, the second modernist movement after the Chicago School of Architecture.

In 1961, New York implemented a new set of codes by regulating the so-called Floor Area Ratio (FAR), which limited the amount of floor area that could be built on each lot. The FAR was popular, and today, it is arguably the most important skyscraper regulation worldwide. By regulating building bulk, the FAR encouraged the third modernist architectural style, the International Style glass box tower.

Post-War America

Then, we visit post-war America. The real “hero” of the skyscraper after World War II was the computer. For the first time in human history, computers could be used to work out the physics of tall buildings. They allowed architects and engineers to devise strategies to go taller for lower costs. The computer thus led to what I call the Second Skyscraper Revolution, a new suite of technologies and design methods that gave rise to the next crop of the world’s tallest buildings, the Twin Towers (1972/3) in New York City and the Sears (Willis) Tower (1974) in Chicago.

And just as important for world history, America demonstrated that growing cities needed tall buildings to house their companies and to signal their economic might. By the late 1990s, the skyscraper spread like a wave across the rest of the planet. In Part II of the book, we take a grand global tour.

The London Skyline. From left: The Walkie-Talkie, the Cheesegrater, and the Gherkin. Source: Wikipedia.

London: From No to Yes

The next stop is London, which provides a fascinating case study regarding tall buildings. In 1894, just as all the technologies needed to produce skyscrapers became available, London banned them by instituting a height cap of 80 feet. If you ask architectural historians why this is so, they will invariably say that the conservative London architects, who sought to preserve the U.K.’s imperial tradition of classical buildings, would not deign to build new-fangled towers like their Yankee upstarts across the pond.

While this is true to a degree, when we drill down into the economics of London’s business district, we see it had something New York did not have: space. The City of London was able to accommodate its business growth because it had more land. The conservatives and anti-skyscraperists were able to hold sway because the economic pressures were never as intense as in Lower Manhattan or Chicago’s Loop.

Then, during the 20th century, after the Blitz Bombing, much of London’s building stock was destroyed, and the city could be rebuilt without supertall towers. But all that changed in the 21st century. London was running out of space, and the answer was to go upward with iconic skyscrapers—the Gherkin, the Cheesegrater, the Shard, and the Walkie-Talkie, to name a few.

Living Densely in Hong Kong

The next stop is Hong Kong, where we see how it became the densest city on the planet with the highest concentration of skyscrapers anywhere. The reason is due to is combination of land shortages, its history as a British-controlled Chinese city, and its unique land ownership system.

Hong Kong was always “land poor”—being mostly hilly territory. When mainland turmoil hit, Chinese residents flooded the colony, seeking employment and refuge. After World War II, British officials realized the only way to accommodate the deluges and to keep the colony profitable was to build upward. The process began with public housing, which, unlike in the U.S., has proved an enduring success. Officials then invested in mass transit and horizontal connectivity to make Hong Kong truly a 3D city.

China: Skyscraper Fever

Then off to mainland China, which has undertaken the largest skyscraper construction project in human history. There is no way else to put this except to say that China has “Skyscraper Fever.” The massive urbanization that has unfolded since the economic reforms initiated in 1978, combined with its particular method of governance, has led China to embrace the tall building bling like no other country.

But its love of the skyscraper has come with a cost. Today, China’s real estate market is in desperate straits because of the overbuilding. Leaders are scrambling to contain the damage. And in 2020, the Community Party banned buildings taller than 500 meters (1,640 feet), and dramatically reduced the number of buildings above 150 meters (492 feet). But if there is one key lesson in skyscraper history, it’s that gluts eventually lead to shortages and shortages back to booms. Stay tuned…

Arabian Heights

After China, we head to the Arabian Peninsula to visit the world’s tallest building, the Burj Khalifa, at 828 meters (0.5 miles) tall. While most people see this building as an example of the craving for spectacle and egos gone wild, the truth is a bit more complex. Yes, the structure was built during a real estate boom, but its construction was meant to help put Dubai on the map as a business and tourist destination.

When we look at the economics of the project, we can see that it represents the same kind of maniacal genius that gave rise to the Empire State Building. Seventy percent of the tower’s residential units sold out before the crash; the observatory is a cash cow, and the surrounding properties with a Burj view are worth thousands of dollars more because of that view.

The tower’s success has not been lost on Saudi Arabia, which realizes it must move quickly to wean itself off its oil addiction. The crown prince, Mohammed bin Salman, is using mega projects to lift the country by its bootstraps. In 2010, the nation started to build the world’s tallest building, the Jeddah Tower, but then political turmoil led to its halt. If restarted, it will be the world’s tallest tower at one kilometer (0.62 miles).

In the meantime, the kingdom is building other mega projects like The Line, which is proposed to be 500 meters (1640 feet) high, 200 meters (656 feet) wide, and 170 kilometers (106 miles) long to house nine million people! Will Saudi Arabia succeed in this unbelievable project? It’s hard to say, but the truth is that great cities typically spring from the ground up and not from the spire downward.

The Burj Khalifa, Dubai. Source: Wikipedia.

A Global View

In Part III, we take a step back to look at the good, bad, and ugly of tall buildings, asking why we are building them, how they should be regulated, and what’s in store for the future.

The reason tall buildings are growing worldwide is the benefits they provide. They allow us to more easily enjoy the fruits of the city, and provide amazing views. But why is the idea of stacking people—the creation of high-rises—so controversial?  One claim—particularly in Western cities—is that they seem to generate gentrification, displacement, and inequality. There is some truth to this, but the real story is more complex and nuanced.

Gentrification and luxury condos must be understood within the larger economic context. Income inequality, for example, should be addressed by making tax rates much more progressive and improving employment opportunities for those at the bottom of the economic ladder. Housing affordability needs to be improved by building abundant housing for everyone—across the income spectrum and entire metropolitan regions.

If more housing is built in the suburbs and that lowered land values in the center, we might get fewer tall buildings there. And that’s perfectly good and right. While new supply everywhere helps, it’s more critical to build affordable housing where it’s most needed. Similarly with CO2 production, yes tall buildings emit a lot of CO2, but overly stringent regulations that cap heights, for example, generate sprawl, which is even more carbon intensive. Policies need to tax carbon for all producers and subsidize clean energy production.

The Future

Over the long run, however, as technology has progressed, we can erect buildings that are not only taller but are also more functional—and for lower costs. The improved supply conditions combined with the rising tide of urbanization means that taller and taller buildings will continue to be brought forth in the world’s greatest cities. But at the end of the day, cities succeed when they bring us together and make us more productive.  If designed well and built in the right locations, skyscrapers can help us achieve that goal.

You can order Cities in the Sky: The Quest to Build the World’s Tallest Skyscrapers here.

 

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Our Economic Future (Part I): How Come We’re Not Getting Happier?

Jason M. Barr              December 14, 2023

The Birth of Economics

Roughly speaking, the century from 1870 to 1970 can be called the Utopia-Was-Possible Century. By 1870, national incomes began rising faster than their populations; thus, economic growth was a fact of everyday life.

This improvement in our material lives was created by the switch to industrial-wage-based manufacturing, technological improvements and economics of scale, cheap fossil fuel-based energy, and the rise of global trade and finance.

The “fixed-pie-economics” of empire and mercantilism, where one nation gained at the expense of another, was now in its twilight, in the sense that economic growth through trade and mass production was to become the norm.

However, in the early years, all was not right in the Factory. Industrialization and trade produced a surfeit of darker sides. Workers toiled in miserable conditions for little pay; the urban air was darkened by thick clouds of smoke from burning coal; and the new technologies, like machine guns, could be used to unleash previously unimaginable waves of death to citizens and enemies alike.

Is Utopia Unobtainable?

The Dream of Utopia

From this era of promise and peril emerged a stew of ideas on how humanity could use its growing wealth to create paradise on Earth. Some nations took the socialist route and abolished private property, while others embraced market systems with varying degrees of government involvement.

By 1950, humanity developed a consensus that democratic capitalism, global trade, and a relatively benign global hegemon—the United States—would produce the most peace, the fairest allocation of resources, and, just as importantly, the greatest wealth of nations.

Though the Soviet Union and Communist China became immense forces, their experiences quickly revealed that they did not, in fact, hold the secret to utopia. The USSR became a totalitarian state, while Chairman Mao’s Great Leap Forward resulted in millions of deaths by starvation, and the Great Proletarian Cultural Revolution turned the citizenry against itself.  By the end of the 20th century, these socialist states had simply withered away.

The Failure of Our Utopian Future

And here we are in the 21st century, some 150 years after humanity realized how to generate meaningful economic growth, but the promise of paradise never materialized. Today, the idea of utopia seems a distant, laughable dream.  Rather, existential threats—economic, environmental, and political—hover above us like a cloud of killer bees.

Is Humanity Getting Happier?

Our failure to solve our economic problems is demonstrated by our life satisfaction. Since 2012, the United Nations (UN) has produced the World Happiness Report, which gives the average level of life satisfaction for each country’s residents, measured by asking people to rank on a scale of 1 (lowest) to 10 (highest) how satisfied they are with their life in general. A large body of research has demonstrated that the answer to this question is a useful predictor of the quality of our lives.

Across the Globe

Across the globe, humanity actually seems to be getting happier (the COVID-19 pandemic notwithstanding). Average national happiness can be seen from the figure below, which gives the average life-satisfaction levels of over 100 nations around the world since 2007.[1]

Happiness was rising as the global economy in the 2000s was improving, and then the Global Financial Crisis put the brakes on things. But then, between 2016 and 2020, global happiness shot up. COVID-19 came along and misery ensued. Despite this, global life satisfaction will likely resume its upward trajectory when the aftermath of the pandemic dissipates.

The Happiness of Nations. This figure gives the average happiness level of countries around the world. Source: UN World Happiness Report (2023). Note: The black dashed line is a quadratic trend.

The Correlates of Happiness

When we look at the global averages since 2007, they range from just below 5.4 to slightly above 5.7. Developed countries typically score closer to 7, suggesting room for improvement for the developing world. But global happiness’s rise and fall begs the question: What makes us happy?

The UN report focuses on six correlates of happiness. First is real per capita GDP, which measures a nation’s income level. Second is the degree of social support, which is measured as the national average of the response to the (yes or no) survey question: “If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them, or not?”

The third element is a nation’s life expectancy at birth, which indicates health and healthcare quality. Next is the perception of residents’ freedom to make life choices, measured as the average of the response to the (yes or no) question, “Are you satisfied or dissatisfied with your freedom to choose what you do with your life?” After that is the measurement of generosity, measured by a country’s relative charitable giving rate. Finally, is the perception of corruption based on the average response to the (yes or no) question, “Is corruption widespread in your country?”

In short, these correlates look at income, the quality of people’s social experiences, their health, and their feelings of trust.

The Income Effect

Using their measures of the “inputs” to happiness, I find that GDP is the most important predictor of well-being around the globe (data and analyses are here). This makes sense as income—and the goods and services it buys—is first and foremost for survival. When a nation lifts itself out of poverty, its residents no longer worry about finding their next meal or a place to live.

And, around the world, income has been rising. In fact, between 2000 and 2022, Planet Earth’s real per capita GDP has risen by 43%. Many countries, such as China, Lithuania, Ivory Coast, and Uruguay, are developing rapidly, and their quality of life is improving (India’s happiness, however, has been falling from already low levels). To the extent that rising national incomes are channeled towards better health care, improved educational systems, and more life opportunities, the better people’s lives will be. 

A simple measure of life quality is the so-called Human Development Index (HDI), compiled by the UN, which is based on life expectancy at birth, average educational levels, and per capita gross national income. We can see a strong relationship between a nation’s happiness and how it scores on the HDI. Though a strong predictor, it’s not 100%. Other factors are clearly at work.

The Inputs to Happiness. Clockwise from Upper Left: National happiness vs. the Human Development Index (HDI), happiness vs. ln(GDP per Capita), happiness vs. freedom to choose response, happiness vs. social support response. Sources: Happiness, GDP, Social Support and Freedom from the World Happiness Report. HDI from the UN. Black lines are trends (quadratic or linear).

Anxiety in the Developed World

Each year, when the UN Happiness Report is released, the press focuses on the “Happiest Country on Earth.” Usually, the top one is from the Nordic zone, with Finland winning the prize in the last five years. But little attention is paid to the trends—what’s happening over time? In 2012, 2013, and 2016, Denmark was the happiest country in the world. But its happiness level has dropped in the last decade. Finland has done something right, allowing it to take the top slot. But if Denmark’s experience is any guide, being king of the hill may be unstable.

More broadly, what’s happening in the developed world? For simplicity, I focus on what I call the OECD+ countries—a group of 23 nations that represents the developed world (the original 20 Organization for Economic Co-operation and Development (OECD) countries plus three more, Australia, Japan, and New Zealand), which include the Anglo countries of North America and Oceania, Western Europe (including Türkiye), and Japan.

The data strongly suggest that once a country hits a certain wealth threshold, its overall well-being stays flat and often declines. Additionally, responsiveness to the happiness inputs generally falls. That is to say, rises in income and social support seem to matter less—or not at all—for increasing happiness.

The Delta

Looking at the changes from 2009 to 2019, we see that 17 of 23 of this group saw their happiness decline, while two were flat, and only three saw measurable rises. What drove these countries to reduce their life satisfaction? It’s not income. All these countries experienced net income growth (despite the Global Financial Crisis), and it wasn’t because of health and life expectancy, which also improved.

Instead, many of these countries experienced a drop in social support and generosity measures. Retrenchments along the social dimension appear to be driving the decline in happiness.

The Happiness Delta. Changes in happiness for 23 developed countries from 2009 to 2019. Source: World Happiness Report. Note: Happiness for each year is taken as three year average (i.e., 2009=average of 2008, 2009, 2010; 2019=average of 2018, 2019, 2020). Note: the list is original is the OECD members plus Australia, New Zealand, and Japan.

The United States

Telescoping onto the United States can shed more light on what’s happening with happiness in the developed world. If there’s one country where life should be improving, it’s the United States, with low unemployment and relatively rapid economic growth. Nonetheless, one fact stands out: American happiness has declined in the 21st century.

We can take a longer-run perspective thanks to data collected since the early 1970s from the University of Chicago’s National Opinion Research Center (NORC), which conducts its General Social Survey (GSS). Since 1972, the GSS has regularly asked people, “Taken all together, how would you say things are these days—would you say that you are very happy, pretty happy, or not too happy?” From this, we can create an index of average happiness (with 3 = very happy, 2 = pretty happy, and 1= not too happy).

The index reveals that American happiness peaked before the new millennium. The 21st century has been sad and grumpy so far. I don’t want to overstate the case. In the World Happiness Report, the U.S. typically lists around 15th in the rankings—with averages typically around 7 out of 10. Nonetheless, the data suggest that America is losing the happiness battle.

Declining American Happiness. Left: Average happiness index value from 1972 to 2022 from the General Social Survey (GSS) (left axis), along with average happiness value from World Happiness Report (right axis). Right: GSS Happiness Index (left axis) and US real per capita GDP (right axis) (source: MeasuringWorth.com). Linear trends included on left graph.

The Happiness Paradox

Part of the problem, in most developed countries, is that increases in income fails to cure our happiness blues. In 1974, economics professor Richard Easterlin discovered something about income and happiness. After a nation grows its economy to a certain level, there’s little apparent relationship between GDP and happiness. We can see this in the United States. Since 1972, real GDP (in $2017) per person has grown from $27,500 to $65,400, or 137%, while happiness levels have declined.

The reason for this lack of relationship is that what makes people happier within a nation is not their absolute income but rather their relative income. Most people compare their income level to those of their neighbors and social groups. And when their income is lower than the typical comparator, they feel worse.

The problem from a societal view is that the ranking is a zero-sum game. When one person rises in the rankings, someone else falls—thus, they switch happiness levels, and the total societal happiness level doesn’t change.

Another way to put this is that we can’t rely on economic growth to stimulate our happiness. Rather, we need rising incomes to ensure we don’t lose happiness (through unemployment or lower wages). In this sense, economic growth is a treadmill. If it stops, we fall off the machine. Otherwise, we keep running in place.

And just as important, we cannot use economic growth to only allow for greater consumption. Instead, some of the additional income needs to be employed for things that truly make us happy: healthier lives, higher quality social interactions, and fewer anxieties about life’s vagaries.

Why Did America Lose its Happiness Mojo?

Using the GSS data sets, we can make some inferences by looking at the statistical correlates of happiness. However, we first need to control for individual-level characteristics (via regression analysis, with results here). For example, the very young and very old tend to be happier than their overworked middle-aged counterparts. The rich tend to be happier than the poor. Those with higher educational obtainment tend to be happier than those with fewer years of schooling. Employed people tend to be happier than the unemployed, and so on. This exercise shows that happiness has been declining even after controlling for personal characteristics. So, the drop is not a statistical artifact due to sampling issues.

Declining American Trust. The blue line an index of social trust (right axis) and the orange line is the % of Americans who say other people can be trusted (left axis). Source: General Social Survey.

Drop in Trust

Let’s turn to trust. Since 1972, the survey has asked people, “Generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people?” The responses can be used to gauge national trust levels.

A large body of literature shows that social trust is a key component of happiness. If people trust their neighbors and their government, they will suffer less anxiety. They will have less fear of being ripped off and more comfort that the government will step in to provide needed services. And they will also be more socially engaged.

However, the response to the trust question has been worsening in the United States. In the 1970s, 40% of respondents typically said they can trust people. By 2018, it was down to about 21% (with shocking drop during COVID).

Including the trust variable in statistical (regression) analysis reveals two things. First is that declining trust is a factor in reducing happiness. On average, people who say they can trust people are about 0.1 “happiness points” higher than those who don’t (out of a maximum of 3). So, the declining share of those who say yes to that question leads to declining happiness in the population.

Party Affiliation

However, including the trust variable in the statistical analysis still does not “explain away” the negative happiness trend. Given the political polarization, I included people’s political party identification, which ranges from strong Democrat to independent (which includes people in neither party or who do not respond) to strong Republican.

One finding that pops out is that independents are less happy than their Democratic or Republican counterparts. I must caution, however, about the direction of causality. Are party members happier because they joined the party and feel a sense of belonging in the organization, or does dissatisfaction with the party system and modern government make people become independents? We can’t answer that here. Nonetheless, the data show that party support on both sides of the political spectrum has been declining, which is associated with lower national happiness.

American Happiness Trends. The blue line shows the happiness trends after controlling for individual characteristics. The orange line also includes a trust indicator. The gray line adds in political party affiliation. The yellow line adds in newspaper reading measures. Source: here.

News Media Consumption

Still, even including the party affiliation variable does not make the negative trend disappear. The next variable I included was the responses to the question, “How often do you read the newspaper?” While the question does not seem to explicitly state a physical paper version, it certainly suggests that. Starting in 2005, the number of people responding “never” shot up. Before then, the average was about 5%; by 2018, it was nearly one-third.

And just as importantly, those who responded that they rarely or never read a newspaper report lower happiness levels. Again, the direction of causality is unclear, but it suggests that  due to the internet, media outlets have become more fragmented. We have fewer, if any, news sources that can act as national uniters, and little sense that reporting is done for the national good. Rather each highly specialized (and opinionated) outlet caters to its own tribe, which implicitly helps to separate us and engender distrust. Reading the news, it seems, gives us greater civic purpose.

In fact, when I include these three variables in the analysis: the trust measure, the party affiliation indicator, and the frequency of newspaper reading, the yearly downward trend flattens out. In other words, these three indicators seem to account for much the drop in American happiness in the 21st century.

A Broader View: What We Haven’t Solved

What happened to the dream of peace and property? While I will have more to say in the next post on this topic, I will offer a few thoughts here. If we take a long-run view of humanity since 1870, we can see that while we have come a long way, there’s still much to be done.

Constant Wants

To the extent that economic growth generates the impulse for more consumption, we are constantly replacing our old goods with new ones. There is never a sense that we “have enough.”

Technological Insecurity

Related to our constant wants is the evolution of technology. As the current debate about artificial intelligence demonstrates, we find ourselves uncertain if new technologies will bring happiness or obsolescence and addiction (enslavement?). There’s every reason to believe that the “internet-ization” of society has increased our anxiety and reduced our self-esteem.[2]

Economic Uncertainty

The Global Financial Crisis of 2007-8 and its aftermath have demonstrated that we have not eliminated the business cycle or financial crises, and the severe dislocations that they create.

Income and Wealth Inequality

Economic inequality is getting worse in the 21st century. Inequality engenders unhappiness when we compare our incomes to the increasing number of one-percenters and social media “influencers.”  Additionally, extreme inequality is associated with a loss of opportunities, which can be immiserating.

War, Conflict, and Hate

As the experiences in Ukraine and Israel and Palestine keenly demonstrate, war and conflict remain an ever-present reality. The political divisions exacerbated by Donald Trump show that we are a house divided, while media hate entrepreneurs peddle hate and misinformation for their own profit, with little concern for how its damaging the commonweal.

Pandemics

Not much needs to be added here, but only to say that something we thought was a distant memory may now be part of our future.

Climate Change

Every year that we delay weaning ourselves off of fossil fuels means greater and greater damage, suffering, and uncertainty. The Climate Kraken has been released.

Looking Ahead

What happened along the way to end the dream of peace, prosperity, and happiness–the striving for utopia? This will be the subject of my next post. Stay tuned.

 

—

[1] Note for simplicity, I take the average national happiness. To get the average individual happiness would require weighting the national averages by their respective populations.

[2] It seems anyone with a Twitter account is instantly an expert on everything, and they are all too quick to tell you that you are wrong and they are right, which is not good for our perceptions of self-worth.

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COVID-19 and the Market for Skyscrapers

Jason M. Barr        November 19, 2020

In the 21st century, Planet Earth has gone on a skyscraper building spree. Since 1995, for example, the number of skyscrapers (150 meters or taller) completed each year has grown at a rate of 8.8%. The height of the tallest completed building has risen at an average annual rate of 2.5%. In short, tall—and taller—buildings have been in great demand. Then on March 11, 2020, the World Health Organization officially declared the COVID-19 Pandemic. How will it affect the market for tall buildings? And what does the market tell us about the future of our cities?

Economic Impacts

In many respects, skyscraper construction is a bellwether for the health of our cities. After all, virtually all skyscrapers get built in big metropolises. Most of those are in central areas where people and businesses come together to generate new ideas and new products. If they stop doing these things, then the future for skyscrapers would seem rather bleak. 

Skyscraper construction is not only about housing a city’s activities but also gives something back to the economy. Construction generates income for construction workers, and fees for the architects and engineers and so on, and ground-floor retail can aid small businesses and restaurants. In New York City, for example, construction each year directly contributes to about 2.5% of the city’s gross domestic product, but indirectly contributes much more through multiplier effects—where each dollar earned by a construction worker gets spent on local goods and services, which gets spent on other local goods and services, and so on. A typical skyscraper in New York City costs a billion dollars or more, and the city normally employs about 135,000 people in the industry. 

A Juggernaut?

Skyscrapers, however, can take many years between conception and completion. Even before the first shovel is dug these projects are likely to have been in the process for several years. Developers must buy the lot, arrange financing, file for permits, have the building designed, consult with engineers about structural and geological issues, then put out bids for construction and supplier contracts. Once these are done, few have an incentive to halt the processes, though they can certainly slow things down.

Furthermore, skyscrapers are long-lived. Few structures above 100 meters are demolished. So once a developer begins the project, she has the incentive to see it through. Even if it opens mostly empty, the building should be profitable in the long run. The key in a crisis is to fill it just enough to pay the financing and operating costs.

Thus, even during a pandemic, skyscrapers are likely to continue to be built once begun. But at some point, projects get shelved, construction efforts slow, or those only half-built get topped out earlier than originally planned. 

Figure 1: Global Skyscraper Heights and Completions, 1960-2020. The orange bars (left axis) are the number of skyscraper completions (150 m+). The black line (right axis) is the height of tallest completed building (m). Data from CTBUH Skyscraper Center. Note: 2020 is estimated based on completions as of Nov. 15, 2020.

COVID-19 and Construction

How has the COVID-19 Pandemic influenced skyscraper construction around the world? To answer this, let us take a long-run view. Historically, the U.S. dominated in the skyscraper market. But things began to change toward the end of the 20th century. Using data from the CTBUH Skyscraper Center, Figure 1, shows the number of skyscraper completions (150 meters or taller) and the heights of the tallest completed building from 1960 to 2020. Around 1995, we see a sharp uptick, about when mainland China started building skyscrapers in earnest. In the peak year of 2018, the world completed 349 skyscrapers (150 meters or taller). 2019 was lower, and 2020 will be even worse.

This year will see a sharp downturn—to around 157—but the completions count is still on track to be higher than in the mid-2000s, similarly, for the height of the tallest completed building. In the 1960s, the tallest completed buildings tended to be in the 200-meter range. Today 200 meters is puny. And since 2010, typically, the tallest structures are above 500 meters. This year the tallest building will be well below that but will still be extremely tall, at 427 meters (59 floors).

Predicting Skyscraper Construction Around the World

But what is likely to happen in the years to come? Before we start to make some predictions, it is necessary to investigate the fundamental drivers of skyscraper construction worldwide. To this end, I have created a relatively simple statistical (regression) model that can substantially account for the growth of the number of tall buildings and the heights of the tallest building (details here). The model, of course, cannot predict things with 100% accuracy. The point of this exercise is to see if we can parsimoniously explain why skyscrapers get built and then use this  model to make some predictions about the near future. 

From this model, two key variables can help explain why both the number and heights of tall buildings have been growing over time. First is world Gross Domestic Product (GDP) (inflation-adjusted), which has grown 343% since 1970 (that is, the world economy is 3.4 times greater today than fifty years ago). Second is the global urbanization rate, which in 2019 was 55.7%, as compared to 36.6% in 1970. 

The two variables are strong predictors of skyscraper construction patterns, suggesting that skyscrapers have a strong economic rationale—even among the tallest of the tall. Their construction is driven by the need for people and businesses to cluster in central cities. However, since construction decisions are made in the past, it is necessary to account for these lags. The statistical procedure can indicate the best time fit between skyscraper completions and the economic variables. It shows that world GDP growth and urbanization rates three years prior are the best indicators of completions and heights, respectively. 

Figure 2 shows the growth in skyscraper completions over time alongside the statistical model’s predicted number of completions. The orange bars give the actual completions count, while the blue line is the expected value. One can see a pretty good fit between the two, on average.

Figure 2: Skyscrapers Completions versus Model Predictions. The orange bars are the number of skyscrapers (150 m+) built each year around the world. The blue line is the predicted completions count from the statistical model. Sources and data analysis here.

China’s Policy Changes

The model gives predictions for what is expected to happen based on events in the recent past. But it does not predict things exactly. There are several reasons for this. First is randomness; nothing can be predicted with 100% certainty since many tiny things change from year to year and project to project. Second are significant events that take place outside the model (and are often not modellable). China, which has been on a skyscraper building spree, has pulled back a bit, and this was noticeable in 2019. To quote from a report by the Council on Tall Buildings and Urban Habitat (CTBUH):

It is tempting to read the noticeable drop in completions [in 2019], particularly in China, as a sign of the effect of proximate events, such as the trade negotiations with the United States, or as the harbinger of a recession. It is well-documented that many of China’s tall building projects were financed with high levels of debt, and that in recent years the government has attempted to rein in speculative building and investing. Certainly, the overall momentum of construction on the very tallest buildings in the world’s most populous nation appears to have slowed on a year-to-year basis. However, as always, it must be remembered that skyscrapers are lagging economic indicators – many of these towers were conceived and initiated five or more years ago, and thus reflect the development circumstances of a half-decade prior.

Additionally, in June of 2020, the Chinese central government placed a ban on 500-meter or taller buildings and required vetting of those 350 meters or above. In the near future, this policy will reduce the total number of skyscrapers completions (or it might increase the number of buildings below 350 meters).

The COVID-19 Effect

Then, of course, is COVID-19, which was utterly unpredictable. In this case, the downturn reflects those who have either topped off their structures below 150 meters or delayed completion until next year. In the absence of COVID-19, the model predicts that there would have been around 263 skyscrapers this year, nearly 70% more than what we will see by year’s end.

Beyond 2020

Ultimately the long-run upward trajectory for skyscrapers is likely to resume within a few years. First, those developers who delayed construction because of COVID-19 are likely to continue or speed up completion in 2021 as vaccines start to get distributed. But more fundamentally, there likely seems few long-run changes in the economic and social path that the world has taken. Since 2000, real world GDP has grown at an average rate of 2.4%, and this pattern is likely going to resume next year; that is the view of Deutsche Bank. Given the lag in construction, this means that skyscraper growth is not likely to hit its 2018 or 2019 levels until 2023 or so. Furthermore, world urbanization has, on average, ticked up about 1 percentage point every two years since 2000. Again, there is every reason that this trend will continue, even if hyper-density is checked somewhat because of fears about the virus. The fact that skyscrapers respond so directly to urbanization and global economic growth suggests the future remains on the up and up.

The Case of New York

We now turn to the specific case of New York City. In the early days of the pandemic, New York was the epicenter, and its density was blamed for the virus’ rapid spread. Today, New York is one of the relative bright spots as the virus has moved on into the interior and rural parts of the country (thought the region is still suffering).

Here, we can look at how construction and heights are affected by local variables, with a focus on buildings that are 100 meters (about 30 stories) or taller. The long run patterns for the city shows something different than the rest of the world. New York’s growth is cyclical, with long upward ticks, followed by sharp declines and so on, but with no sharp upward trend like the rest of the world.

Because New York has been developing skyscrapers for so long, new buildings are added more slowly than in the rest of the world, where many cities are getting into the game for the first time. New York has seen five major cycles since World War I: The Roaring Twenties, Post WWII modernization, the 1980s office boom, a 2000’s condo and hotel boom, and then another one after the Financial Crisis of 2007-8. In terms of the heights of the tallest buildings, between 1955 and 2000, heights were generally around 200 meters; in the 21st century this has risen to about 300 meters, but remain well below the world average of around 500 meters. The ultimate question, however, is: is New York done building skyscrapers?

Figure 3: New York City Skyscraper Completions versus Model Predictions. The orange bars are the number of completions (100 m+). The black line is the predicted count from the statistical model. Sources and data analysis here.

Economic Analysis

For the entire world, we can “explain” skyscraper growth by the two key variables of world GDP growth and urbanization rates. We can do something similar here, as well. But by looking at one city, we can use local factors to get a more fine-grained analysis. To this end, a “simple” New York City model includes total New York City employment, the value of the stock market (as measured by the S&P500 Index), interest rates (the Fed Funds rate), and a construction cost index (the Turner Construction Cost Index). (Data sources and results here.) Similar to the analysis for the world, the best “fit” for these predictors are from two or three years past, given the long timelines for these projects. 

Figure 3 shows the number of skyscrapers since 1960 and the model’s predictions. Overall, the model can capture the broad trends and cycles. For 2020, the model predicts that there “should” have been 20 skyscraper completions in New York City, as compared to the likely number of 7—a nearly 300% drop! 

Among the group of predictors, the most important is New York City employment two years prior. An increase a 10% increase in jobs in a given year is associated with about eight more skyscrapers two years later, on average. As Figure 4 shows, New York City employment took a massive hit at the beginning of the pandemic. In February 2020, employment peaked at 4.67 million jobs and collapsed by nearly 20% by the end of May. It has since begun to rebound but remains well below that of earlier in the year. 

Therefore, the near term of New York’s tall building market depends on what happens to employment. If 2021 shows a rapid rebound, we will likely see construction patterns return to pre-COVID-19 levels by 2023. Otherwise, things will be delayed until mid-decade.

Figure 4: New York City Employment, 2019 to Sept. 2020. Note shaded area is 2020. Source: New York State Department of Labor.

 

The Death of Tall Buildings?

It seems that every time a crisis hits our cities, there’s a chorus of voices shouting that this is the death knell for skyscrapers. After 9/11, the skyscraper was pronounced a thing of the past. After the financial crisis and global recession in 2007-2008, cities were considered overbuilt. Now people are saying that density is bad and nobody will want to return to the office ever again.

But the fundamental truth is this: the world needs its cities. We are social creatures and we rely on proximity to make our economies function and grow. This growth means an increasing reliance on cities, which means a need for more skyscrapers. In this sense, the long run prospects for tall buildings remain strong.

by Jason Barr 21 Comments

Solving Traffic Congestion: A Plan for New York City

Jason M. Barr         May 16, 2019

Congestion Pricing for Manhattan

This past April, New York State passed a law allowing congestion pricing in Manhattan. It will take effect sometime by the end of 2020. Drivers will be charged a fee, likely around $14, to enter the island south of 60th Street. The plan, similar to those already in effect in London and Stockholm, aims to reduce the number of cars and generate revenue for mass transit improvements. Implementation in European cities shows that it can work. And while the congestion pricing plan is reasonable and likely to achieve its main goal, it completely ignores the city’s larger transportation problems.[1]

New York: We Have a Problem

Consider this: the New York City metropolitan region has a population of 20 million people, scattered throughout 25 counties in three states. It is, evidently, the largest metropolitan area in the world by land mass, at some 4500 square miles. Assuming that the New York State rate of 0.54 cars per person applies to the region, that means that nearly 11 million passenger cars can possibly be on the roads on any given day, not to mention commercial and freight vehicles.

But a large sprawled out population may or may not be a problem. It all depends on the transportation system’s efficiency. Here is where the real problem lies. Relative to the 125 most populous metro areas in the United States, the New York metro area ranks worst on commuting times. The system is incapable of properly of providing freedom of mobility without undue delay or frustration.  Gridlock is a huge waste of resources and diminishes productivity and well-being.

Nighttime lights of the New York City metropolitan region. Source: Wikipedia.

A Brief History of New York City Transportation

Before we move forward to a policy plan, however, it’s important to go back and review the history of transportation investments in New York. Two hundred years ago, the foot was the main mode of travel. Stagecoaches and sailboats could take travelers further afield. But the idea of commuting was non-existent. People lived and worked in the same place or very close by.

Mass Transit is Born

Things started to change with the development of the urban omnibus, in 1829. As a stagecoach outfitted for local travel, it made intra-city mass transit possible. But the real innovation was the horse-drawn streetcar, first introduced in Manhattan in 1832. By embedding rails in the street, fewer horses could pull more people. This was the first time in New York City history that commuting—the separation of work and home—became feasible. It’s also when we see the birth of suburbanization, where middle- and upper-class households moved out to the leafier fringes of the city (in this case around Washington Square park and lower Fifth Avenue). Soon the island was crisscrossed with mass transit.

Els, Trolleys, and Subways

But horses eat and poop a lot. They can only work so many hours a day, and their horsepower is limited. After Thomas Edison demonstrated the success of generating electricity in 1882, trolleys soon replaced streetcars. Travel was now even cheaper and faster, and allowed for a further expansion of the city.

Map of Brooklyn’s trolley network circa 1930. Source: 6sqft.com.

The next innovation was in rapid transit: elevated railroads, sprang up in the 1870s and funneled people up and down Manhattan from the Battery to the Bronx and all places in between. This, again, allowed for a continued expansion of the city’s footprint. But the Els were load and smoky and put streets in shade. Thus came the subway (and the dismantling of the Els). The first line opened in 1904, running from City Hall to the Bronx. Its success prompted a massive building effort, so that by 1940 there was some 700 miles of trackage to all corners of the city. The Golden Age of the New York City subway was during the first half of the 20th century. It allowed people the freedom to quickly and cheaply travel distances far and wide within the city. Once again, the city expanded outward as a result. But by 1950, the subway system was considered complete and hasn’t grown in any material way since then.

Map of Manhattan’s Elevated Railroads, circa 1890. Source: StuffNobodyCaresAbout.com.

The Rise of the Automobile

Though significant investments in car-based infrastructure were made in the 1920s, the real action happened after World War II. New York, like other cities, went on a highway building spree, while simultaneously dismantling its trolley network. From the 1930s to the 1960s, New York’s master builder, Robert Moses, skillfully amassed the resources to create a modern road system, including parkways, highways, bridges and tunnels. The automobile and its highways allowed the New York region to grow to 20 million.

In 1968, New York Governor Nelson Rockefeller forced Robert Moses out of power. With Moses gone, New York’s road building spree came to a halt. Moses apparently loved to utter the phrase, “You can’t make an omelet without breaking some eggs.” By 1968, people were tired of eating omelets. The entire transportation system was considered complete, and no one had the will, the energy, or the money to do much about it.

A 1964 map of the actual and proposed roads, bridges, and tunnels built by Robert Moses. Source: Wikipedia.

Transportation and the City

When we step back to consider why cities exist, the answer is to eliminate the barriers of geography. The city is a means by which the spaces between people are reduced as much as possible: a worker is more easily united with employment; the employer is more easily united with the worker, and firms are more easily connected to other firms. People can more easily fulfill their social, economic, psychological, and cultural needs. The city is thus a set of structures—buildings, roads, spaces–that allow people the benefit of living their lives in a more productive way. The city is a mobility machine.

The history of the New York City region demonstrates that as new transportation innovations emerged, the city embraced their construction as a way to increase the efficiency of movement. As the costs of commuting fell, the city expanded to accommodate a larger population. The original New York, founded by the Dutch in 1624, was just a tiny colony on the toe of Manhattan. Today the region is America’s largest and most important metropolis, in no small part because of the transportation investments that were made.

Too Fat for those Old Jeans

And yet, there have been no significant changes to the transportation network in over half a century—no revolutions in modes of transport, no expansion of subways or highways or commuter lines. Despite the fact that the city’s economy and population continue to grow, we are stuck with exactly the same system that residents had when Richard Nixon was president. It was never designed to accommodate 20 million people and the trade and economic activity they generate. The transportation system is like an overweight, middle-aged man trying to cram into the same pair of jeans he wore in college.

The black line is the total number of vehicles crossing New York City bridges each year from 1948 to 2016 (in millions). The orange line is crossings over the non-tolled bridges. The green line crossings over the tolled bridges. Even though volume has declined or flattened in the last decade, the bridges are operating over-capacity since they were built to accommodate a population and economy from half a century ago. Source: NYC Bridge Traffic Report, 2016

A 21st Century Plan for a 20th Century Network

The current transportation network is fixed and too small to operate in its current haphazard fashion. While the Metropolitan Transit Authority runs the subways, buses, and commuter rails, there is little or no coordination among the different modes of travel. Furthermore, there is no coordination of the tolls from the panoply of bridges and tunnels in the region. Hudson River crossings are controlled by the Port Authority who set their own tolls. East River and Harlem River crossing can either be free, or have low or expensive tolls depending on where you cross. The tolls do not float according to the number of users who want to use a particular bridge. If one car or 10,000 cars want to cross, everyone pays the same price (though there is often peak pricing during rush hour).

Because transportation systems are inherently regional, they need to be addressed at this level. The governors of New York, New Jersey, and Connecticut, along with local stakeholders need to formulate a regional strategy. This is unlikely to happen.[2]  So what can New York City do to improve its own system? While expanding mass transit and reducing car ridership should be a priority, sadly, this is not likely to happen any time soon. Given the network we have, I offer here a proposal that will allow for a much more efficient system that will improve people’s lives.

The Mega-Network Philosophy

The first element is to recognize that New York’s transportation system is just that: one large mega-system or network tied together by means of travel and their routes. Transportation needs to be viewed broadly as an entire interconnected system—roads, highways, subways, commuter trains—and modes of travel—foot, bicycle, car, and train. All modes in New York are linked, directly or indirectly, by the relative costs and benefits of using each mode for a given objective.  People frequently alternate between modes depending on the day, time, the nature of the journey, the availability of parking, how often the trains run, and so on. And yet, despite the overall flexibility that citizens have, the system is too easily gummed up. The reason is because the system is operated in a decentralized manner with each route-mode forced to fend for itself with little coordination and with little consideration of how they are tied together and impact each other.

Pricing

Once the entire system is viewed as a whole, the next step is then to use modern technology to operate the network as one large inter-connected system in order to allocate this finite resource in the most efficient manner as possible, in order to maximize the mobility of the people (and goods) moving about within it. The way to do this is to monitor all the elements simultaneously using big data computing methods to discover which route-modes are jammed up and which ones are operating smoothly (and how they may affect each other). Then the prices of using these different modes are changed throughout the day to improve efficiency.  The entire system should operate to limit or make more expensive those things that cause the most congestion, while simultaneously encouraging those parts of the system that are underutilized or are operating smoothly. This means that transportation prices should be set according to the supply and demand for that mode at any given time.

While this might seem like a backhanded way of saying that tolls and fares should be increased, that’s not completely true. If a certain bus route is underutilized at the same time that a certain subway line is overutilized, prices should rise for the subway and fall for the bus.  This means that some routes, say bus lines at a certain time of day, can be free or nearly free, while simultaneous with that, the rates of a parallel, but congested, route is relatively expensive.

Prices that Reflect Supply and Demand

This also means that all tunnels and bridges throughout the region need to have tolls and that these tolls should move up or down based on congestion levels. Instead of having a congestion pricing scheme for only lower Manhattan, all bridges and tunnels into Manhattan should have prices set based on how empty or full the city’s roads are at any given time. As more cars pour in, the fees for entering the island should start to spike.

The same applies to street parking. In Manhattan, 44% of the street area, on average, is used for on-street parking, and yet the prices people pay bear no relationship to supply or demand. On many streets, parking is free, and those streets with meters usually have low prices that are independent of how many people want to park on that street. The cost of parking needs to be more closely tied to both parking availability, and the impact of the cars on traffic congestion (not to mention CO2 emissions).

Information

In this day and age, the technology exists so that real-time pricing, and the costs and benefits of different means of travel can be instantly calculated and provided via website, mobile phone app, or on digital signs at bus and subway stops, and on road signs. Travelers would not only be charged based on the relative supply and demand, but just as importantly, they would have as much information as possible on what the costs and travel times will be, and they thus can make an informed decision.

During rush hour, people would choose the alternative that has the best benefit to cost ratio. Not in a rush? Take the cheaper but longer option. Have a meeting that you must attend? Take the quicker but more expensive option. Note that the different alternatives can have different cost-benefit ratios across days of the week and times of the day. There’s nothing inherent in the plan that would favor the wealthy over the poor, if each is free to choose the lowest-cost route. The point is to increase the efficiency of the movement of people by correctly pricing and allocating the different–but interconnected–parts of the network.

The Future

Data analysis can also reveal what the same trips or routes are likely to cost and their speeds in the near future, say 30 to 60 minutes ahead. If potential travelers know they could save both time and money by waiting an hour or so they might stay off the roads for a bit longer, thus freeing up the system for the current users.

Finally, since we are in the dawn of the age of self-driving cars, the pricing scheme offered here seems particularly well-suited for this coming transportation revolution. Autonomous vehicles can be directly tapped into the route pricing system and offer passengers different travel options based on the cost-speed trade-off. Implementing this plan now could make the transition to autonomous vehicles much smoother.

If you Can’t Make it Bigger, Make it Better

For too long, U.S. cities, like New York, have sat idly by while their transportation systems get older and more decrepit and continue to squeeze more and more people onto routes never designed for such volumes. Cities world over have expansion plans to match their growing populations. Yet for over half a century, New York has stubbornly refused to embrace its history of growing its network to match its growth. The gummed up and aging network reduces economic opportunities, wastes time and money, and stresses people out. If NIMBYism and political gridlock prevent us from having more transportation options, then we, at least, should utilize what we have more efficiently by correctly pricing the entire inter-connected transportation system. Think about that the next time you’re stuck in traffic or have to wait 30 minutes for your next (overcrowded) train.

 

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[1] Not to mention that the area just outside the pricing zoning is going to face some severe parking problems, as people try to game the system to avoid the fee.

[2] For example, one of the first acts of New Jersey Governor Chris Christie in 2010 was to cancel a project to build a new badly-needed rail tunnel to Manhattan. Who knows if it will ever be built, despite the fact that the current tunnels are a century old and in bad need of repair. As another example, New Jersey was not included in the new Manhattan congestion plan and residents there are not happy about it;politicians are threatening some form of commuting-based fees as retaliation.

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Credits

The New Amsterdam map on this page was sourced here, and the atlas image is from the 1891 Atlas of City of New York by GW Bromley & Co.

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