Building the Skyline

The Birth & Growth of Manhattan's Skyscrapers

by Jason Barr 4 Comments

Supertall: A Q&A Interview with Stefan Al

Jason M. Barr          August 8, 2022

Stefan Al is the author of Supertall: How the World’s Tallest Buildings Are Reshaping Our Cities and Our Lives (Norton, 2022). Al earned a Ph.D. in City and Regional Planning from the University of California, Berkeley. He is a practicing architect and has taught at Virginia Tech, Columbia University, Pratt Institute, the University of Hong Kong, and the University of Pennsylvania.

About Supertall

JB: Regarding your new book, Supertall, what is your main argument, and what are the key ideas that you want readers to come away with?

SA: By 2050, 2.5 billion more urbanites are projected to be living in cities. In addition to new housing, this urban drive will require a massive increase in city infrastructure, including roads, sidewalks, parks, and transit, as well as city sewage, water, and power lines. This is like building a new New York City every single month for the next thirty years. If we were to build sprawling Phoenixes, we would waste a lot more energy related to transportation and twenty times more environmental land. We don’t need to tread so hard across the earth if we can rise into the sky.

While high-rise living may not be for everyone, many people actually prefer being in central cities, close to offices, restaurants, and transportation hubs. High-rises can be built in these locations. The more viable urban centers we have, the less our cities have to sprawl.

Skyscraper Innovations

JB: What do you see as the key technological innovations that have allowed buildings to go taller and taller in the 21st century?

SA: With new manufacturing technology and the widespread availability of software simulations for wind and structural loads, it is becoming easier to make structures more material efficient. Structural members, like steel bars and concrete columns, used to be predominantly straight. Now, 3D printing can print materials in any shape and make custom molds for more elaborate concrete forms. Machine-aided manufacturing enables designers to bypass blueprints and communicate directly with machines, allowing more complex forms, such as curvilinear shapes optimized to reduce wind vortexes that the very tall buildings would create. With a wider palette of shapes at their disposal, engineers can also devise structures that more naturally and efficiently transfer horizontal forces to the ground. With less weight dedicated to structures, the building itself can become taller.

The Manhattan Skyline from Central Park.

Rise of Skyscraper Heights

JB: What is driving or propelling this movement toward taller and taller skyscrapers?

SA: Rapid urbanization has proved to be a major tailwind for skyscrapers, particularly in Asia. The twenty-first century is the first urban century. Never before has more than half of the world’s population lived in cities, attracted by the many and diverse opportunities of urban life. Some countries have even decided to base their national policy on the positive relationship between urbanization and economic growth. China has added roughly half a billion people to its cities. Not surprisingly, it has the world’s most skyscrapers.

JB: Relatedly, why do you think there has been a massive growth spurt in the number of skyscrapers (say buildings 150 meters or taller) around the world in the 21st century?

SA: What is surprising is that skyscrapers are even altering historic cities previously inhospitable to urban growth. For three centuries, the skyline of London was defined by St Paul’s Cathedral, with its silhouette of a dome and spires. Then, in the 2000s and 2010s, more unusual and often taller skyscrapers came in, crowding the skyline with ingenious shapes that earned them their nicknames, including the Gherkin, the Walkie-Talkie, and the Cheesegrater. In the case of London, new social preferences and the desire for economic growth helped loosen planning restrictions that new skyscrapers faced.

Skyscrapers and Cities

JB: How do you see this growth spurt as affecting cities (either for good or for bad)?

SA: Skyscrapers can have negative impacts on cities, such as increased traffic congestion, a lack of human scale, and restricted views. But with good planning, these problems can be minimized. Even more, when done well, cities can use high-rise development as an opportunity to improve the quality of life for residents. For instance, a thoughtful approach to high-rise development makes it possible to increase green areas, improve public transit, and enhance a city’s vibrancy. Singapore’s LUSH incentives, or “Landscaping for Urban Spaces and High-rises,” illustrate how policy can help promote a new generation of “green” skyscrapers, with tall buildings integrated with greenery. Hong Kong shows how to integrate subway stations in high-rise complexes, making it perhaps the world’s best example of Transit Oriented Development. And Vancouver’s “tower and townhouse” model — slim residential towers on a mixed-use podium often containing townhouses — illustrates how to minimize the impact of tall buildings on views while offering pedestrians a human-scale pedestrian experience.

Supertalls around the World. From left: Petronas Towers, Taipei 101, Burj Khalifa, Shanghai Tower.

Skyscraper Controversies

JB: Why do you think skyscrapers, especially very tall ones, have become so controversial over the last decade or so? And what might be some ways that cities can address these controversies?

SA: One of the reasons is a reaction to novelty. Very tall towers can be considered “too tall” in proportion to their surroundings. Even the Eiffel Tower, during construction in 1887, was despised by the city’s elite as “a dizzily ridiculous tower dominating Paris like a gigantic black smokestack.” The city seriously considered demolishing it and selling it as scrap metal. Gustav Eiffel himself erected an antenna and financed wireless telegraphy experiments to prove the hollow tower’s utility. With the French military recognizing the tower’s newfound usefulness, a Parisian committee with authority for the structure’s fate only reluctantly let it stand. “One would wish it were more beautiful,” the committee stated.

“Quid pro quo” is one of the lessons here. The Rockefeller Center offered New Yorkers more than a collection of tall buildings to look at but also a remarkable public plaza to enjoy. The Midtown East rezoning in Manhattan offers developers more buildable floor area if they contribute to the public good through transit improvements, such as in the case of the One Vanderbilt tower, which contributed a pedestrian plaza and transit hall.

The Future of the Skyscraper

JB: What is the future of the skyscraper?

SA: For environmental reasons alone, the way in which we design our tallest buildings has to change. Architects are bound by a kind of “Hippocratic Oath” for the public realm and environmental stewardship. Instead of just think­ing of about how to get taller-appearing structures, they should also aim to create buildings with smaller environmental footprints.

We need to recalibrate the race for the tallest building. We should aim for buildings to be the greenest, with the most landscaping, and the fewest carbon emissions. We need skyscrapers to generate the most renewable energy, produce the most food, and promote the healthiest environments for residents with the most biophilic benefits. We need tall buildings created with their entire life cycle in mind and to be disassembled in the end. We need the most resilient buildings able to withstand the ravages of climate change with not only practical design but also nods to aesthetics and beauty.

The good news is that many energy-efficient technologies and renewable-energy solutions are commercially available today and are already being applied. Renewable-energy supplies, cross-laminated timber, prefabricated modules, and super insulation are making a positive impact. Now we need a lot more. Despite advances in artificial intelligence and robotics, the built environment is still mostly a brick-and-mortar industry, capital-intensive, and locally fragmented. It tends to lag behind. The vast majority of buildings will become greener only if regulations both force and incentivize them to do so.

The Future of Cities

JB: You have a Ph.D. in City and Regional Planning and you also practice as an architect. Given your background, what do you see as the main challenges that cities face in the 21st century?

SA: Climate change, urban population growth, and housing unaffordability are already impacting city life. The challenge is how to build up our cities to house more people, how to build more sustainably and equitably, and how to build to absorb the shocks that will come from the increasing occurrence of extreme weather events such as flooding and heat waves.

Rotterdam, The Netherlands: The Dakpark (roofpark) and the shopping mall underneath were built on an obsolete railway yard.

Climate Change Adaptation

JB: You also have a book Adapting Cities to Sea Level Rise: Green and Gray Strategies. What are the key ideas in this book? Do you see cities employing the strategies in your book? If not, why not?

SA: Growing up in the Netherlands, a country that for centuries has fought the ocean, I have long admired its holistic solutions to flood protection. However, after several flooding events elsewhere, such as Hurricane Katrina in New Orleans, I witnessed the building of new sea walls that obstruct people’s views and access to the waterfront. Instead, in my book, I argue for flood protection approaches that are nature-based, integrated with the public realm, and sensitive to local conditions and the community. This way, flood protection can also benefit communities and environments in other ways.

For instance, building flood management infrastructure in urban areas can be particularly difficult in dense cities where land is scarce. Fortunately, recently several innovative solutions have addressed these problems by integrating flood solutions into the public realm and with urban uses. These include the multi-functional flood defenses in Rotterdam. The Dakpark, Dutch for “roof park,” is a dike that also includes a retail and parking structure and a park.

New York is considering several such strategies for the south of Manhattan.

♣

Continue reading other Q&A blog posts in the series here.

by Jason Barr 1 Comment

Skyscrapers and Global Connectivity: Which Causes Which?

Jason M. Barr      March 28, 2022

Today, metropolises like New York, Vancouver, and London, get a lot of flak for constructing ultra-luxury high-rise condos for international jet-setters. They seemingly have become “safe deposit boxes” for billionaires. Whether these structures are good or bad for cities is worthy of debate, but it does raise the question about skyscrapers more broadly and their role in urban growth. Why are these cities such magnets for real estate investment in the first place? Ultimately, I would argue, it’s because of the strength of their economies and their broad offerings to residents and visitors alike.

New York and Chicago’s historical skylines emerged “spontaneously” as their land values hit thresholds, incentivizing the construction of tall buildings, each of which is “merely a machine that makes the land pay.” London, which rejected skyscrapers for many decades, has recently been pulled into going tall and is now awash in Gherkins, Cheesegraters, Walkie Talkies, and Shards.

Field of Dreams

On the other hand, some cities, especially in Asia, have seemingly used skyscrapers as a so-called Field of Dreams strategy—if you build it, they will come. Arguably, this began in Kuala Lumpur, which constructed the world’s tall buildings, the Petronas Towers, in 1998, at 88 stories each (1483 ft, 452 m). The city used these record-breakers as a part of a three-prong strategy: Provide office space for Petronas, the state-owned oil company; redevelop an abandoned racetrack into a bustling neighborhood; and announce that Kuala Lumpur is “open for business.” Thus, the Petronas Towers was a direct attempt by Kuala Lumpur to join in, and benefit from, the global economy.

Dubai

Perhaps no other city has so fully embraced the skyscraper as an economic development strategy as that of Dubai. The conventional wisdom is that Dubai is an instant city and that its towers emerged overnight like mushrooms after a rainstorm. But this is not entirely true. Dubai, which came relatively late to the oil game, had invested in trade and its port since the 1950s.

Despite the perception that the Burj Khalifa is a pure “ego play,” Dubai has been building skyscrapers since the late 1970s. Its first skyscraper was the Dubai World Trade Center, modeled, in large part, after New York’s World Trade Center. Though quite diminutive compared to its New York cousin, it was the Middle East’s tallest building for many years.

In 2002, when the city allowed property ownership by non-nationals, it generated a flood of investment because of its global and urban status. The demand for luxury high-rise towers emerged from Dubai’s strong economic position and tourist and leisure opportunities.

China

Then there’s China. Since it initiated economic reforms in 1978, mainland China has embraced skyscrapers like no other country. Today, it has more tall buildings than any other nation and is home to nine of the world’s 20 tallest skyscrapers. And tall buildings do not just appear in big metropolises but in small and medium cities as well. The country’s building spree is due to its rapid urbanization and its unique governance structure, where local officials are charged with planning and building out cities in anticipation of future growth.

The development of the Pudong area in Shanghai is an example of using skyscrapers to enhance a city’s global position. By building some of the world’s tallest structures, including the Shanghai Tower (2015, 2073 ft, 632 m), the city aims to increase foreign direct investment (FDI), provide office space for international firms, and get that much closer to becoming the “Wall Street of the East.”

So, when we look at skylines around the world, we seemingly have two different models: “spontaneous eruption” versus “Field of Dreams.” Which is the actual nexus between skyscrapers and city importance? Here we focus on one key measure of urban importance: global connectivity—the degree to which each city is connected to other cities worldwide. Does global connectivity drive skyscraper construction, or does skyscraper construction drive global connectivity? And can a city leapfrog its way to the top by building a supertall skyscraper?

Skyscrapers and FDI: These four building are examples of cities using supertall skyscrapers to enhance their global positions. From Left to Right: Petronas Towers (1998), Taipei 101 (2004), Burj Khalifa (2010), Shanghai Tower (2015).

Global Cities

We can look at the Global Network Connectivity (GNC) index from the Global and World Cities (GaWC) Network to measure global connectivity. The index, which measures urban interconnectedness, was first created in 1998 and has been updated regularly.

Thus, the data measures the “centrality” or connectedness of several hundred cities to get a sense of the degree to which they linked to each other or not (see here for more details). The basic idea is to measure the importance of a city’s office-based sector by looking at the number of international business services and financial offices. The top-tier global cities will have local headquarters for international firms, while lower-tier cities will have smaller representations of foreign firms. By counting the size and importance of these business, the index measures how economically connected each city is to the rest of the world.

One key finding is that London is the global champion and has held the top position since the index was created. In 2000, the top five were London, New York, Paris, Tokyo, and Singapore. In 2020, the top five were London, New York, Hong Kong, Singapore, and Shanghai.

A Look at the Data

The first question to investigate: Are skyscraper construction and global connectivity linked? If there is little relationship between the two, it would suggest that skyscraper construction is not directly related to the economic fundamentals of a city or rather is only loosely connected. Then we might need to look for other reasons for their construction. To investigate this question, I have obtained two types of data. One is on skyscraper construction for cities worldwide, and the other is city scores from the GNC Index. (Information about data sources and preparation is here.)

Do globally connected cities tend to have more or taller skyscrapers than their less global counterparts? The answer is a definite “yes.” We see a strong positive relationship between the height of a city’s tallest building and its GNC score (see figures below). While the correlation is not perfect (ρ=0.53), it does provide evidence that, on average, more connected cities have taller buildings. Going from a city with a median GNC score to one in the top 75th percentile means, on average, a jump in its tallest building by about 37 meters (about ten floors).

What about the number of skyscrapers, where here a “skyscraper” is a building that is 90 meters or taller (295 feet, about 30 floors)? Again, we see a similar pattern: on average, around the world, skyscraper construction and global connectivity are strongly related (ρ=0.49). The data show that going from the median GNC score to the 75th percentile (about 10 GNC points) is associated, on average, with an increase of about 80% more skyscrapers.

Outliers

The graph, however, shows some interesting outliers. London, the most globally connected city, is way below the trend line for skyscraper growth and has somehow managed to get to its number one position without having a history of tall buildings like New York or Hong Kong. Two other cities stand out as interesting: Dublin and Washington DC.

However, before discussing outliers, they should be considered after “detrending”; that is, how far away from the pack they are after comparing what one expects given their global connectivity scores (see the figures below). Here we see that Dublin and Washington are, indeed, the furthest below the trend line. That is to say, the heights of their tallest building are much shorter than what would be expected. This makes sense for Washington DC since it has a height cap, where not building can be taller than the Capitol Building. Dublin refuses all tall buildings and limits its building heights to 60 meters (197 feet) in most of the city.

London

How can we explain London’s high GNC score but low skyscraper score? This question requires a fuller treatment, but the answer, I would suggest, lies in its long history regarding capitalism and the Industrial Revolution. London began its global ascent as the UK simultaneously pursued imperialization and industrialization. These two created positive feedback loops that gave London a central position in the global economy, even before skyscrapers were technologically feasible. As a result, it seems to have developed an ability to run its affairs and accommodate global investment without going tall. In addition, the City of London is less land constrained than other central business districts like Manhattan or Central in Hong Kong. Evidently, it was able to expand outward in place of building upward.

Dubai

Looking at the outside of the trend line, we see that Dubai’s “outlierness” is not as extreme as it might seem. Even though it currently holds the record for the world’s tallest building, its rank in the GNC Index is relatively high; in 2020, it was at #7 (out of 707 cities). In fact, Shenzhen and St. Petersburg have even taller buildings than their GNC index values would suggest. And the city with the highest deviation from the trend is Busan, in South Korea, which, though not highly globalized, is still an important city in that country.

Skyscraper Construction and Global Connectivity. Top Left: Scatter plot of ln(Height of Tallest Building) versus its GNC Score. Top Right: Detrended scatter plot of ln(Height) versus GNC score. Bottom Left: Scatter plot of ln(1+#Skyscrapers) versus GNC score. Bottom Right: Detrended scatter plot of  Ln(1+#Skyscrapers) versus GNC score. Sources: here.

Leapfrogging?

Returning the “Field of Dreams” theory, the question is whether constructing the world’s tallest building can leapfrog a city into global prominence. Cities jump into the world record game, in large part, to advertise and demonstrate they are open to FDI and tourism. Despite what seems an unyielding quest to have the world’s tallest building, since 1998, the record has only been beaten three times: the Petronas Towers in 1998, the Taipei 101 in 2004, and Burj Khalifa in Dubai in 2010.

The data in the GNC data set that I have goes back to 2010, making it a bit difficult to draw conclusions about the first two and whether they saw dramatic leaps in their rankings just after opening. Nonetheless, we can look at the changes in the GNC rankings since 2010 to see if there are dramatic changes. In this example, I looked at five cities. The first three are Kuala Lumpur, Dubai, and Taipei, which each have or had the world’s tallest buildings. I then added Shanghai, with East Asia’s tallest skyscraper, the Shanghai Tower (2015), and St. Petersburg, with Europe’s tallest skyscraper, the Lakhta Center (2019, 1516 ft, 462 meters).

This exercise shows that, on average, these five cities moved up in the global cities rankings between 2010 and 2020, but there were no major jumps, and each remained roughly in the same tier that it had been before. It suggests that cities can use tall buildings to make relative improvements, but in no case do any of them see massive leapfrogging.

Supertalls and GaWC/GNC Rankings. This table shows the global connectivity rankings for five cities that each have a supertall building. There is little evidence for “leapfrogging.” Sources: here.

Another statistical test is to see if a broader set of cities with very skyscrapers have witnessed dramatic leaps in their global rankings. To this end, I compared average changes in GNC scores between 2010 and 2020 for cities with the tallest building in their respective country in 2010 versus those that don’t. The statistical results suggest that countries with the tallest buildings improved global connectivity scores faster, on average by about one GNC point (results here). At a minimum, it indicates that leapfrogging is not supported, and that more subtle mechanisms are at work. A further test for GNC growth in the last three years for buildings with and without the country’s tallest shows that the non-tall group outperformed the tall group, suggesting that other factors besides tall buildings are at work.

Causality?

We still need to drill down to the causal link, however. Just because there is a correlation between global connectivity and skyscraper construction does not mean there is a causal relationship. We don’t know if, on average, global connectivity leads to more skyscrapers, more skyscrapers lead to greater global connectivity, or if the relationship is just a coincidence and driven by their connection to some other variable, such as a city’s gross domestic product.

To this end, I dug deeper into the data to see if there was evidence for a causal connection. Here, I performed a series of statistical (regression) tests to see if the two might be linked, controlling for other variables that are likely to drive each of these variables. (The data sources and regression results can be found here.)

Does Higher GNC Lead to More or Taller Skyscrapers?

In my statistical analysis, I first looked at how the height of a city’s tallest building was impacted by its global connectivity score and other control variables, including a city’s population and its gross domestic product (and other variables). The takeaway: I found that an increase in GNC score by 15 points (one standard deviation) increases the height of the tallest building by about 7%, on average. Not a large number, but, still meaningful.

A similar result was found for the number of skyscrapers. On average, after controlling for a host of other variables, including each city’s population or urban GDP, there remained a positive and statistically significant relation between the GNC score and the number of skyscrapers a city had. On average, a 15-point rise in GNC score was associated with 75% more skyscrapers, a substantial impact.

Does Skyscraper Construction Lead to More Global Connectivity?

Flipping the question: Does skyscraper construction lead to more global connectivity? Again, the answer is “yes.” Controlling for GDB and other city variables, a 10% increase in skyscraper counts, on average, increase the GNC index score by about half a point. Seemingly not a large number, but one that does suggest a connection. While estimates of the impact of a city’s tallest building vary across different regressions, the results suggest that cities with taller buildings also have higher connectivity scores.

Linkages

Based on the results of the statistical tests, what can we conclude? First, the Field of Dreams theory is not supported. Instead, emerging cities with a global presence can use skyscrapers to improve their relative global position. But they cannot turn a small, isolated village into an urban juggernaut overnight. Instead, supertalls are used to aid and abet the quest for global status, but this cannot be done without the other economic and institutional factors.

While the degree of “spontaneous eruption” across cities requires more research, we can see a positive feedback loop between skyscraper growth and economic interconnectedness. As cities become desirable places to live in work, they need to have the kinds of buildings that facilitate these activities. Tall buildings play a role in allowing providing spaces for this activity. And they also help advertise cities and build confidence in the place.

Thus the results suggest a bi-directional relationship between economic growth and the nature of its building stock. If city leaders want to increase their global competitiveness, they must aim to create policies that attract FDI and high-skilled workers and allow their real estate stocks to expand accordingly. More investment leads to taller buildings, which generates more investment, and so on.

While skyscraper construction has its share of controversy and doubters, the evidence strongly suggests that cities are better off when they allow for needed tall buildings.

by Jason Barr 5 Comments

Why Doesn’t New York Construct the World’s Tallest Building Anymore?

Jason M. Barr      December 23, 2020

The Space Race

At the end of the Roaring Twenties, New York City witnessed a three-way race for the world’s tallest building. First was the Bank of Manhattan Building, at 40 Wall Street, which topped out at 927 feet (283 meters, 70 stories) in November 1929 and officially opened in May 1930. Next came the Chrysler Building (1,046 feet 319 meters, 77 stories), whose final height was riveted into place concurrently with the Bank of Manhattan but was not formally revealed until its rival was finished.

Finally was the granddaddy of them all, the Empire State Building. When its construction was announced in August 1929, it was planned to be 1,000 feet (305 meters, 80 stories) tall. However, after the Chrysler Building was completed in December of that year, five more floors and a 185-foot (56-meter) mooring mast were added. The building topped out in March 1931 at 1,250 feet (381 meters, 102 stories) and officially opened on May 1, 1931, with President Hoover ceremonially illuminating the lobby from Washington D.C.

Out of Gotham

Four decades later, in December 1970, when the north tower of the Twin Towers topped out at 1,368 feet (417 meters, 94 stories), the record was broken once again (both towers officially opened on April 4, 1973). The world’s tallest building then moved to Chicago when the Sears (Willis) Tower topped out at 1,450 feet (442 meters, 110 floors) in May 1973. After that to Kuala Lumpur with the Petronas Towers (1,230 feet, 452 meters, 88 stories) in 1998. Then the Taipei 101 in 2004 (1671 feet, 509 meters, 101 stories). And most recently, in Dubai in 2010, with the Burj Khalifa (2,217 feet, 828 meters, 163 floors).

It is clear that New York has bowed out of the record-breaking game—the very game that it initiated in the 19th century. Between 1875 and 1931, New York City developers beat each other for the world’s tallest skyscraper ten times. What drove the city to build so many record-breakers in the first place, and why did it stop competing?

The Bricks of Ego?

If you ask a random person on the street why New York built so many record-breakers, the typical answer is bound to be “ego.” Ever since societies settled down, titans have built monumental structures. The pharaohs showed off with pyramids, kings with grand palaces, and religions with houses of worship. It thus follows that mega-wealthy business tycoons would show off their wealth by building monuments to themselves or their companies. But in truth, this is a gross oversimplification. Certainly, today’s New York builders have just as large egos as the old days, and if ego were the main driver, they would still be competitive in the height race.

But the fundamental reason that New York kept outdoing itself was that the underlying economics of going tall was so favorable. The tallest of the tall represented the “peak” of the height distribution. Skyscrapers were built to accommodate the city’s rapid growth. Land values were rising while engineering and construction technology were improving—these two factors, more than anything, explain the height races.

A Vision of the Future? A potential design for a 1.1 kilometer tower in Midtown Manhattan, if New York should get back into building the world’s tallest skyscraper. Rendering by Brenna Fransen and Jihoon Kim.

The Bricks of Business

If the developer was a national corporation, it would build tall to house its employees and to have an icon of its success. However, most of these companies did not use all the floors; many were rented out to smaller firms. In this way, the corporation received a return on its investment in addition to headquarters.

For the speculative developer, the goal was to fill the building with as many companies as possible; that was relatively easy in the central business districts, which were bubbling with firms eager to rent in the newest, most convenient accommodations. Without the nickels of the thousands of small white-collar businesses, there would have been no space race.

For some builders, however, merely being tall was not enough. Having the tallest was important—either for ego, advertisement, or some combination of both. This was accomplished usually in one of two ways (or both). The first was to increase the profit-maximizing height by erecting a narrow tower on top. While adding the tower was not cheap, it tended to rent for higher rates given the small, sun-filled spaces with amazing views.

Vanity Height

The other strategy was to add a decorative element that had an architectural appeal but was not otherwise occupiable (the Council on Tall Buildings and Urban Habitat calls this Vanity Height). The most common was a spire, which could also be used to house machinery and equipment, thus rendering it useful, if not income producing.

The critical point here is that the favorable economics would get a building to a certain profit-maximizing height; with some extra cash, the developer could extend it into the record-breaking zone and still generate a profit. And profitable they were—that is why there were so many of them.

A Brief History of the Record-breakers

Before the Great Depression, there were three generations of record-breakers. Generation I encompassed the last quarter of the 19th century, with a series of buildings that were incrementally taller than what was being built at the time. To break the height barrier, they each added domes or small towers. All of them were built in Lower Manhattan along Broadway or Newspaper Row, by City Hall.

This generation includes the Tribune Building (1875, 260 feet, 79 meters, 9 or 10 stories), the World (Pulitzer) Building (1890, 308 feet, 94 meters, 18 stories), the Manhattan Life Insurance Building (1892, 348 feet, 106 meters, 18 stories), and the Park Row Building (1899, 391 feet, 119 meters, 30 stories)

The Tribune and World Buildings were constructed by newspaper publishers to house their operations and to project the power of their newspapers and American journalism in general. The Manhattan Life Building was constructed as a headquarters. The company was also participating in an insurance company height race, started by the Equitable Life Assurance Society and the New York Life Insurance Company, whose buildings were both completed in 1870. The Park Row Building was a speculative venture. It was initiated by prominent New York lawyer and politician, William Mills Ivins, but subsequently led by financier August Belmont. The building housed the offices of his Interborough Rapid Transit company, which built the city’s first subway line.

Left to Right: World (Pulitzer) Building (1890), Tribune Building (1875), Manhattan Life Building (1894), Park Row Building (1899).

The Next Generation

Generation II was the twentieth century before World War I. This crop included the Singer Building (1908, 674 feet, 205 meters, 41 stories), the Metropolitan Life Tower (1909, 700 feet, 210 meters, 50 stories), and the Woolworth Building (1913, 792 feet, 241 meters, 55 stories). These represented the flowering of all-steel skeletal frames. They were each built by large corporations seeking to house their businesses and produce an icon for their companies.

The Singer Building was built for the Singer Sewing Machine Company and was essentially a 14-story office building with a super-thin, goosenecked 27-story tower plunked down on its mansard roof. The MetLife Building was a pure tower modeled after the St. Mark’s Campanile in Venice. The Woolworth Building, built by retail store magnate, F. W. Woolworth, was a 30-story office building with a 25-story tower.

Generation III

Generation III was the three Deco Giants: The Bank of Manhattan, the Chrysler, and the Empire State Buildings. They were each built after the implementation of the city’s 1916 zoning codes, which mandated that buildings be set back from the street as they rose higher, thus promoting the wedding cake architectural style. A builder could erect a tower as high as he wanted if the footprint were less than 25% of the lot. Given the large lots of these three projects, the tower portions were economically viable.

Left to Right: Singer Tower (1908), MetLife Tower (1909), Woolworth Building (1913).

The Bank of Manhattan building, at 40 Wall Street, was conceived as a speculative project by financier George Ohrstrom. He convinced the Bank of Manhattan to rent 100,000 square feet (9,290 m2) for its headquarters. In contrast, Walter Chrysler built the Chrysler Building on his own account. However, in 1928, when he initiated the project, the Chrysler Motor Corp. was only three years old; in this sense, the line between Chrysler, the man, and Chrysler, the company, was very thin. Finally, the Empire State Building was erected as a speculative venture by former New York State Governor Al Smith and financier and former General Motors executive John J. Raskob. They initiated the project in the late summer of 1929 as Manhattan rents continued to skyrocket.

The Twin Towers

After the completion of these “three amigos,” 15 years of depression and war followed. When New York returned to the business of business, the economics of recording-breaking buildings had changed. Industrial cities like Gotham saw their employment bases shrink due to the rise of sunbelt cities and a drop in the quality of life. New York was still skyscraper central. However, construction cost inflation and flat office rents, combined with a more restrictive zoning regime (initiated in 1961), meant that the economics of private-sector record-breakers no longer worked.

The World Trade Center was a government project, built by the Port Authority of New York and New Jersey (PANYNJ) with the aid of New York State and New York City. It was conceived during the 1960s when governments around the U.S. were promoting slum clearance and urban renewal projects. The World Trade Center, with 10 million square feet of office space over 16 acres, was viewed as a means to improve the fortunes of lower Manhattan, which had fallen on hard times. The Twin Towers would never have been built by private developers; however, they proved profitable over time.

Left to Right: Bank of Manhattan Building (1930), Chrysler Building (1930), Empire State Building (1931).

An Economic Analysis of the Record-breakers

A rational developer goes tall when the expectation is that the high cost will be rewarded with a large income. Developers typically take the current rents as the starting point. As the potential income relative to costs rises, it motivates developers to add extra height. To investigate the degree to which the record-breakers in New York were tied to the economic fundamentals and not loosely moored to them because of raging egos, I turned to the historical data.

To compare apples to apples and keep the analysis relatively simple, we can look at the average expected annual rent per square foot for the building at the time of opening relative to the per-square-foot costs to erect each building (including land costs). We can call this the Benefit-to-Cost Ratio.  (Details on data, sources, and analysis are here.) If the Benefit-to-Cost Ratio for these buildings are high, it suggests a strong economic basis for these buildings; if not, it suggests emotions dominate the decision-making process.

Based on a review of this data, the conclusion is that before World War II, the record-breaking buildings were economically justified. In fact, the average ratio of rents to construction costs was nearly 23% (with none lower than 18%). This translated into an average estimated return on investment (ROI) of 8.0%, which is quite respectable. This is not to say that every building went on to earn very high profits or that the developers’ expectations were fully realized; but rather, it is to say that these projects all had a strong economic logic and that ego was second to economics.

This finding also includes the Empire State Building, which was green-lighted in the summer of 1929 and whose construction ran through 1930, when the New York real estate market was still chugging along. At the end of 1930, when the market took a deep dive, the structure was almost finished and had rental contracts on its books. Nearly every building in New York suffered tremendously in 1931. The only reason the Empire State Building was ridiculed so resoundingly was because of its visibility.

The Profits of Going Tall. Each skyscraper in the table broke the record for the world’s tallest skyscraper. For each one, total costs are construction and land costs combined. The income projections are based on the average square-foot rents that developers believed they could receive when their buildings opened. Note that data were not obtained for the Tribune Building (1875) and the MetLife Tower (1909). The Benefit-to-Cost Ratio is the average expected rent per square foot divided by the total cost per square foot of gross building area. ROI is the estimated return on investment, which is the first year’s estimated net operating income divided by the total cost of the structure (and does not include financing costs). For more details on sources and calculations see here.

Office Towers Today

How do the economics of office towers for Manhattan compare today? To answer this, I collected information on New York’s newest office skyscraper—One Vanderbilt (1,401 feet, 427 meters, 65 stories)—completed this year. While it is the city’s fourth-tallest building (and second-tallest office building), it is quite stubby when compared to the 828-meter Burj Khalifa. Around the globe, it is the 26th tallest skyscraper.

The total project cost for land and building (and upgrades to local infrastructure) came in around $3.3 billion. Using the expected figure of average office rents of $178 per square foot (ignoring the COVID-19 pandemic) gives a Benefit-to-Cost Ratio of 9.4% (and an estimated ROI of 4%), half of the average from the pre-World War II period. In other words, going super-supertall today in the office sector does not appear all that profitable.

What Will it Take for New York to Build the World’s Tallest Building?

What kind of economics would incentivize the private sector to build the next world’s tallest tower in New York City? For the sake of comparison, let’s say that the building will be a centrally located office tower constructed within current zoning allowances. Using One Vanderbilt’s construction costs as a benchmark, let’s assume that the project can be built for $2,000 per square foot, including both land and construction costs.

Further, let’s assume that the Benefit-to-Cost Ratio has to be at least 20% to make a record-breaking building work, just like in the old days. Thist would mean that office rents would have to be more than double what was estimated for One Vanderbilt, given the costs. Rents would have to average around $400 per square for a 21st-century version of the Empire State or Woolworth Building to pay. Something unlikely to happen any time soon, if ever.

The Bricks of Ambition

Merely talking about New York constructing the next world’s tallest building, is of course, controversial. Tall buildings had their detractors a century ago, and NIMBYists do what they can to stop them today. But it’s important to understand that in the long sweep of New York’s history, economic forces have driven the rise and growth of its skyline. This is not to say that every single project had a rock-solid economic foundation or that its impacts were purely benign, but it is to say that New York became the world’s greatest metropolis because it was able to build up to accommodate the growth of its commerce and population.

Someday, if the economics should favor a motivated developer to push her building one kilometer or higher into the sky, I say we should celebrate it. New York was, is, and will always be, a city of strivers. The skyline was built from the bricks of ambition, and without it, New York would not be New York.

 

Thanks to Maria Thompson for editorial assistance.

by Jason Barr Leave a Comment

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.

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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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