Building the Skyline

The Birth & Growth of Manhattan's Skyscrapers

by Jason Barr 2 Comments

Urban Umami or Urban Appakukan?: The Psychology of Streetscapes

Jason M. Barr       October 22, 2020

Pleasure or Pain?

One of the biggest complaints about new construction is that it is harmful to the quality of urban life. For example, architecture writer, Justin Davidson, says that “shiny towers are invasive species and they are choking our cities and killing off public space.” Other critics charge that new, taller buildings don’t mesh well with the older urban environment. High-rises, they argue, destroy the “human scale” and make cities less satisfying. Supporters of this view see neighborhoods like Manhattan’s low-rise, but dense, Greenwich as the ideal. In some respects, I don’t disagree. Strolling through Greenwich Village, one feels a kind of urban umami, an almost unquantifiable sense of pleasure (or “deliciousness”). The old brick townhouses on narrow tree-lined streets offer the pedestrian a kind of nostalgic warmth or calmness.

The belief that newer buildings generate negative emotions is likely driving our current land-use policies. Suppose you feel that taller buildings are inherently ugly, stultifying, or emotionally oppressive. The natural response is to demand that city officials limit what can be built. This is exactly what big cities, like New York and San Francisco, have done—they have created a web of zoning and building restrictions to slow down new construction.

Urban Growth versus Real Estate Restrictions

And yet, the very thing that allowed these cities to become successful and house millions of people, and the companies they work for, was to grow their real estate stocks. If economic growth causes a city’s population and business activity to swell, but is unable, through zoning restrictions, landmarking, or general NIMBYism, to expand to accommodate them, residents are simply cutting their nose to spite their face.

Economic growth without real estate growth leads directly to rising housing prices, greater income inequality, anger and frustration from gentrification, and lower future job opportunities. It turns the city into a kind of game of musical chairs—where one person wins only when someone else loses. A substantial body of research demonstrates that new construction lowers housing prices and allows a city to maintain its growth trajectory of growth and vibrancy.

And so, we have a 21st-century paradox—urban growth drives people to limit urban growth. How can we resolve this paradox? More specifically, how can we make inroads on the issue that people think that new buildings are ugly and emotionally oppressive? How can new structures bring joy and utility to both the occupants and city dweller alike?

Umami or Appakukan? Which building causes pleasure and which causes pain? Left: Small building behind St. Helen’s Bishopsgate Church. Right: Leaden Hall Building (48 stories). Both in London. The buildings were used in the study by Mazumder et. al. (2020).

Measuring Oppression

Over the last few years, social scientists have tried to understand how building form can influence our emotional sense of peace or unease.  This research offers some promising leads. A strand in this vein was begun by researchers in Japan in the 1970s, but the work has been revived using modern social scientific and computing methods. The original researchers used the Japanese word, 圧迫感 (appakukan), which translates into “to feel oppression” or “to feel overwhelmed.” And they wanted to know what elements of streetscapes generated appakukan.

Simulated Streetscapes

A 2012 study, “Measuring Oppressiveness of Streetscapes,” tries to recreate, in a laboratory setting, the perspectives of pedestrians viewing a high-rise from across the street (although, in the lab, they are sitting in a chair). The authors began by taking a picture with a fisheye lens of a building on Hongo Street, in a dense residential neighborhood in central Tokyo. The choice of camera lens is an attempt to simulate the actual visual perception of the human eye. Next, they render the image into a computer-generated one. This allows them to alter, add, or remove features one a time.

Then they “covered” each image with regularly spaced dots (like regularly spaced points along “latitude” and “longitude” lines). They then counted the number of dots that fall on the building, on the sky, and other features, such as trees. In this way, they have very specific measures of what fraction of the fisheye/human eye view is taken up by different elements that a typical pedestrian might see.

Next, they brought subjects (mostly students of architecture and urban planning) into the laboratory and had them view versions of the simulated imagines. Some had taller buildings; others had more open space; others had substantial tree coverage, and so on. Each of the subjects was exposed to 48 images and asked to fill out five questions per image. The survey asked subjects to rate on a scale of 1 to 7 their perceptions of oppression, openness, and pleasantness.

In short, they found a strong positive correlation between the response to the oppression question and the height of the buildings. But they found that this oppressiveness response was moderated to some degree by adding tree coverage on the street front. Finally, from their results on the relationship between the oppression question response and the quantitative measures of building and tree density, they create a formula, to measure net streetscape oppression. In theory, this formula can then be applied to any building or architectural rending to assess its likely impacts on people’s emotions. (A follow-up study for buildings Iran further seeks to refine this formula.)

Out on the Street

In 2014, the authors published another study, “Investigating Oppressiveness and Spaciousness in Relation to Building, Trees, Sky and Ground Surface: A Study in Tokyo,” using the same methodology. But in this case, their focus was on having subjects (again architecture and urban planning students) observe actual buildings on the street and fill out a survey about how the views felt. They then looked at the responses versus their measure of building, tree, and sky coverage, which, again, were measured from fisheye photographs of the respective views. Here they find that after controlling for the tree, sky, and ground area coverage, the building coverage variable was statistically insignificant regarding the oppression question. This suggests that people’s perception of unease from building form is moderated by the context in which it appears.

In a similar style paper, “Exposure to High-Rise Buildings Negatively Influences Affect: Evidence from Real World and 360-degree Video,” another group of researchers had two sets of study participants looking at buildings in London. One group was sent to directly view the Leadenhall Building (48 floors, 2014) and then take a quick walk to view an older three story-brick building at the rear of St. Helen’s Bishopsgate Church. Each participant viewed the structures for five minutes and answered questions on oppression, openness, and pleasantness. Another test group in Canada viewed the same scenes with special 360-degree headgear and answered the same set of questions. In addition, all the study participants were given a wearable device to measure heart rates, body temperatures, and other physical measures of emotional responses

They found that while participants, on average, felt the shorter building was more pleasing, there was no statistical difference for the specific question about oppression. The shorter building was preferred, on average, in large part due to the openness of the scene. However, the wearable devices did not indicate any physical response difference between the two views, which suggests further work is needed in exploring emotional perceptions versus actual emotional responses. Interestingly, they found very similar results among the London and Canadian subjects, indicate that either in-person or simulated methods are useful.

Upper Left: View from Hongo Street, Tokyo. Upper Right: Computer-generated version of Hongo Street Building. Lower Right: Schematic of Laboratory Study of Impact of Building Form on Emotions. Lower Left: Actual Laboratory Subject. Source: Asgarzadeh et al. (2012).

The Pros and Cons of this Work

The type of research has both pros and cons, however.  On the plus side, it offers a way to conduct highly controlled experiments to better understand people’s emotional responses to different streetscapes.  The environment can be changed one item at a time to better isolate cause and effect from what are usually busy scenes. Furthermore, the work can tie individual responses to a quantification of these feelings to generate usable formulas. In principle, they can help guide architects, planners, and developers on how their projects may be perceived by pedestrians.

There are, however, reasons to be cautious when interpreting the results. First is that most of this research was conducted with students majoring in architecture or urban planning. This is hardly a representative sample of society, both because they are younger, and because there might be something about either their training or views about cities that make them respond to questions in ways different from the population at large.  Second is the study design. In the name of controlling the precision of the experiments, they all involve a degree of unnaturalness. Participants are asked to sit or stand still for five minutes while staring at buildings or images of buildings and reflecting on their emotions. This is not the typical experience of urban pedestrians.

Furthermore, given that the subjects are viewing only one or two specific buildings at a time, it’s hard to know if the responses are due to the building’s general features or to the specific structures, which might be seen as particularly ugly or extreme in and of themselves. Additionally, if respondents suspect, even unconsciously, that the investigators want certain responses, they may try to answer those questions in that way. This is not to say that researchers give away information about their beliefs, but the nature of questioning can subtly influence participant’s responses, especially if a question is asking you how oppressed you feel when viewing a tall building.

Lastly, each study has several different survey questions, and it can be difficult from these to make sense of what they all mean when taken together. Some studies find taller buildings generate high oppression ratings, while others do not; while yet others find the oppression rating is correlated with building height, but the finding goes away after controlling for other factors.[1]  In short, more work needs to be done to see if this area can produce some generalizable results that can produce precise and insightful predictions.

Computer Vision in Economics

This discussion also suggests the need to study the issue in other ways beyond psychological surveys. Another parallel approach is within economics. Here, economists have used computer programming/machine learning methods to evaluate the “looks” of buildings. Computer software and statistical methods applied to Google Street View images can categorize the different image  features in a method known as Computer Vision. The quantification of these features can then be paired with measures of well-being.

Valuing Curb Appeal

In a recent study, “Valuing Curb Appeal,” the authors determine a numerical measure of a house’s “curb appeal” for nearly 90,000 free-standing homes in Denver, Colorado. First, they generate a curb appeal rubric, which is a checklist of elements about a house’s exterior and lot, as viewed from the middle of the street. Next, they download images of the property from Google Street View.

After that, they assign curb appeal scores (from 1 to 4) for a small sample of images based on the rubric’s underlying results. For example, Class 1 houses (the lowest curb appeal) have broken concrete, overgrown or no lawns, etc. Class 4 properties, on the other hand, have extensive landscaping and fully manicured lawns. Next, they “train” the computer algorithm to recognize the features of the property and assign them curb appeal scores. Then they run the algorithm on all of the properties in their data set to get scores for each one.

Lastly, they perform the statistical (regression) analysis to see how the curb appeal score correlates with housing prices. On average, they find that an improvement from one category to the next, say going from a 3 rating to a 4, is associated with a 2% bump up in prices, holding property size and other housing and neighborhood features constant. In short, they come up with a way to measure the value people place on having a house that is more pleasing to look at.

Measuring Curb Appeal: Examples of Street View Images used for Categorizing Curb Appeal. Top Row: Properties with Curb Appeal Score of 1 (lowest). Bottom Row: Curb Appeal Scores of 4 (highest). Source: Johnson et al. (2020).

Curb Appeal in Boston

A similar study from 2018, “Computer Vision and Real Estate: Do Looks Matter and Do Incentives Determine Looks,” uses Computer Vision to quantify the external features of over 16,000 properties in Boston. The authors have the Computer Vision software recognize some 1024 features (such as colors and shapes), and then they reduce this list (using principal components) to 100 elements.  Unlike the paper above, these authors only look at how these features as a whole correlate with housing prices and do not attempt to investigate the specific nature of them individually.

The key result of their work is that Computer Vision categories can help better predict sales prices than without them, and it strongly suggests that appearance improves home buyers’ well-being. Future work can expand the analysis to identify the specific coded features that are preferred or disliked, which might include housing color, housing shapes, and the degree of open space.[2]

The Pros and Cons of this Work

Computer Vision and machine learning software offer great potential in helping us to understand what residents find soothing and what they find distressing. Like the psychological studies above, these techniques allow for matching building elements to measures of well-being, and thus, in principle, one can use Computer Vision methods to determine a formula or rule that can guide architects, developers, and planners about what kinds of building and lot features will enhance the “umami” of the neighborhood.

The two research papers discussed here specifically tie their measures of “curb appeal” to housing prices. Prices are a good measure to use because housing sales data are widely available, and they are a convenient way to ascertain what people value. However, using prices to assess psychological well-being or distress can be problematic because houses are bought for multiple reasons, including as investment, and for shelter as well as psychological fulfillment. Thus, the curb appeal measure may be picking up the value of one or more of these elements.

Regarding investments, people buy houses with the expectation that they will rise in price. The price of a home today is, in large, part determined by its expected future value down the road. Curb appeal may indicate stronger investment reward potential, regardless of whether the new owners like those features or not. If lawn gnomes, for example, are popular because people think they bring good luck to the house and its occupants (and hence make it more valuable), despite them being ugly, a buyer might pay more for a house with lawn gnomes

Second, homes are shelter. Curb appeal might mean “good bones” and lower maintenance. Thus, home purchasers might use curb appeal as an indicator of the home’s quality and assume that it will not need major repairs any time soon. And finally, curb appeal or lack thereof may indicate the degree of emotional oppression or pleasure. The point is that price effects from curb appeal may not be directly used to infer streetscape satisfaction. In this regard, more work is needed to tie Computer Vision to psychological studies by mapping Street View images to other measures of emotional satisfaction.

The Policy Implications

The key reason to discuss these research papers is that if we can determine formulas or guidelines for streetscape “umami” versus appakukan and that the real estate community employ them, it might give residents more confidence in new construction. People want to feel that the changes they see around them are helping to contribute to their life-satisfaction or, at least, are not making things worse. Imagine a kind Rip Van Winkle scenario. A person purchases a home and falls asleep for twenty years, but when she awakens, the neighborhood is immeasurably improved in aesthetics and vibrancy. This is what we want to shoot for. And perhaps these new social science research methods can pave the way.

But it is vital that these formulas or rules, once discovered, are be implemented by government fiat. Housing markets need the flexibility to adjust neighborhood housing stocks based on the demand. Rules today may no longer apply tomorrow or may be found to have unintended consequences that need to be rectified. Any policy that uses this research should use incentives in some way so that developers consider both the costs and benefits of urban umami formulas.

For example, if people are not burdened by tall buildings that have a significant degree of open space up high, then setback rules should make buildings gets narrower as they get taller. Since people enjoy trees on the streets, new projects that provide (native) street trees should get floor area bonuses, for example.

And finally, any formulas or findings from this research needs to be strongly validated and tested in real-world settings before being widely applied. Starting in the 1960s, for example, New York’s zoning rules gave floor area bonuses for developers who provided open plazas. This thinking was based in the belief that pedestrians like open space and need more of it. As it turned out, follow-up studies on these spaces found that they were frequently under-utilized, under-maintained, and oppressive in their own right. The point is that rules and incentives that encourage more pleasing neighborhoods need to be firmly grounded in social science research and well-tested before wide-spread implementation. Recreating the mistakes of the past will only cement people’s beliefs that developers can’t be trusted.[3]

At the end of day, we want cities that are both affordable and enjoyable. The way to do this is to build new housing across the city, and to make sure it enhances the urban fabric. Computer Vision can help us see the future before it arrives.

 

—

[1] Additionally, the word “oppression” in English is most usually associated with unjust political control, not the secondary use of feelings of distress. English speaking subjects might be confused about the word in a study about building heights, which might impact the average responses to those questions.

[2] A previous study “trained” these features to predict perceived neighborhood safety.

[3] Ironically, it may be that the zoning and planning rules that have created people’s negative perceptions about developers, who built out cities according to those rules. They provided parking lots and strip-malls when off street parking was required by law, and they built wide open plazas when incentivized to do so.

 

 

by Jason Barr 8 Comments

The Skyline versus the Sprawl-line: CO2 Emissions and Building Types in New York City

Jason M. Barr          September 16, 2020

Hong Kong on the Hudson?

When we think of New York City, we think of Manhattan and its supertall skyscrapers. As a result, we believe that New York is one of the densest places on Earth: a Hong Kong on the Hudson. And yet, craning our necks upwards diverts our attention from another fact. New York is not very dense at all when you look towards the horizon. Once you get out of Manhattan and past the historical outer-borough neighborhoods, you will find a distinctly suburban city. The landscape comprises block after block of one- and two-family homes, strip malls, and wide, car-friendly streets. New York is thus a tale of two cities—the skyline and the sprawl-line.

An Urban Greenhouse?

The “competition” between density and sprawl leads us to the question of which is worse for the environment, and greenhouse gas (GHG) emissions, in particular. Skyscrapers are frequently criticized as emitting too much CO2—their size and heights make them particularly carbon-intensive. Because their facades contain broad surface areas of glass, they absorb a tremendous amount of sunlight, which means higher cooling needs, and more greenhouse gas emissions. Additionally, running elevators, with heavy steel cables, is energy-intensive; the taller the building, the more CO2 production from vertical transportation.[1]

But when one discusses the carbon footprint of tall buildings, it’s vital to distinguish between the building itself and the occupants. Even the most efficient structure may be carbon-heavy if those inside use excessive amounts of energy. All else equal, wealthier households will consume more than lower-income ones, generating more carbon from their lifestyles. It is necessary to try to hold all things equal, if possible, to understand the impact of building heights per se.

Will the Real New York Please Stand Up? Top: The Skyline of Manhattan. Bottom: The Sprawl-line of Eastern Queens.

Plastics, Benjamin

But, of course, free-standing houses in the suburbs have their problems. Since they are relatively large, they tend to have fewer people per square foot, requiring more electricity and fuel per person. Additionally, people who live out in the city’s less dense place are more dependent on their automobiles. Crave a pint of Ben and Jerry’s Cherry Garcia at 11:00 pm? You have to jump in your vehicle to get to the local supermarket. Need to get to work? It’s more convenient to drive since public transportation is thinner or less efficient out in ‘burbs. In this way, suburban homes are inherently linked to automobile transportation. You can have suburbs without cars, and perhaps you can have cars without suburbs.

Average Annual Household Carbon Foot Prints (metric tons) by Zip Code in New York City. Note, that on, average, household emissions tend to rise moving out from the center. Source: Jones and Kammen (2013).

The Efficient City

When discussing the trade-off between height and sprawl, however, we first must begin with a discussion of what urban form “should” look like if a city is going to efficiently allocate its valuable land to different uses. While much of city planning is about trying to arrange the city into neatly compartmentalized zones, economists have shown that cities are pretty good—though not perfect—at self-organizing themselves so that land is used in the best manner as possible.

The economics of urban form begins with the idea that land, as private property, is bought and sold in the marketplace. The question is, who pays for it, and at what price? To make things simple, let’s “anchor” the city with a central business district. Here land values are the highest.  The reason is that businesses need to cluster together to perform better. Finance firms must be down on Wall Street. Marketing firms need to be on Madison Avenue, and so on. And they pay for the right to be there.

In general, the fundamental location decision for professional service-oriented businesses, who earn the lion’s share of the city’s income, is whether to remain in the cluster or not. Before the COVID-19 pandemic, midtown office rents averaged around $80 per square foot ($861 per m2). A firm could leave the center and save a lot of money. Office rents in downtown Newark, New Jersey, or Stamford, Connecticut, by comparison, are about half of that. But at what price? At the cost of losing an international reputation, access to the high paying clients, and a more skilled labor pool.[2] In short, firms in the center pay to play.

The Commute

These business districts draw workers who commute from their homes. For the most part, employees cannot pay more in rent than their employers, so most folks reside outside the business districts. But far away is the vital question. Here the decision, again, involves a trade-off. The longer the commute, on average, the cheaper the housing, since its less convenient. If you want a three-bedroom, two-bath house with a backyard, you need to expect to be traveling up to an hour to work each way.

That’s the fundamental trade-off that generate the city’s basic “spatial structure,” where people typically live and work (with the recognition that we are abstracting here for simplicity). High prices in the center generate high land values that naturally produce taller buildings, which at their heart, are an efficient use of land. Similarly, larger houses in the suburbs represent the perks of living further away—people get more space, both inside and out. Thus, even suburban living is usually an outcome that reflects households’ preferences and can be an efficient land use.

The Externalities

But, of course, the story does not end there. In the central city, tall buildings can generate negative “externalities”—unintended side-effects. The most cited ones are crowded streets, shadows, fears of gentrification, and the emission of greenhouse gases. On the other hand, sprawl also has negative impacts, including traffic congestion, racial and ethnic segregation, and greenhouse gas emissions from larger houses and extra driving.

The problem of externalities that one person’s decisions about where and how to live frequently do not consider the impact on others. When was the last time, for example, that you decided not to drive your vehicle because you feared that you would slow down other drivers when you got on the highway? If you and others thought that way, there would probably be no rush hour traffic! Or have you ever decided not to use your car one day simply because you knew that gasoline combustion produces a slight amount of odorless, colorless carbon dioxide that would enter the great flow of air that covers our planet? Not likely.

The point is that sometimes in life, you make a decision that impacts other people in a nearly imperceptible way. However, when thousands of people are doing this, the outcome is strongly felt—in this case, through rising temperatures and more erratic and dangerous weather patterns from CO2 emissions.  So which kind of living—in the skyline or along the sprawl-line—is worse for climate change?

CO2 Emissions versus Building Form. Top Left: A scatter plot that shows a u-shaped relationship between the average number of residential building floors in a zip code and average household CO2 emissions. Top Right: A scatter plot that shows a u-shaped relationship between each zip code’s floor area ratio (FAR)–a measure of building density–and average household CO2 emissions. Bottom Left: This scatter plot shows the relationship between average household CO2 emissions and average building height per zip code, with the impacts of driving behavior and income removed. In short, it shows very little relationship between the two after controlling for consumer behavior. Bottom Right: This Scatter plot shows average household CO2 vs. residential FARs after removing the impact of driving behavior and income. Again, it shows little relationship between the two.  Data source and analysis: here.

Carbon Production in New York City’s Housing Market

To answer this question, we need to investigate how residential building types affects greenhouse gas production, controlling for, or holding constant, other factors that might get in the way. To this end, I combined two data sets to analyze this question for New York City (the details and analysis can be found here). One part has the estimated average household CO2 production for each zip code. The other part comes for the NYC Department of City Planning and contains information about building heights and floor areas.

To see the impact of building form on GHG emissions, I performed a statistical (regression) analysis that looks at how average zip code building heights and floor area amounts impact GHG emissions, holding, other factors constant. First, the results show that, on average, without controlling for household income or driving behavior, there is a u-shaped relationship between heights or building areas and GHG production. The worst emitters live in free-standing houses in the suburbs and supertall buildings in the center—though the suburbs are worse in this regard (see the figure below).

However, after one removes the impacts of CO2 emissions from income and driving behavior, the relationship between building form and GHG emissions diminish greatly. General consumption patterns are are more important than if the unit is in the clouds or on the ground.  In other words, the key to knowing whether a structure is GHG-efficient or not is to focus on two things: the average housing square foot per person in a neighborhood and its location relative the central city. Manhattan is much more energy-efficient than the other boroughs because people do so much less driving and live in smaller units.

The Right Policies

The lessons from this analysis are that, regarding household carbon production, building shapes matter less than income, driving frequency, and the amount of space that households occupy. As I have discussed before, the right policies need to be tied directly to consumer behavior and reducing dependence on automobiles (or getting rid of fossil fuels to power engines). Nonetheless, there are many in the planning community who advocate for “Goldilocks Density.” The perfect density—like New York’s Greenwich Village—they argue, should be imposed by fiat across the city. These areas have dense populations, but many lower-rise apartment buildings. The results of the analysis here, however, suggest that the theory of Goldilocks Density is misguided. Proponents look at the u-shaped CO2-building density curve and conclude that all places should have a residential floor area ratio (FAR) of three. But this like using a hammer to solve all carpentry problems.

The urban spatial structure that naturally emerges from countless individuals’ decisions reflects their choices in the faces of various trade-offs. Yet sometimes these decisions generate externalities. The solution is to make producing the externalities more expensive so as to reduce them without fundamentally altering the freedom of individuals or households to make choices about what works best for them. While the suburbs may be stultifying to some, to others, it is paradise. At the same time, people who drive and consume big houses need to pay for the harm they impose onto Planet Earth. Similarly, living on the 50th floor of a skyscraper may offer incredible views, but the carbon generated must be paid for. In the end, maybe some new towers will not be as tall, and some new suburban houses will not be as palatial, but they will remain if they provide people with a more rewarding life.

Read other blog posts on cities and climate change here.

 

I am grateful for valuable research assistance form Shaojie Wang and Ujjaini Desirazu.

 

[1] Another issue not addressed in this blog is that carbon emissions from the construction sector and the production of CO2 in manufacturing materials like concrete or steel. Skyscraper construction might produce more carbon on a square foot or square meter basic because it uses more materials and requires more machinery. As discussed in the conclusion, policies should be designed to tax carbon-heavy manufacturing and incentivize those processes and materials that generate less CO2.

[2] This is not to say that some jobs can’t be outsourced or done from m home, but the vital, knowledge-based jobs, and the spontaneous productivity that emerges from being at the same place at the same time cannot be outsourced.

by Jason Barr 4 Comments

Boon or Boondoggle? The Long Run Economics of the Empire State Building

Jason M. Barr and Gabriel Ahlfeldt                       August 17, 2020

The Bricks of Ego

When most people look up at supertall skyscrapers, like the Burj Khalifa or the Shanghai Tower, they assume they have been constructed for irrational purposes. The most common belief is that they are built by ego-driven developers seeking to build monuments to themselves.

This certainly seemed like the case in 1931, when the two developers of the Empire State Building, former New York governor and 1928 Democratic presidential candidate, Al Smith, and retired General Motors executive, John J. Raskob, built the world’s tallest building. Raskob was motivated, in part, by a rivalry. He “wanted a building that would literally and figuratively put Walter Chrysler’s building in the shade.” If there was ever a structure built with the bricks of ego, it was the Empire State Building.

And in May of 1931, when the building officially opened, New York real estate was in free fall. As the city entered the Great Depression, people scoffed at Smith and Raskob’s folly by calling their beast, “The Empty State Building.” The vacant offices and negligible cash flow only confirmed what everybody already knew—supertall buildings don’t pay.

But this historical perception begs two questions. First, from the point of view of August 1929, when the developers were establishing their plans, were their decisions really so foolhardy? And second, what has been the long run economics of the building? Nine decades later, the Empire State Building remains a beloved icon. It is one of the most popular tourist attractions in the world, and the skyscraper is part of New York’s identity and heritage. How can we resolve the historical accounts of it being a lemon with our current perceptions of it as lemonade?

From Astor to Empire

Before the Empire State Building existed, the site, at Fifth Avenue and 34th Street, housed the world-famous Waldorf-Astoria Hotel, which, since 1893, was receiving wealthy guests and holding lavish parties for the scions of the Gilded Age. In December 1928, Bethlehem Engineering Corporation purchased the lot, when the Waldorf-Astoria owners decided to construct a new 47-story hotel on Park Avenue and 49th Street.

However, Bethlehem Engineering had trouble securing full financing for a new building; they then sold the lot to an investment syndicate, led by the Chatham-Phenix National Bank and Trust Company. Al Smith was familiar with the deal and pitched the idea of bringing in Raskob, also his former presidential campaign manager, to buy the lot and build a skyscraper.

Interestingly, the original plans for the site produced by Bethlehem Engineering was a 50-story structure that contained offices and loft space, which was more in line with the neighborhood’s character. Situated close to Penn Station, the district was home to hundreds of designers, manufacturers, and sellers of clothing for the local and national markets.

In August of 1929, Smith publicly announced the plans for the Empire State Building, with a crisp height of 1,000 feet (305 meters). The hope was that the skyscraper would help spur redevelopment of the neighborhood from a dingy industrial quarter to a shiny new corporate sector. After Walter Chrysler topped out his building in October of 1929, Raskob and Smith thought up the idea of adding a mooring mast to allow for the docking of dirigibles; this extruded the building’s height to 1,250 feet (381 m),  200 feet (61 m) higher than Chrysler’s building. No airship captain ever dared the landing.

Three Skyscraper Plans. Left: original plan for the ESB site—a 50 story building for lofts, showrooms, and offices. Middle: the original 80-story design for ESB before the addition of a mooring mast and observation decks. Right: a hypothetical skyscraper on 42nd Street designed in 1929. Note that the setback style common to all three was due to the 1916 zoning codes. Sources: see here.

The 1929 Analysis

History has scoffed at Smith and Raskob for placing some two million square feet (185,806 m2) of office space on the market when the city’s economy was crashing. But from their point of view, in the summer and fall of 1929, when they were at the drawing board, what did the economic landscape look like then? Was their thought process really so irrational?

To answer this question, we need a benchmark. For this, we turn to the findings of authors W. C. Clark and J.L. Kingston (CK). In 1930, they published their book, The Skyscraper: A Study of its Economic Height. They play the role of a hypothetical developer of an office skyscraper in Manhattan, on a large lot directly across from Grand Central Terminal on 42nd Street. In fine-grained detail, they itemize the various costs and revenues from erecting a building with varying heights, to identify the one that maximizes the return on the investment.

Based on their calculations, they found that the profit-maximizing height was 63 stories, with a 75-story one a close second. When we start comparing the costs and revenues from their hypothetical 63-story project to the Empire State Building, the differences between the two seem relatively minor. From the point of view of August 1929, the Empire State Building had a strong economic rationale, even if its height was not profit-maximizing. While the building became higher over the ensuing months, the total amount of office space stayed about the same.

Apples to Apples

Let’s turn to this comparison (for data analysis, sources, and notes see here). First is the size of the lot. To make the economics of a tall building work, a large lot is needed. In the CK case, their lot was 81,200 square feet (7,543 m2). The ESB lot is 91,351 square feet (8,487 m2), some 13% larger. Second, the cost of each lot was similar. CK estimated $200 per square foot for the land, while ESB the lot was bought for $175 per square foot.

The ESB has a gross building area of 2.8 million square feet (260,129 m2), whereas the CK building was to have 2.4 million square feet (222,967 m2)—each with a similar floor area to lot ratio. That gave a construction cost, on a square foot basis, for CK of $8.79 ($91/m2) versus the ESB of $7.93 ($85/m2). Turning to revenues, again Smith and Raskob were not unreasonable in their estimates, which they assumed would average $3.37 per square foot of office space ($36/m2), and was comparable to CK’s estimate of $3.81 per square foot  ($41/m2). The difference seems justifiable given that the CK building was directly across from Grand Central Station.

Return on Investment Analysis for the Empire State Building and Hypothetical Skyscraper on 42nd Street. The data for the ESB is for the original plan, before its height was raised some 200 feet. *Note that 80 stories was the original height. Today the building is 102 stories, but with 85 stories of offices, the rest are the observation decks and the mooring mast. Sources: See here.

When one does all the apples-to-apples comparisons, the best CK building had a return of 10.25%; their 75-story structure had a return of 10.06%. The estimated return from the Empire State Building comes in at 9.54%, which would offer the typical investor a more-than-satisfactory return. Also, keep in mind, these calculations were made without the observation deck, which, when included, would most assuredly have made the ESB a better investment than the CK structure.

The Market Value of the Empire State Building

What seemed reasonable at the time, of course, quickly became unreasonable, and was seen by the wider public as an example of irrational decision making. Smith and Raskob faced no shortage of troubles keeping their building during the Great Depression. With help from their wealthy backers, they persevered and made the best of a bad and stressful situation. But here we are nine decades later. What have been the long-run returns? Has it turned out to be profitable, and, if so, how does it compare to other investments from 1931 to the present day?

There are several ways to try to answer this question. For the sake of brevity, we are going to focus only on one approach–tracking the building’s sale price or market value over time, relative to the initial cost of construction. This is like looking at the returns to buying a home—we pay an initial price, and then down the road, we hope to sell it for a higher price. Market values reflect the underlying economic value, which, in this case, is the flow of profits from the skyscraper. Thus, we look only at the capital gains of the building over time, ignoring any profit payouts to the investors. This is also similar to tracking the value of the stock market, without worrying about dividends.

1951

Al Smith died in 1944, and his stake was taken over by Raskob, who continued to run the building until his death in 1950. His estate then sold it to a syndicate, which paid $51 million. The New York Times reported that the sale “was said to be the highest price ever paid for an office building.” And offered up that, “The structure…is now reported to be one of the most profitable single building operations in the world.” Also, about the same time, a 222-foot TV-radio tower was placed atop of the mast and was expected to bring in an additional $1 million in revenue per year. Not bad for the Empty State Building.

1961

Beginning in 1961, things got very, very complicated, with several different organizations having a piece of the ownership action (including through very long-term leases and subleases). In that year, for example, only the building, but not the land, was sold for $65 million. The land had been purchased by Prudential Insurance for $17 million back in 1951 (this was similar to the 1929 land price of $16 million). So, if we assume the building alone in 1951 was worth $34 million ($51 million – $17 million), then the net gain was from $34 million to $65 million, a near doubling in value in only a decade.

Market Value of the ESB versus the Stock Market (S&P Stock Index). This graph shows only the capital gains portions (and excludes any dividend distributions). Note that between 1931 and 1985, the two indexes tended to track together. Source: See here.

 The 1990s

In 1991, Prudential was seeking to sell its share. This prompted the New York Times to get estimates of the true market value. It reported, “If it could be sold outright, unencumbered by the leases, the building would have a value of $600 million to $800 million in today’s real estate market”—a hearty gain over the previous three decades.

In 1994, Donald Trump, working with Japanese investors who bought Prudential’s stake, aimed to wrest full control away from the other owners. This was only possible, however, by suing them. In the end—not surprisingly—he failed. The foreign investors, who put their faith in Trump, lost on the gamble, while Trump walked away with substantial brokerage fees.

In the 21st Century

In 2002, after nearly seven years of suits and counter-suits, complete ownership fell into the hands of Peter L. Malkin and his partners. Malkin, along with real estate mogul Harry Helmsley, had been involved with the building since 1961. In 2013, Malkin took his real estate holdings public by forming a Real Estate Investment Trust (REIT). At the time, the Empire State Building was worth around $2 billion. And, in 2019, the ESB had a market value of $2.3 billion. In short, over the very long run, the average annual growth rate for the market value of the Empire State Building has been about 5.3%.

It’s also worth noting that, on average, the value of the ESB and the stock market tracked each other for many years. After 1985, the two began to separate, with the stock market going on to greater heights; perhaps this says more about corporate stock prices than New York real estate.

The Mooring Mast and TV & Radio Antenna of the Empire State Building, circa 2000. Photo by Jason M. Barr.

Visions of Grandeur or Grander Visions?

The conclusion here is that, in the long run, the final ego-based version of the Empire State Building was likely more profitable than the more mundane office building originally envisioned by Smith and Raskob. The 1,250-foot tower, with its mooring mast, has provided a greater aesthetic elegance and allows for its famous light displays. Adding the observation deck has been a boon to both the building owners and the world (in 2017, the observatory had 3.9 million visitors who paid a total of $124 million for tickets). Its height also made it ideal for a large TV and radio antenna, which is profitable to both the building owners and society.

Though Smith and Raskob’s projections for office income might have been too rosy for the times, they were certainly not irrational, given that they assumed higher-end corporate clients would use the building. The Great Depression was a financial tsunami that no one could have foreseen and should not be used to judge the structure’s economic merits.

Ultimately, the real enemy of the Empire State Building was not the depression, but rather the slow, inevitable forces of economic change. After World War II, corporate America had a strong preference for larger floor plans and greater light exposures. The Empire State Building was arguably one of the last great old-style office buildings with smaller floor plans and narrower windows. Additionally, the building remained too far south from the heart of midtown. After the war, the new office skyscrapers were built further north of Grand Central Station. Today the Empire State Building remains a lonely giant in the historical retail and garment center.

Nonetheless, while Smith and Raskob struggled to make their building pay in the early years, it’s safe to say that what seemed, at the time, to be visions of grandeur, was, in the end, a grander vision.

 

More blog posts on the Roaring Twenties and New York City real estate can be read here.

by Jason Barr 1 Comment

Skyscraper Bottlenecks (Part I): The Elevator

Jason M. Barr                February 10, 2020

Note this is the first post in an intended series on the technological and economic barriers that need to be broken to construct the first mile-high skyscraper.

The Illinois

In 1956, Frank Lloyd Wright unveiled his design for a mile-high skyscraper (1.61 km)—The Illinois. It was to be built in Chicago and was to have 528 floors, with 12.3 million square feet (1.14 km2) of office space for 123,000 people. Commuters could choose from 15,000 parking spots after they arrived by one of four feeder highways. Two helicopter landing decks could accommodate 50 helicopters each.

Ironically, Wright was, at best, ambivalent about skyscrapers. In 1923, after witnessing a devastating earthquake in Japan, he expressed his belief that “the skyscraper, never more than a commercial expedient…is become a threat, a menace to the welfare of human beings.” He spent much of his career promoting his “Prairie Houses” and planned, decentralized communities, such as his Broadacre City.

And yet, at age 89, he felt compelled to produce his mile-high design. The building was, of course, merely a concept—an imaginary figment of architecture and engineering. It was never meant to be built, as the ability to construct and operate it was nearly impossible. But ideas are powerful motivators, and when a man of Wright’s stature proposes such a thing, it becomes part of the vast ocean of our collective consciousness. And just as importantly, it was produced by America’s greatest 20th-century architect when America reigned supreme in the world of skyscrapers.

Regardless of his motivations, his renderings have launched an architectural and engineering quest. The mile-high has become the Holy Grail of skyscrapers. To build one is the burning ambition of many throughout the world, particularly in Asia. Whoever constructs it will beat the odds and grab ownership over something that was once purely an American phenomenon. After all, one mile—5280 feet—is as an arbitrary length as anything else, except that it’s the standard of measurement in the United States.

Left: Frank Lloyd Wright Presents his Mile-high Skyscraper, The Illinois, in 1956. Right: Renderings of the The Illinois.

A Brief History of Bottlenecks

If we step back and take a broader view of skyscrapers, we can think of each one as part of an economic and technological system of interconnected parts. The key demand-side components are the prices that occupants are willing to pay, the uses of the structure (residential, commercial, etc.), and any additional or secondary benefits, such as advertising, placemaking, or the quest for glory. The supply side comprises the cost and logistics of construction, the technological and engineering aspects, the architectural style, local building regulations and interactions with local officials, and access to financing and capital. At any one time, the different elements are acting more or less strongly to move construction in a particular direction.

Across the World

Across the world, urbanization and economic growth are pushing developers to go taller. Technological innovation is also lowering construction costs. This rising demand and falling costs are naturally producing a rise in the “economic height” of tall buildings, where the economic height is the height that maximizes the profits from construction. But, arguably, global competition is driving cities and developers to increase building height beyond this economic height for the secondary gains they may produce. We can call this extra height, “symbolic height,” since it’s meant to convey additional information about either the city, the developer, or the occupants.

The point here is that the demand for the world’s tallest buildings is based on some combination of economic and symbolic heights. Economic height must get a builder to a certain level. Then the symbolic height can do the rest since the building must generate enough profits on its own so that the cost of the additional height can be paid for, or, at least, doesn’t bankrupt the developer. There is a constant drive to increase the height of the tallest buildings in an attempt to stand out. The ability to stand out, however, depends on the height of surrounding structures. If the economic height is increasing through rising incomes and falling costs, then symbolic height must be increasing as well.

Height over Time, 1890-2022. Blue Dots: Height of tallest building completed (in meters) each year (assumes the Jeddah Tower is completed in 2022). Red Line: Height of the tallest building in the world each year. Black Dotted Line: Trend line for tallest completed building. Trend line is: Predicted Height (meters) = -6180+3.3Year. Both estimates stat. sig. at the 99% level. Source: Graph created by Jason Barr using data from the CTBUH Skyscraper Center and other sources.

A Theory of Technological Evolution

Developers are continually seeking ways to push the technological envelope. While there is no one universal way that technological change occurs, I’d like to offer what I call a Theory of Bottlenecks. First, a boost in demand produces a supply bottleneck, in the sense that the need for tall buildings outstrips the current technological ability to satisfy it.

This bottleneck drives a “revolution”—a package of new technologies that allow for the solution to this problem, so much so that they provide opportunities for new record-breaking heights. Then, over time, engineers and developers tinker with the technologies, making incremental improvements that help lower the costs of construction within the “reigning” construction “paradigm.” At some point, demand catches up with supply, which produces a new set of bottlenecks that need to be removed with new technologies, and the cycle begins anew.

The Bottleneck Cycles

I would like to argue that since around 1880, there have been three bottleneck cycles. The first one began in New York and Chicago in the 1880s and culminated with the Empire State Building in 1931, at the end of the Roaring Twenties. During this time, the steel frame and electric elevator “package” were continually perfected. The Great Depression and World War II, however, wiped away demand. After that, there was a period of rebuilding. Economic growth and the evolving nature of work eventually produced a need to go even taller.

The Structural Revolution of the 1960s

The issue with the standard steel-framed building is that as it goes higher, it requires an increasing amount of steel per floor to brace the structure against the rising wind forces. This so-called premium for height, generated the second “skyscraper revolution,” as initiated by engineers such as Fazlur Khan at Skidmore, Owings & Merrill (SOM) in the 1960s. Advances in computing for engineering design combined with creative “thinking outside the (steel) box” lead to new structural forms.

These innovations helped to make the construction of supertall buildings cheaper while increasing the total rentable area of each floor. Khan, for example, was a pioneer in the tubular design. In older buildings, such as the Empire State Building, a latticework of columns and beams form the structure. The tube design, however, uses many thin steel columns placed closely together around the facade. Each column is connected by a horizontal “spandrel” beam. It allows the façade to do most of the heavy lifting, so to speak.

The John Hancock Tower (875 North Michigan Avenue) in Chicago, completed in 1968, represents one of the first of the post-War supertalls to use this tubular design (along with diagonal “x-bracing” to help improve rigidity). The building, designed by SOM, with Fazlur Kahn as the chief structural engineer, promoted a “jump” in heights beyond those at the time. Versions of the tubular design were then used for the record-breaking Twin Towers in New York City and the Willis (Sears) Tower, which were all completed in the early 1970s.

The 21st Century

A 21st-century “revolution” has, in large part, been driven by the tremendous demand for skyscrapers in Asia. In the last quarter-century, the world has seen a whole new suite of building technologies that are allowing for even greater heights. Examples of these include the buttressed core; high-strength, pumpable concrete; the mass-tuned damper; and wind tunnel testing. These innovations are being employed in the Burj Khalifa and the Jedda Tower. They have allowed height to leapfrog, once again, beyond the economic demand.

The Elevator Problem

Although structural systems have undergone dramatic changes, the elevator is still based on the traditional rope-based method, where a cable is attached to the elevator car to move it up or down. However, as buildings go taller, the ropes must get longer as well. And rope weight increases exponentially with height, which increases not only the cost of operating the lifts but the risk of the cable snapping.  As Professor Kheir Al-Kodmany writes, “In very tall buildings, almost 70% of the elevator’s weight is attributed to the cable itself, and when the rope gets too long it cannot support its own weight.”

Elevator suppliers have been hard at work, developing alternatives to the steel rope. One of the most promising is the “UltraRope” developed by KONE. It is comprised of a carbon-fiber core with a special high-friction coating, making it extremely light and hearty. The UltraRope is helping to break the one-kilometer bottleneck. It is going to be installed in the Jeddah Tower in Saudi Arabia, which, when completed (likely in 2022), will the world’s tallest building at one kilometer high (3281 feet).

The Ropeless Future

However, according to Prof. Michael Cesarz,  CEO of MULTI at ThyssenKrupp, the rope remains one of the key barriers to increasing maximum building height. At some point, new heights will not be feasible with a rope-based elevator, either because of limits on cable strength or because of rope vibration. As Professor Al-Kodmany writes, “[L]ong cables cause damage to the shaft and to themselves. For example, in the former World Trade Center Twin Towers, the elevators’ cables swung back and forth in the building, and over the decades, their movements resulted in wearing deep holes in the shaft walls.” The problem is even more severe in seismic zones, where an earthquake could cause buildings to sway. While structural technology prevents the skyscraper from collapsing, the rope is still vulnerable.

Rending of Building Concept that Employs the Maglev MULTI Elevator System.

The Maglev MUTLI

Frank Lloyd Wright, with a wave of his hand, dispensed with ropes in The Illinois. Instead, his fictional building used fictional nuclear-powered elevators. But today, one elevator company, ThyssenKrupp, is betting on a ropeless future. It is developing the MULTI, an elevator that travels by magnetic levitation (maglev).

The technology is now used for bullet trains. For example, Shanghai has one to ferry travelers from the Pudong business district to the airport. It can travel up to 268 miles per hour (431 km/h). The maglev system has the cars hovering over tracks, so there is no friction. The principle is the same for elevators, but they are, of course, used to run up and down.

Without a rope, multiple elevator cars can run in the same shaft, and their movement can be coordinated with sophisticated software algorithms. When one is needed on a higher floor, other cars, which might be in the way, can move horizontally to free the path. According to Prof. Cesarz, the ability to move cars aside represents one of the last remaining bottlenecks for the maglev elevator itself. ThyssenKrupp engineers are close to perfecting the switching device that will make the MULTI practical. The company has even constructed an 807-foot (246-meter) testing tower in the German town of Rottweil. When the elevator cars can seamlessly change directions, they will circulate through the building like blood cells in our arteries.

Maglev elevators are likely to have many benefits. In the immediate future, by allowing several cars to run in the same shaft, they reduce the total amount of shaft space, meaning more revenue-generating space for the building owner. Further, it can more efficiently carry people to their final destinations within the building. Since ropes are heavy, they require significant energy usage. The MULTI can reduce both energy costs and greenhouse gas emissions.

Other Possibilities

But once the rope is eliminated, architects, engineers, developers, and planners could, in theory, exploit endless possibilities—to make the MULTI the iPhone of real estate. The ability to run many cars through the shafts could mean a more personalized elevator experience. We can imagine a situation where each tenant has their own elevator. Say an apartment dweller arrives home; she calls her car, which retrieves her on the ground floor. Upon arrival, say on the 40th floor, the unit “plugs itself in” to the entranceway, and waits for the next trip down. But more interestingly is the opportunity to connect buildings via skybridges. Without the ropes, there is no need for an elevator to remain inside the structure. Thus freed, it could offer a fast way to travel from one building to another.

Releasing the Bottleneck

When the MULTI is operational, it will likely get us that much closer to Wright’s vision of the mile-high skyscraper. But the question remains, is the elevator the only bottleneck preventing the mile-high from being built? For the answer to that, you’ll need to stay tuned.

 

Continue reading related posts. The “Technology of Tall” series is here. The “Economics of Skyscraper Height” series is here.

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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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