vanity height

May 21, 2024 by Jason Barr 1 Comment

Busting Skyscraper Myths

Jason M. Barr May 21, 2024

Note: On May 14, my book Cities in the Sky: The Quest for the World’s Tallest Skyscrapers was published by Scribner Books. This post summarizes some of the myths and misconceptions described in the book. For more information, to buy a copy, or to sign up for my email list, please click here.

Because skyscrapers are so big—and tall—they are shrouded in myth, mystery, and controversy. It’s easy to make up stories about them because there’s often little direct information. Developers are naturally a secretive group, and it’s impossible to know how a building has been engineered since it’s covered in glass and stone. And when we look around, we see tall buildings sprouting up while urban life gets more expensive, so it feels correct to conclude that tall buildings are causing the problem.

However, for nearly twenty years, I have been researching the history and economics of tall buildings. Along the way, I’ve heard many of the stories and claims, and have investigated their veracity as much as possible.

Let’s turn to busting some of the myths, starting with the history first and then moving to the present day.

Myth #1: The Home Insurance Building was the first skyscraper, and William Le Baron Jenney was its inventor

Let’s begin with the concept of the “first skyscraper.” The truth is that it’s impossible to name such a thing. The array of elements required to erect tall buildings evolved in fits and starts over the 19th century. This evolutionary process began with structures with external, load-bearing masonry walls with wood or brick internal framing and “ended” with the fireproofed, wind-braced steel skeleton with an electric elevator.

There was never any one technology in the building process that, when incorporated into a building, was so radical that building forms were inherently different after that.^[1] It’s also important to note that nobody was trying to invent the skyscraper per se. Architects, engineers, developers, contractors, and suppliers were all trying to figure out how to improve building forms to make them more functional and profitable and to accommodate more people. The idea that someone should get credit for inventing the skyscraper emerged after 1890, when tall buildings rose high across American cities, and people were curious to know how these giants came about.

The Home Insurance Building

In 1883, the Home Insurance Company of New York hired the architect William Le Baron Jenney to design a Chicago headquarters. One of Jenney’s engineering strategies was to embed iron columns and beams into the exterior masonry walls to make them thinner to allow for larger windows. Like the countless buildings before him, the Home Insurance Building was an evolutionary step forward.

But a decade later, many architects and engineers claimed they had invented the skyscraper. One was a particularly litigious architect from Minneapolis named Leroy Buffington, who received a patent for iron framing for tall buildings. Starting in 1896, Jenney and his colleagues engaged in a concerted public relations campaign to convince the world that Jenney invented the skyscraper to quash Buffington’s claims. Because the Chicago School architects and engineers were so respected, the world came to believe them, and the notion stuck. Today it is the conventional wisdom that Jenney invented the steel-framed skyscraper. But this idea is a pure myth–a made-up story designed to make a mortal into skyscraper Prometheus. The truth is more mundane: he was clever but hardly radical.

Myth #2: The depth to the bedrock caused skyscrapers to be “missing” in parts of Manhattan

Ask any tour guide or New Yorker interested in Manhattan’s architectural history, and they will tell you that there are no skyscrapers between Downtown and Midtown because the bedrock there was too far down below the surface for developers to anchor their building foundations. Yes, the bedrock north of Downtown is indeed deep below the surface, but it’s wrong that the depths stopped skyscraper construction there. This idea of “missing” skyscrapers was promulgated by a geologist in 1968 because he confused correlation with causation.

The actual reason was demand. At the turn of the 20th century, there was no demand for tall buildings in the tenement and factory districts north of City Hall, precisely where the bedrock was the deepest. If there were, the engineers of the day had the skills and knowledge to make foundations there, but developers didn’t require their services because they couldn’t make money from tall buildings in these neighborhoods. In fact, some of the tallest buildings in the city, like the Woolworth Tower, were built over some of the deepest bedrock spots on Manhattan, so developers and engineers knew what they were doing.

From Left: The Home Insurance Building–Not the First Skyscraper, the Empire State Building, and the Burj Khalifa–Not Boondoggles. Sources: Home, ESB, Burj.

Myth #3: The construction of a record-breaking skyscrapers signals economic doom

In 1999, an economist named Andrew Lawrence invented the phrase “the skyscraper curse,” which claims that the appearance of a record-breaking building heralds that an economic bubble is about to burst and lead to economic calamity. The idea is that record-breakers only get built during times of irrational exuberance, so we can use tall buildings as an exuberance indicator. Lawrence created the so-called Skyscraper Index which “pairs” tall buildings with crises to “prove” his point.

The only problem is that his logic has many problems. First, the “index” is silent on whether we should be looking at the announcement, groundbreaking, topping out, or official opening of a building. In other words, using tall buildings as an indicator of mania is about as fuzzy a measure as one gets, particularly given the long lags between conception and completion.

But just as important, no matter which version of the indicator you use, there is no way to predict when a crisis will emerge from the completion of a tall building. When one drills down into the data, one finds that there is actually no meaningful connection between the two.

Instead, the Skyscraper Curse is an example of what I call Rorschach Economics. Financial and economic crises have happened twice the frequency compared to the construction of a record-breaking building, so it’s easy to pair a building with a nearby crisis and falsely conclude there is a connection. (It also turns out there’s an “eerie” connection between record-breaking buildings and maritime disasters.)

Myth #4: Record-breakers don’t pay

When the Empire State Building was completed in 1931, its upper half went unrented because of the Great Depression. The building earned the moniker the “Empty State Building,” which led to the myth that record-breaking structures are simply monuments to the ego-driven developer who wants to claim the prize of the “tallest building,” and the economics be damned.

However, to blame the developers for failing to see the arrival of the Great Depression is moving the goalpost. The Great Depression was utterly unforecastable, and its length and severity could never have been foreseen by any developer, no matter how rational. It’s akin to telling a developer in the fall of 2019 to hold off on a new project because a horrible pandemic is coming next spring. No one saw either one coming.

More broadly, the idea that record-breakers don’t pay is a myth. Part of it stems from the true notion that as buildings get taller, they get more expensive to build on a per-floor or per-square-foot basis. For example, more elevators and longer cables are needed, and more steel and concrete are required for wind bracing and foundations. So, people look at the additional costs and assume they are making these projects inefficient.

Costs and Benefits

But you can’t ignore the revenue side. To understand if a project is rational or profitable, you need to look at the net income of buildings over time relative to the cost of constructing them. And when you do this, you see that record breakers make much more economic sense than people think. Even the Empire State Building, which got off to a rocky start, has been consistently profitable for most of its 90-year history.

Today, record breakers are built with more than just economics in mind. They are built to boost tourism, increase property values in their neighborhoods, and put a city on the map. And they generally make money from rents. When we expand the definition of the benefits, we see they are rational projects indeed.

Bedrock Depths in Manhattan Going from the Southern Tip to Midtown. Triangles are tall buildings, circles are low-rise buildings. Notice that some skyscrapers are built over very deep bedrock. Source: Barr, Tassier, and Trendafilov (2011).

Myth #5: Developers are engaging in rampant “vanity height” competition

In 1998, when the Petronas Towers were completed and declared “the world’s tallest buildings,” people cried foul. The reason was that it would only be a record-breaker because of the 151-foot-tall (x m) spire. The top floor at 1,230 feet (375 m) was still 124 feet (38 m) below the tallest floor of the Sears (Willis) Tower, completed in 1974.

Until 1998, there were no official measurements, and the Council on Tall Buildings and Urban Habitat (CTBUH) stepped into this role. As an organization comprised mainly of architects and engineers, they were well-equipped to measure building heights. They determined that if a building had a spire that is architecturally part of the structure, it counts toward the overall height of the building.

Since then, extruding spires have become a way to raise a building’s “neck” even higher. The next record breaker after the Petronas Towers, Taipei 101, has a spire that is 230 feet (70 m), and the Burj Khalifa’s spire is a whopping 801 feet (244 m).

The Vanity Height Myth

The use of spires to help extrude record-breakers has led to what I call the Vanity Height Myth: that spires are getting taller and are the only way to break a record. However, except for the spires on Petronas Towers, the floor heights of the record breakers are all taller than previous record holders. Just as importantly, spires are essential to the structure’s architecture.

No one complains about the spires on the Empire State or Chrysler Buildings—we celebrate them. Yes, there are some examples of what seems like “let’s put a spire on our building to make it taller”—One World Trade Center comes to mind—but for the most part, spires either add to the elegance of the building or are not needed to be a record breaker. For that matter, the Twin Towers and Sears (Willis) had no spires.

More broadly, I investigated the differences between the architectural height and the top floor height for a sample of nearly 2,000 buildings of 100 meters or taller buildings completed worldwide. My finding is that, on average, the difference represents only 10% of the total structure’s height. For supertall skyscrapers of 300 meters (984 feet) or taller, that average is still relatively low at 12% (median of 9.7%). In short, across the spectrum, vanity height is actually a very small—or short—part of tall building design.

Myth #6: Tall buildings are only for the rich

In global cities like New York and London, the skyscrapers erected in central areas tend to be apartments for the rich or global headquarters for international firms. This phenomenon has led to the idea that tall buildings are only for the wealthy. Yes, tall buildings are more expensive than shorter ones, but nothing is inherent in the structure’s economics that makes them only for the wealthy.

Spend five minutes in any Chinese city to see this. Tall buildings are built for nearly everyone—the homes of the middle class in cities large, medium, and small. Unlike in America, where free-standing, single-family homes are the norm, high-rise apartments are typical in China. The country has been building them in spades, so much so that China is in the midst of a housing crisis, with nationwide vacancy at 15%.

More broadly, when it comes to costs, there is a u-shaped relationship between height and per-square-foot or -meter costs, but the floor count where the lowest point is hit depends on many factors. One study of high-rise housing costs in Hong Kong found that the minimum per square meter cost was 100 meters (about 30 floors or 328 feet), on average. Overall, if planned properly on a large lot, built by an efficient construction sector, and with few stringent building regulations, tall buildings can be built as cost-effectively as low-rise ones.

It’s also worth remembering that American high-rise public housing was a failed policy not because of construction costs. They were built quite cheaply. The problems, in brief, were public policies that hyper-concentrated poverty while housing authorities under-maintained the buildings.

Middle-class High-rising Housing in China. Clockwise from top left: Shenzhen, Changchun, Shanghai, Hong Kong. Photos by Jason Barr.

Myth #7: Skyscrapers make cities more unaffordable

Global cities like New York and London are very expensive places in which to live. Most people blame the high-rises. The logic goes that high-rises are costly to build and only for the rich. So, the rich move in, displace the poor and make housing less affordable for everyone.

But this notion confuses causation with correlation. Simply put, big cities are not building enough housing for everyone. New York City has a citywide housing vacancy rate of 1.4%! In London, that vacancy rate is 1.7%. There is no extra housing for anyone.

But it’s easy to focus on tall buildings because they are most likely to be noticed when we observe new construction in the city. In truth, more tall buildings are likely being built than new low-rise buildings because cities, by design, keep most of them closed for new construction and only allow tall buildings in the center, where it’s the least politically costly to do so.

Positive Spillovers

However, tall buildings do have beneficial impacts on the prices of nearby buildings. Two studies, for example, one in America and one in Helsinki, followed people who moved into new centrally located high-rise buildings. They found that the majority originated from their respective metro regions. Then, they tracked those who moved into their “abandoned units” and found that they had, on average, lower incomes. So, in short, building high-rise housing in the center frees up lower-cost housing for those within lower income brackets. Another group of cutting-edge studies has shown that adding new housing supply lowers nearby housing prices. Additionally, a cluster of studies show that reducing zoning stringency leads to more construction and lower housing prices.

But why don’t we see it? The reason is that supply increases are swamped by rising demand and income. Believe me, if citywide housing vacancies—including in the lowest-income neighborhoods—were, say, between 7% and 10%, no one would blame high-rises; instead, they would be saying that they are solving the housing crisis.

Change in Housing Units in New York City by Block, 2003-2020. Note that the majority of blocks in New York saw virtually no growth their housing stock. Housing growth only appears in select neighborhoods. This is why housing is unaffordable in New York City. Source: NYC PLUTO file.

Myth #8: Five- to ten-story buildings are the ideal for cities

Tall buildings get a bad rap for all sorts of reasons. They tend to emit more greenhouse gases, and people feel they are alienating and inherently harmful for aesthetically pleasing cities while only being palaces for the rich. On the other hand, urban advocates look at the sprawling suburbs and see excessive car dependence and expensive single-family homes.

Urbanists thus point to Greenwich Village with its five-story walk-ups and Second Empire Paris with its seven– to ten-story mansard-roofed buildings as ideal for creating the “human scale.” These urban areas have given rise to the perception that they have the “perfect” density. They have lower carbon footprints, a high enough density to sustain mixed uses and promote pedestrian-friendly neighborhoods.

It must, therefore follow, the logic goes, that to create the perfect Jane-Jacobs-approved city, we must require all cities to have five- to ten-story apartment buildings everywhere. I love Paris and Greenwich Village as much as the next person, but the only problem with this logic is that imposing height caps or trying to mandate “Goldilocks Density” does more harm than good. By ignoring the economics of land use and people’s wishes, height caps and building type requirements generate a bevy of unintended consequences, including higher housing prices, more carbon emissions, sprawl, and lower employment growth.

In the Center

Skyscrapers rise in the center because more people want to be at these locations than can be accommodated by a low-rise building. In this case, the only way to accommodate this demand is to go up. Farther away, where commuting to the center takes longer, people should have access to low-rise neighborhoods with more space per household. The cost and benefits of being in different locations must drive the housing types.

Policies need to consider this fundamental trade-off: smaller housing units and taller buildings in valuable locations and larger units in low-rise buildings further away. If a city perverts this trade-off, it makes people worse off. A one-size-fits-all policy harms cities and their ability to successfully attract people and provide employment opportunities. The natural way to densify neighborhoods is to provide efficient public transportation, parks, access to retail, and good schools and let the supply match the demand.

Truth #1: We need to think more deeply about cities

The conclusions about tall buildings that people make often arise from the confusion of correlation with causation or by generalizing based on one or a handful of observations. We need to discover the truth by looking deeply at the data, inquiring into how people respond to incentives, and uncovering the logic of social systems. Please join me in this endeavor!

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^[1] If one technology made the biggest difference, it was the elevator, which radically changed the economics of going tall since now occupants would rent the higher floors for more money than the lower ones.

January 20, 2021 by Jason Barr 1 Comment

Clouds in Your Coffee? Skyscrapers and their Symbolic Heights

Jason M. Barr January 20, 2021

You’re So Vain?

On January 4, 2010, the Burj Khalifa officially opened its doors. At 828 meters (2,717 feet) it became the world’s tallest building by a long shot. It overtook the previously tallest building, the Taipei 101, by 302 meters (991 feet). The only rub: Much of Burj is empty space—the top third is a 243-meter (797-foot) spire—where no human will likely ever work or live.

The difference between the actual or architectural height (excluding TV and radio antennae) and the highest occupied floor is what the Council on Tall Buildings and Urban Habitat (CTBUH) has dubbed “Vanity Height.” They originally coined the term, with tongue in cheek, because some developers—presumably—have added a decorative element simply so they can brag about having a taller building. For the CTBUH, the de facto arbiter of official building heights, these elements create a conundrum.

The most famous recent examples of Vanity Height are the Petronas Towers (1998) and One World Trade Center (2014). When completed, the Petronas Towers took over the title as the world’s tallest building (until 2004) because of its spire. The highest occupied floor remains well-below the previous record holder’s top floor, the Willis (Sears) Tower (1974). To many, it seemed that to beat the record, you simply build a tall skyscraper, attach a glorified pole, and declare victory.

Similarly, One World Trade Center, in New York, is only the tallest building in the Western Hemisphere because of its 154-meter (505-foot) spire, which looks more like an antenna than an artistic statement. Its sole purpose, it appears, is to allow the skyscraper to rise 10 1,776 feet (541 meters), as a symbolic gesture to the birth (and hopefully continuance) of American Democracy.

Space Wasters?

In 2013, the CTUBH published an article discussing so-called Vanity Height. They showed that among a crop of 200-meter or taller buildings, several notable examples had spires or other architectural elements of at least 95 meters (312 feet), comprising 25% or more of their respective total heights. The article tickled the funny bone of the press, who went on a reporting rampage, producing such splashy headlines as, “Space-wasting ‘vanity’ skyscrapers revealed,” and “44 of the world’s 72 tallest buildings are cheating.”

Assumptions

While the 2013 article was meant as a jocular jab at some developers, the phrase has remained in the public sphere because it feeds the belief that skyscraper builders are only concerned about self-glorification and are unconcerned about other mundane things like profitability or urban well-being. The phrase “Vanity Height” implies that all structures with large vertical voids are—by definition—ego-borne. But this belief obscures other reasons for what is happening up top. The drivers and impacts of this extra height are more complicated.

Another implicit assumption is that skyscrapers are getting “vanier”—that builders are adding more of it now than in the past. The phrase fuels the idea that developers in the 21^st century are engaged in an arms race to claim the prize. This suggests a degree of dissipative or wasteful competition—that by adding height to stand out, developers are spending resources to satisfy themselves, with no larger benefit to society. To what extent are these assumptions true? The answers will be revealed below when we look at the data.

Vanity Heights? Despite the controversy, the degree of “space-wasting” height among the world’s tallest buildings varies widely. The Twin Towers and Willis (Sears) Tower have virtually none, while more recent structures add a varied amount (ignoring antennae). From Left: Burj Khalifa (2010), Petronas Towers (1998), Taipei 101 (2004), Willis (Sears) Tower (1974), Twin Towers (1972/3). Note that the buildings are not to relative scale.

From “Vanity Height” to “Symbolic Height”

Tall buildings serve many purposes beyond providing space for people to work, live, or play. They also convey information: Big corporations like to be in iconic buildings because they signal something about their business, such as their profitability or trustworthiness. Corporate headquarters are part of the larger need for branding because branding gives a certain level of assurance about what consumers get when they buy a company’s products. More broadly, companies that have national or international ambitions find they need to be in skyscrapers to signal their ability to compete in the global marketplace.

Cities like to have iconic structures because they increase tourism, foreign direct investment, and advertise that the city is a dynamic urban center. Architects, when designing tall buildings, also have multiple goals. They want to not only deliver an iconic structure to their clients but also seek to make their buildings aesthetically pleasing and meaningful. To architects, “Vanity Height” is often shorthand for the design up high.

I asked architect Ro Shroff, of 3MIX, who is involved in several tall building designs around the world, his thoughts:

I generally concur with the notion of Vanity Height, and it has almost become a de rigueur methodology for most architects, to “enhance” the proportions and appearance of the tower, and create some identifiable iconography to differentiate from other skyline cacophonies. This is accomplished either by extending the façade as a screen to hide the rooftop equipment or by creating unoccupiable voids, vertical spires, spiraling crowns or glowing lanterns, not too dissimilar from the design intents of the Empire State and Chrysler Towers in the 1930s.

Then there are developers who may want to have icons for their personal satisfaction or bragging rights. But this leads to an important question: Where do beauty and iconicity end and vanity begin? This is inherently unanswerable. Shroff adds, “Hopefully and presumably, such vanity exercises in ‘irrational exuberance’ by the architects or developers are also countered with fiscal responsibility, maintenance economics, and other checks and balances.”

The Information

The bottom line, however: We cannot say much about so-called Vanity Height by looking at a few buildings. We can cherry-pick and shout-out the ones that appear most egregious. But, as I show below, the data strongly support that relatively few buildings are as bad as we think.

This leads me to propose a new name for this type of height: Rather than Vanity Height, we should call it Symbolic Height, because it is height added to convey information of some kind.[1] This information can be literal, like broadcasting the name or logo of a corporation, or abstract, such as an aesthetic design or sculptural elements.

Early Examples of Symbolic Height in New York City. From Left to Right: World (Pulitzer) Building (1890) with decorative dome; Tribune Building (1875) with decorative tower; Singer Building (1908) with occupied tower; Empire State Building (1931) with mooring mast/spire. Note: Buildings not to scale.

A Brief History of Symbolic Height

Symbolic Height has a long history and is older than the skyscraper itself. A review of this history demonstrates the multiple purposes that tall structures serve, the different types of information that they broadcast, and the benefits of the voids up high.

We can think of gothic church spires or old city hall clock towers. Sure, their heights were meant to announce the power of the institutions that created them, but they also served other purposes, especially related to telling time—church bells and clocks to telegraph the hour of the day. They also provided locational beacons—in a low-rise city, people could head for the center by moving toward the structure rising in the skyline.

Then there are towers, arches, and obelisks, built with no other purpose in mind than as symbols (with the occasional observation deck thrown it). Despite their “useless” objectives, do we complain that the Eiffel Tower is too tall or that the Washington Monument is a waste of resources?

When the building technology to go tall was perfected, developers—be they corporations or individuals—realized they could add extra heights to convey information about the occupants or builders. The first record-breaking buildings in New York, such as the Tribune Building (1875) or World (Pulitzer) Building (1890) added decorative towers or domes to raise themselves above the fray and to express the power of their business or industry.

Early developers also added occupied towers. Both the Singer Building (1908) and Woolworth Building (1913) are large, bulky office building with extruded towers, which also play the role of Symbolic Height, though, in these cases, they also provided office space. It also shows that not all Symbolic Height is empty space or decorative spires.

And yes, developer and ego-based competition has driven buildings to be taller than they would otherwise be. The developers of the Empire State Building (1931) added a 61-meter (200-foot ) dirigible mooring mast to lock in the world record, while Walter Chrysler added the 56-meter (185-foot) stainless steel spire—“the Vertex”—to beat out the Bank of Manhattan Building (1930) at 40 Wall Street. However, without this competition—this “Vanity Height”—the city would feel a little emptier.

There are examples around the world of practical uses for the voids up top. The Ping An Tower, in Shenzhen, contains a mass tuned damper that helps stabilize the building against wind forces. In the observation deck of the Shard, one can look up into the “Vanity Height,” hovering above; the experience helps enhance the pleasure when viewing the London skyline.

The Opposite is Also True

Not every record breaker or supertall has Symbolic Height. Both the Twin Towers (1972/3) in New York and the Willis (Sears) Tower (1974) have near-zero additional space above the top floor. Architectural modernism after World War II was a movement away from overt expressions of decorative height. The idea was that record breakers speak their intentions simply by being tall towers. Today, the view of “Billionaires Row” from Central Park shows wide architectural variety on top. 432 Park Avenue—like the former Twin Towers—just stops, with no decorative elements. A few blocks away, the rising Steinway Tower has a tapering, almost two-dimensional, 90-meter (295-foot) crown. Vanity or art? Perhaps both.

Symbolic Height: A Look at the Data

Despite some interesting examples here and there, we cannot say much about Symbolic Height, on average, because no one has analyzed more than a handful of buildings. To this end, using the CTBUH database of tall buildings, I have performed a statistical analysis to look at the patterns of Symbolic Height for about 2,000 skyscrapers worldwide.

The goal is to answer a set of related questions: Is Symbolic Height—the difference between the architectural height and the height of the highest occupied floor—a systematic part of the tall building universe? What has been happening to Symbolic Heights, on average, over time? Has it been rising, as is commonly assumed? Does the data support the idea of dissipative or wasteful competition among developers? And lastly, are China and the United Arab Emirates (UAE) the worst offenders, as people commonly assumes? (Data sources and statistical results are here.)

Symbolic Height Around the World

The answer to the first question is “no.” The average Symbolic Height, as a fraction or percent of total height, for buildings around the world of at least 100 meters is about 10% (with a median of 8%). In other words, on average, Symbolic Height represents only 10% of the total structure’s height, which suggests it typically plays a very small role. For supertall skyscrapers of 300 meters (984 feet) or taller, that average is still quite low at 12% (median of 9.7%).

This is not to imply that all tall buildings have a Symbolic Height of only 10%. There is a degree of variation—mostly on the low end. 75% of 100-meter or taller buildings in the database have a Symbolic Height of 12.5% or less. Only 5% have a Symbolic Height above 22%. For those at or above 300 meters, the numbers are similar: 75% of these buildings have a Symbolic Height of 18% or lower. Only 5% have 28% or higher.

Variations in Symbolic Height. Left: Relative frequency histograms (%). The blue line gives the distributions for Symbolic Height for 100 m+ buildings in the sample. The orange line gives the distributions for 300 m+ buildings. For example, about 18% of 100 m+ buildings have Symbolic Height around 8%. Right: Cumulative relative frequency histograms. The blue line gives the percent frequency of Symbolic Height at or less than each value for 100 m+ buildings. The orange line is for 300 m+ buildings. For example, about 80% of 100 m+ skyscrapers have Symbolic Height less than or equal to about 13% Source: here.

Symbolic Height Over Time

What about over time? Is Symbolic Height growing? Again, the answer is “no.” Using this data, I have created a Symbolic Height Index (analysis here), which gives the average Symbolic Height around the world each year, relative to the long run global average of 10%, after controlling for building location and use. The results suggest, first, that is no long run trend, but rather is cyclical. The Index peaked in the 1997 (a year when no new world record breakers were built), before Asian countries dove into the skyscraper game. As places like China and the UAE ratcheted up the tall building construction in the 2000s, the Index moved up until 2006 (before Global Financial Crisis) and has been falling ever since.

The Index also reveals relatively muted movements. Even in robust times, when more developers were adding extra height, the highest amount above the average was 7 percentage points. In other words, the data suggest that Symbolic Height is based on fashion or tastes, rather than developers need to systematically outdo each other. The findings also suggest that “irrational exuberance” is punished in the long run.

Global Symbolic Height Index. This index gives the percent of Symbolic Height relative to the long run average (10%) for each year from 1968-2018. Note this index is an moving average (3 years) from 1966 to 2018, with 1982=10 (the long run average). Source: here.

Symbolic Height by Country

Which countries are the most egregious on average? The results of the statistical analysis are surprising. Among the 64 countries that have built at least one skyscraper since 1966, the top three are Ethiopia, Kenya, and New Zealand, with average Symbolic Heights of at least 25%. The UAE, China, and the United States are in the middle of the pack.

Just focusing on countries that have built at least ten skyscrapers, the UAE and China rise in the rankings. But their averages are still not that far above the global average of 10%. In short, when it comes to Symbolic Height, these countries about average. Among the public perception, China and the UAE appear to be “bad” because there are a handful of notable extreme cases. However, by focusing on those, we lose the skyline for the skyscrapers.

Symbolic Height by Country. Left: Rankings and average Symbolic Height for selected countries based on 64 countries with at least one skyscraper. Right: Rankings and averages for selected countries based on 27 countries that have at least ten skyscrapers. Source: here.

Variety is the Spice of Life

Given there is a certain cache to having a nominally taller building, the “stick-a-pole-on-it-and-declare-victory” type skyscraper is not likely to go away anytime soon. But a review of the broader evidence suggests that these types of buildings are the exception rather than the norm. There’s also little evidence that developers are engaged in a dissipative battle royale to beat each other for the title. So what if there are a few too-tall buildings out there? The variety alone makes it worth the cost.

Thanks to Maria Thompson for editorial assistance.

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[1] Note that in my book, Building the Skyline (2016), and a previous blog post, I defined Symbolic Height in a slightly different manner. There, Symbolic Height was the difference between the actual or architectural height and the profit maximizing or economic height based on revenues and construction costs. Thus, Symbolic Height can include extra floors above the profit amazing height in addition to decorative elements or spires. Given that the two definitions of Symbolic Height are likely to be fairly close, on average, it can be a reasonable substitution for the definition of Vanity Height.

January 3, 2019 by Jason Barr 4 Comments

The Economics of Skyscraper Height (Part II)

Jason M. Barr January 3, 2019

Note this is Part II of a series on the economics of skyscrapers. The rest of the series can be read here.

When we think of the world’s tallest skyscrapers, the natural reaction is to insist that they are “freak projects,” built by ego-driven, greedy developers who imposes their will onto a city. And yet, this whiff of conspiratorial thinking exists side-by-side with our fascination with tall buildings. Countless coffee table books—skyscraper porn, if you will—have been published that compare the world’s tallest buildings, and offer dazzling photos and fancy drawings. Skyscrapers are the soap operas of the real estate world; they generate a guilty pleasure that deep down inside we believe are not good for us. But, before we start drawing conclusions, it is important to first itemize the different elements of building height and focus on those that relate to the world’s tallest buildings.

Types of Height

Economic Height

First is Economic Height, which is the height that best balances the costs and revenues from the project, assuming it doesn’t impose hardships on the neighborhood. As a project goes taller, the cost of adding another floor increases at an increasing rate. But adding another floor also increases the revenue. Above the Economic Height, building one floor taller will add a cost that is greater than the revenue it generates. Below the Economic Height, money is “left of table,” since adding a floor will increase revenue more than the costs.[1] Economic Height is the sweet spot and is a useful benchmark because it also represents the most efficient allocation of a society’s resources. As discussed in another post, the height of the majority of the world’s tall buildings are consistent with the notion of Economic Height. But what about the world’s tallest buildings? Does the concept apply to them? We will return to this below.

Developer Height

The next height type is what I call the Developer Height. This is the actual height of a completed building. Developer Height can be taller or shorter than Economic Height. In some cases, height restrictions might force developers to build structures that are economically too short. In other cases, developers may build structures taller than pure economics would suggest, thus making them economically “too tall.”

Left: Rendering of the Jeddah Tower (1 km), under construction. Source: CTBUH. Right: Rendering of Sky Mile Tower (1 mile), Tokyo, proposed. Source: Wikipedia.

Symbolic Height

The difference between Developer Height and Economic Height, when the former is larger than the latter, is what I call Symbolic Height. It is that part of the structure’s height that is too tall from a pure profit maximizing perspective. Symbolic Height is meant to convey some kind of message or information to the world. The key point is that if we are going to make conclusions about supertall skyscrapers, we need to more fully analyze the causes and consequences of Symbolic Height.

But, before we proceed, we need to break down Symbolic Height a little bit more. In 2013 the Council on Tall Buildings and Urban Habitat (CTBUH) introduced a new concept, Vanity Height, which is the difference between the height of the structure and the height of the occupied floor. Many skyscrapers, especially among the supertalls, have spires and antennae that are not usable space.

I would argue, that from an economic point of view, what matters is not Vanity Height per se, but rather that part of Symbolic Height that remains after removing the Vanity Height. From a resource allocation question, how much of the floor count is “too tall” from a socially beneficial perspective? Adding spires or non-usable space simply to stand out does not strike me as inherently an excessive use of the world’s resources. These spires may naturally emerge as architectural elements that at, relatively low cost, allow the building to stand out. Being so high in the sky and quite thin, they are not likely to add to traffic congestion on the street or excessive shadows, and they may make the structures more pleasing and marketable.

Furthermore, some Vanity Height is necessary because plant and equipment and wind dampers are often placed on the top floors. Then there are antennae, which, while giving the buildings a height edge, also perform a useful service. The rest of these “vanity” decorations are architectural spires. In some cases, like One World Trade Center, we know there was a non-economic purpose at work, since the spire was used to bring the building height to 1776 feet. But in other cases it is not so clear. The existence of Vanity Height does suggest that developers and architects are interested in the “iconification” of their structures (and that there is a competitive element to this).

Theories for the Drivers of Symbolic Height

A common failure in the thinking about Symbolic Height is that people first observe the height of the building and then draw conclusions about the forces that generated it. Yet it’s nearly impossible to get into the heads of developers to know what they are thinking. Because these buildings are so large and visible, our brain is naturally drawn to infer that they are arrogant Towers of Babel. But this is backward logic.

Scientific investigation, including in the social sciences, is the process of offering theories, which generate testable hypotheses, which are then supported or not based on rigorous tests or experimental evidence. To simply say that the world’s tallest buildings are too tall based on casual observation or loose correlative exercises is nothing more than a leap of faith or faulty reasoning.

What are the theories about why supertall and megatall buildings exist above the heights predicted by economics? Some are theories are “nefarious,” others benign, and while others productive. Here I list nine, which can be divided into four categories: “economics,” “the selfish developer,” “the selfish politician,” and “urban growth strategy.”

Theory I: Economics

It might simply be the case that economics is on the side of the developer so that a supertall structure has little or no Symbolic Height. The world’s tallest building may naturally emerge from a “perfect storm” of factors that produce tall buildings in general: having a large lot in a central location, combined with a high demand for building space, and particularly low construction costs. Or, in some cases, the Economic Height is sufficiently tall that adding Vanity Height has a low enough cost to perform the additional function of advertising the building, city, or developer. In some cases, a large international corporation may be willing to pay for naming rights or to guarantee a minimum rent because of the advertising it brings to the company itself, which can be a useful signal to consumers about the quality of the company’s product.

“Selfish Developer” Theories

Theory II: The Ego Prize and Developer Competition

In the economics literature, one of the most-read papers on skyscrapers is by Helsley and Strange (2008). They observe that throughout the world, a city or region’s tallest building is much taller than the next tallest one. Based on this observation, and from readings from the popular press, they conclude that this suggests that developers aim to satisfy their egos by claiming the “prize” of “tallest building.” They then generate a mathematical model where two developers compete against each other. In equilibrium, a too-tall building can result. This model suggests that the outcomes we observe are theoretically possible, but it does not prove or disprove anything about the true motivations of builders.

Theory III: Easy Credit, Irrational Exuberance, and Moral Hazard

Another theory that looms large is that during times of easy credit, builders succumb to irrational exuberance. Banks and other financial institutions are so eager to lend money, that developers are emotionally compelled to build while the spigot is open. In this case, developers construct a region or world’s tallest building knowing that if the project loses money, the creditors (or society at large) will bear the cost of failure. Easy credit leads to a moral hazard: risk-loving, ego-driven developers are subsidized by the credit markets to go too tall.

Theory IV: Corruption or Legal Ambiguities

Demand Side

Corruption can take on many forms. In the case of Donald Trump, there is evidence that the demand for his buildings is due, in part, from those who want to launder money. It may be that the mega-wealthy are willing to pay higher than market rates for units to have a safe place to park their ill-gotten gains. In this case, developers are responding to the favorable economics, but they ask few questions about whether the funds were legally obtained.

Supply Side

Developers in some countries may bribe political officials to get tax breaks, low-interest loans, or artificially cheap land in the central cities. Thus, by illegally lowering the costs to construction, the economics of supertall construction becomes profitable. Another version of this is that builders can use clever strategies to interpret the law to their advantage, and in way that is not strictly illegal but is morally ambiguous. The real estate company of Jared Kushner, Donald Trump’s son-in law, is known, for example, to use the Federal Government’s EB-5 Program to get access to cheap financing for luxury towers in central locations. The program was designed to promote the redevelopment of economically depressed areas and was not intended to subsidize luxury towers.

“Selfish Politician” Theories

Theory V: Bread, Circuses, and White Elephants

This theory says that autocratic rulers use supertall skyscrapers to further their political agendas. By building them, these leaders provide symbols of their power, or seek to give pride of place to residents, who need justification or reasons to legitimize their autocratic leaders’ rule over them. Or, perhaps, autocrats use large skyscrapers as projects to put citizens to work or to distract them from their own oppression.

Theory VI: Political Career Promotion

A somewhat more benign version of the greedy politicians theory is that local officials use skyscrapers to advance their careers. In China this appears to be common, since the Communist Party makes decisions about who gets leadership positions within the various levels of government. In this case, promoting skyscrapers is a visible means for a local leader to signal that they can “get things done,” so they can then be entrusted with greater responsibilities or placed at a higher level in the government.

Urban Growth and Development Theories

Theory VII: Urban Growth and Neighborhood Formation

In the 21^st century, the world’s richest nations manufacture mostly services and intangible products. These are created by high-skilled workers who need to cluster together in large cities. The economic forces of agglomeration mean that larger cities have an edge over smaller ones. Governments throughout the world, recognizing this, might use a supertall building as a way to “spark” these forces of city growth. By building (or subsidizing) a landmark structure, local or national governments attempt to create business clusters that will draw people to that neighborhood and make it more productive.

Theory VIII: Tourism

Nothing is more fascinating than being on a viewing deck high in the clouds. People pay good money for a vertical road trip to the sky. A ticket for the observation deck at One World Trade Center is $34 (and for $74 you can upgrade to the “luxury” experience). Local leaders may subsidize a too-tall building because it draws tourists, which increases employment and economic opportunities for the locals. Visiting these icons creates pleasure and a memorable experience.

Theory IX: The Economic Map

The fastest growth in the world’s cities are in developing countries. Political leaders there realize that to promote their economies, some form of advertising helps to turn the world’s eyes toward them. This leads to greater foreign direct investment (FDI), tourism, and improved employment opportunities. Because skills and services generate the highest paid work, countries seek to increase the prospects of the urban-based services sectors, including their financial sectors. By building a too-tall structure, local officials seek to advertise the city, and increase global confidence in the place.

The Evidence

What does the evidence suggest about which theory best applies? This will be taken up in the next post.

Continue reading. The rest of the series can be read here.

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[1] Note that Economic Height is a theoretical concept because of the “lumpiness” of construction, the uncertainty about future revenues, and that we hold lot size and other things constant–meaning that building height is the only decision to be made. Lumpiness is due to the fact that there are thresholds when, if passed, make the costs can jump significantly, such as the need to add a new elevator shaft.