What’s The Connection between Skyscrapers and Economic Turmoil?

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February 10th, 2012

“Once I built a tower up to the sun, brick and rivet and lime. Once I built a tower, now it’s done. Brother, can you spare a dime?”

The Empire State Building was completed in 1931, the same year “Yip” Harburg wrote this lyric. The song grew to become an anthem to unemployed American builders during the Great Depression. But these words could easily apply to those put out of work after building Burj Khalifa or one of hundreds of other skyscrapers that now cast long shadows across the Middle East.

The skyscraper index

If you’re beginning to wonder whether skyscrapers are an economic jinx, you are not alone. What began as Andrew Lawrence’s tongue-in-cheek “Skyscraper Index” to correlate skyscraper construction with business cycles has grown into serious research. As recently reported by BBC news, Barclays capital wrote: “Often the world’s tallest buildings are simply the edifice of a broader skyscraper building boom, reflecting a widespread misallocation of capital and an impending economic correction…” Misallocation of resources is one of the unfortunate side effects of economic bubbles. Mega skyscrapers may be an indication of a distorted relationship between land values and construction costs.

Why build these skyscrapers?

The construction cost of a one story commercial building is typically $100-$200 per square foot, varying widely because up to 70% of this is the cost of the land. The construction cost per square foot of a skyscraper is approximately $500 per square foot and the cost of WTC 1 in New York City is $1,150/square foot.

Construction costs

Working through the details is one exercise, but economic reasons for building a skyscraper seem to vanish by the tenth floor. So if a pencil building seems to be the best fit for the economics of a site, you might want to consider funding horizontal public transportation to another location. The chances are good that the land values are floating on an economic bubble. And when the bubble pops, the skyscraper will have to support itself long after it makes economic sense.

The skyscraper symbol

The Great Pyramid of Giza stood as the highest man-made structure on earth for almost 4000 years before the Lincoln Cathedral exceeded its height in the 14th century. This record held for another six centuries before the Washington monument topped it at 555 feet.

Symbolic structures

These were all symbolic structures. They didn’t pretend to be green or economically practical. They were works of art which symbolized something. Skyscrapers rarely make economic sense, but they can be powerful symbols. So many people think of modern skyscrapers as symbols of economic prosperity it has become a cliché since they often indicate quite the opposite.

Are they Green?

While there can be an advantage in avoiding horizontal sprawl, vertical sprawl can be just as bad for the environment, possibly worse. Even so-called “green” skyscrapers consume a massive amount of resources and energy. They cast long shadows, kill millions of birds and expose far more surface area for collecting solar heat than the land beneath them.

This entry was posted on Friday, February 10th, 2012 at 9:59 am and is filed under Business, Economy, Finance, Personal / Internet, Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

What’s The Connection between Skyscrapers and Economic Turmoil?

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