| Just the Peaks
This newsletter, at a glance
|
Tall buildings deliver a unique share of advantage and disadvantage
Everest brings you sky-high factors for CRE consideration
For ambitious builders and developers, skyscrapers offer a winning formula: stunning views + infinite floorspace = surefire investment success. With vast opportunity for residential, office and retail hosting, the sky’s the limit.
For this reason, more and more investors are taking the aerial plunge across the globe, building more supertall skyscrapers in 2019—26, to be exact—than in any prior year.
Still, fear of heights remains very real. Urban planners and developers face a slew of unexpected challenges when building up. In America, it’s less about the actual engineering and technique—and more about the money. As a result, skyscraper development in the States has slowed.
Measuring 1,776 feet, One World Trade Center is the only U.S. skyscraper among the world’s top 10 tallest (clocking in at 7th). Meanwhile, countries like China, Saudi Arabia and the United Arab Emirates are in the midst of a boom. Overseas construction costs are markedly low compared to cities like New York and Chicago, which has helped foreign entities eclipse the U.S. since the start of the new millennium.
Before we consider the upsides and downsides of skyscraper investment, let’s decide what qualifies:
Tall order
- As early as the 1880s, the term skyscraper referred to any building with 10 to 20 floors
- Today, a skyscraper is any ‘continuously habitable high-rise building’ with over 40 floors and reaching heights of at least 494 ft (150 m)
- A building measuring above 656 ft (200 m) is called a tall skyscraper
- A building measuring above 984 ft (300 m) is called a supertall skyscraper
- A building measuring above 1,969 ft (600 m) is called a megatall skyscraper
**For more skyscraper facts, visit Encyclopedia Britannica
Worth the climb?
If you’re considering a foray into tall building development, there are many complex factors to weigh—both positive and negative. Let’s begin with the good.
To start, tall buildings transform a cityscape in more ways than one. In major cities, they lower housing costs, create new jobs, cultivate a stronger sense of community, and bring architectural interest to otherwise mundane urban landscapes. Not to mention, such towering spectacles practically market themselves.
You can see why developers stand to profit. And today, you don’t have to be a bigshot to cash in.
“From the pyramids to the Empire State Building, the world’s largest structures have typically been financed by the superrich,” says Max Raskin of Bloomberg. “New York-based Prodigy Network, best known for marketing the Trump SoHo hotel condominium, is now bringing crowdfunding to real estate, soliciting thousands of investors to buy slices of a skyscraper.” Unlike most commercial real estate investment, the model has people funneling funds into a single asset (as opposed to many).
Also, consider things from a simple economic standpoint. When land prices are high, building up makes perfect sense. With such voluminous room on such a relatively small footprint, developers can be creative in how they utilize the space.
But take a step back, and you realize a laundry list of potential hiccups. Here are just a few of the oft-overlooked uses for a skyscraper (and how you can still benefit from them):
Skyscrapers: 3 Factors for Consideration
Restaurants
The pros: Since the dawn of the skyscraper, developers have understood the inherent value of a good view. Top floors have always been reserved for lux restaurants—an environment perfect for “power lunches, romantic assignations and schmoozy dinners with clients,” according to David Thame of Bisnow. The draw is undeniable.
The cons: Getting diners (and supplies) up 50 floors is not as simple as it sounds. Sure, elevators are a start, but when restaurant managers are stuck in the penthouse, they have very little control over customer experience from point A to point B.
In addition, designers note lighting challenges, as reflection off of glass tends to kill the view. Window spots are also limited, resulting in wasted dining space.
Safety
Pros: From an architectural standpoint, today’s skyscrapers are exceedingly safe. Thankfully, America has 100+ years of tall building design in its back pocket. Stairs are hardly needed, although they are necessary for safety purposes.
Funny enough, tenants have come up with a unique method for capitalizing on unused fire escapes. A company called Vertical Rush is helping to raise money for charity by encouraging people to run up the stairs in an upright race. “The event is now in its 12th year and attracts around 1,300 runners,” says Thame.
Cons: High rise living may be perceived as glamorous, but it is not for the faint of heart. Complaints include long elevator times, occasional tech problems, as well as the ‘impossible’ task of climbing stairs in case of emergency. Add children to the mix, and the challenges quickly compound.
Crime
Pros: With very few points of entry, tenants enjoy enhanced privacy and security. With the right surveillance system, door monitoring and lobby setup, building managers can keep everyone safe at a relatively low cost. Compared to the manpower required to surveil a sprawling complex, vertical security appears the more attractive option.
Cons: In the age of social media, more and more thrill-seekers are flocking to skyscrapers to live out their daredevil dreams. Thame notes that Manchester, London, Paris and New York are the most popular destinations.
When trespassers are oblivious to danger, owners and managers are left to worry about lawsuits, among other consequences of the trend.
Everest says: reach for the stars