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  • 1. The Economics of Skyscrapers: New York City Urban Economics Prof. Barr
  • 2. Land Value Model
    • Profits for corporate firms:
    • π =PQ-AQ-C-sQd-R(d),
      • which yields rent equation via zero profit condition:
      • R(s)=(PQ-AQ-C-sQd),
      • where s is “cost of travel” for office workers (i.e., cost of walking/traveling to/from clients)
    Bid Rent Distance from center Office sector Manu. sector Residential
  • 3. Model cont.
    • This says that rent per acre is function:
      • Distance from center
      • Revenues
      • Costs
      • Wages
    • Competition among firms distributes land according to those who can and must pay the most for it:
    • i.e., land values and land use represent an process of economic evolution.
    • Steepest rents at the center.
  • 4. NYC in the 19 th c.
    • Rising commercial activity, esp. from 1825 onwards (Erie Canal) and center of global trading.
    • More and more firms competing for same space.
    • Rising population growth.
    • Increasing corporate and administrative activities.
    • Manhattan is an island, with limited possibilities for commercial expansion.
    • (1865: 44 th street northern-most development; 1883: The Dakota (W. 72 nd Street) was ‘in the Dakotas’)
  • 5. 26% 1,515,301 1890 28% 1,206,299 1880 16% 942,292 1870 58% 813,669 1860 65% 515,547 1850 54% 312,710 1840 64% 202,589 1830 28% 123,706 1820 59% 96,373 1810 83% 60,515 1800 33,131 1790 % Change Population City of New York (does not include Brooklyn)
  • 6. NYC cont.
    • Increasing competition:
      • Bids up value of land due to more profits of larger firms.
      • Large opportunity costs of travel for workers.
      • More agglomeration economies.
      • Greater need for face-to-face communications.
    • Generates economic need for density and economic demand for density.
    • Rising land values drive technological innovations that could enable more intensive use of existing land.
    •  The skyscraper!
  • 7. 1811 Grid Plan
    • In 1811 NYC land arranged according to the grid plan.
    • Basic lot sizes were fixed at 25’ x 100’.
    • Avenues and streets were either north/south or east/west.
    • Plan was designed to ‘rationalize’ development (e.g. contrast Wall Street area with north of 14 th street)
    • The effect was to aid business growth:
      • Real estate was made simple and easy to value.
      • Made lots a type of tradable commodity.
      • Gave clear property rights demarcations.
      • Notice that is also made assemblage of large lots relatively difficult (also giving an incentive to build tall on smaller lots)
  • 8.  
  • 9. Manhattan Schist
    • Unlike many geographies, in downtown Manhattan bedrock is very close to the surface.
    • Bedrock is stable.
    • As a result, costs of digging and laying foundation are relatively low.
    • No need for caissons.
  • 10. Transportation Innovations and the Rise of NYC CBD
    • Before 1815: NYC was a walking city.
    • Steam ferry service (Robert Fulton, 1817)
    • Horse driven buses (omnibuses) (1820s-1840s)
    • Horse driven buses on tracks (1850s-1880s)
    • Electric Trolleys (1885-1920s)
    • Commuter Railroads (1837)
    • NYC Subway (1904)
  • 11. Technological Innovations and the Skyscraper
    • Iron and Steel Skeleton (1850s-1860s).
      • Before that supporting walls were stone and brick. Too expensive to build high b.c. needed thicker and thicker base walls.
      • 1855: Bessemer Steel process
    • The Elevator
      • Elisha Otis of Yonkers, NY developed safety break in 1851 (demonstrated at New York's Crystal Palace exhibition).
      • 1871: Hydraulic elevator replaces steam.
  • 12. Skyscraper Technology cont.
    • Heating and Cooling technology
      • Steam and hot water systems were developed in 19 th c.
    • Wind-bracing technology.
    • Artificial Light
      • Edison laid electric lights in downtown NYC in 1871.
      • 1938s fluorescent light bulbs on market.
    • Steam powered construction tools
      • cranes, shovels, etc.
  • 13. Skyscraper Early Time Line
    • 1871: Great Fire of Chicago destroys downtown (The Loop).
    • 1885: First Skyscraper, 10 story Home Insurance Building in Chicago.
    • 1890: World Building Joseph Pulitzer's New York World (Newspaper row, 26 stories, first building in NYC to surpass 284’ spire of Trinity Church)
    • 1902: Flatiron Building
    • 1913: Woolworth Building (“Cathedral of Commerce”)
    • 1915: 42-story Equitable Building.
    • 1916: NYC Zoning Laws
  • 14. Skyscraper Timeline Cont.
    • 1929: Chrysler Building
    • 1930: Empire State Building
    • 1952: The Lever House
    • 1961: New Zoning Resolution
    • 1973: World Trade Center (Port Authority)
  • 15. How High to Build?
    • Key difference between engineering height and economic height .
    • There is virtually no engineering limit to height.
    • Economic height reflects the maximum height (and square footage) that generates the highest net return on the investment.
    • Economic height reflects various costs to purchasing land, building and operating the structure.
  • 16. Economic Costs
    • At some point (for floor height) the law of marginal diminishing returns starts to kick in (i.e., additional market rents do not cover additional costs):
    • Taller buildings need:
      • Heavier foundations.
      • Extra wind bracing.
      • More space for elevators.
      • More and larger mechanical systems for ventilation and heating.
  • 17. 1916 Zoning Law
    • Was first comprehensive zoning law in the country.
    • Stated where different economic activity could take place in the city (i.e., zones).
    • Did not restrict height per se :
      • Rules for how much of a lot could be used for the building (e.g., 25% had no restrictions).
      • Introduced ‘set back’ rules based on width of street.
  • 18. Skyscraper Epochs
    • Though architects have discussed different aesthetic styles that have evolved over the years, this discussion cannot take place without also mentioning the larger economic, technological and political forces at work: “form follows finance.”
  • 19. Skyscraper Epochs
    • Period 1: 1890-1916
      • Tended to take up whole lot.
      • Occasionally had towers.
      • e.g., Equity Building, Singer Building, Woolworth Building.
      • Arrangement of office space and building based on need to maximize exposure to sun light.
      • 20-30 stories were profit maximizing.
  • 20. Epochs cont.
    • 1916-WWII
      • 1916 zoning created ‘wedding cake’ style.
      • 1920’s (“The Roaring Twenties”) saw a massive speculative and building frenzy.
      • Result: Race to the heavens.
      • e.g. Chrysler vs. 40 Wall.
      • Empire State Building
      • Art Deco style.
      • Depression and WWII put ‘kaybash’ on skyscraper market.
  • 21. Epochs cont.
    • Post WWII – 1970s
      • The International Style
      • e.g. 1952: The Lever House (Skidmore, Owings & Merrill), 1958 The Seagrams Building (Ludwig Mies van der Rohe and Philip Johnson
      • Glass boxes were not only in vogue but were more profitable:
        • Class less expensive than stone.
        • A/C and florescent lighting allowed wide open (more rentable) space.
      • 1961 Zoning Resolution promoted the style.
  • 22. 1961 Zoning Resolution (from NYC Zoning Handbook )
    • “ Incentive zoning" offered a bonus of extra floor space to encourage developers of office buildings and apartment towers to include plazas in their projects.
    • Emphasized the creation of open space. A flexible document, it was a product of the best planning, economic and architectural skills of its time ( nb : “we’re sorry, we made a mistake”).
    • “ Resulted in tall buildings out of scale with their neighborhoods. And the open space provided has not always been particularly useful or attractive.”
    • New approaches since 1961: incentive zoning, contextual zoning, special district, air-rights transfer and restrictive covenant techniques have been used to make zoning a more responsive and sensitive planning tool.
  • 23. Epochs cont.
    • 1970s – Present
      • PoMo and Beyond
      • e.g. Philip Johnson’s AT&T Building and “The Lipstick” Building
      • The Freedom Tower, 1776 feet tall.
      • “ Asian Tigers” take lead in world’s tallest building.
      • 60-70 max. economic height.
  • 24.  
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  • 28. References
    • Gottman, J. (1965). “Why the Skyscraper?” The Geographical Review .
    • Landau, S. B. and Condit (1996). Rise of the NY Skyscraper: 1865-1913.
    • Willis, C. (1996). Form Follows Function: Skyscrapers and Skylines in New York and Chicago.