For the first decade of its existence, New Yorkers jokingly called the building the “Empty State Building” because it had so few tenants. The Empire State Building was conceived in the late 1920s, just before the Great Depression. The Curse has a lot of history to back it up. According to the theory, skyscrapers, particularly those attempting to be the tallest in a particular category (tallest building in China, for example) are often conceived during a time of economic irrational exuberance and, frequently, just before a bubble bursts. When a project’s primary goal is to tower over its surroundings, investors should be suspicious that the developer may value prestige over profit.Īt a certain point when constructing a skyscraper – and this point varies depending on a variety of factors, including land value and construction technology – adding another floor becomes exponentially more expensive and unprofitable. But, the skyscrapers that the theory refers to can reach twice the height of the other buildings in the area. Believers in the Curse use skyscraper projects as a proxy for what Nobel-prize-winning economist, Robert Shiller, labeled “irrational exuberance.” The theory suggests that economic busts are driven by policy: as governments provide easy credit to spur economic growth, the sudden influx of cash fuels poor-performing projects that cost more than they create value.īuilding projects can offer the chance for stellar investment opportunities in areas with expensive land prices. While the ‘Curse of the Skyscraper’ might sound like a B-movie horror flick, it is backed by economic theory. You may have missed the news that an obscure government bureau recently introduced limits to new building heights in April – a regulation almost certainly related to what economists call the ‘Curse of the Skyscraper.’
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |