Whenever Robin Hanson turns to urban economics, I expect to be edified. A prime example:
Urban
economics studies the spatial distribution of activity. In most urban
econ models, the reason that cities aren’t taller is that, per square
meter of useable space, taller buildings cost more to physically make.
(Supporting quotes below.) According to this usual theory, buildings
only get taller when something else compensates for these costs, like a
scarce ocean view, or higher status or land prices.Knowing this, and wondering how tall future cities might get, I went
looking for data on just how fast building cost rises with height. And I
was surprised to learn: within most of the usual range, taller
buildings cost less per square meter to build.
What gives?
Perhaps
the above figures are misleading somehow. But we know that taking land
prices, higher status, and better views into account would push for
even taller buildings. And a big part of higher costs for heights that
are rare used could just be from less learning due to less experience
with such heights. So why aren’t most buildings at least 20 stories
tall?Perhaps tall buildings have only been cheaper recently. But the Hong
Kong data is from twenty years ago, and most buildings made in the last
years are not at least 20 stories tall. In fact, in Manhattan new residential buildings have actually gotten shorter.
Perhaps capital markets fail to concentrate enough capital in builders’
hands to enable big buildings. But this seems hard to believe.Perhaps trying to build high makes you a magnet for litigation, envy,
and corrupt regulators. Your ambition suggests that you have deeper
pockets to tax, and other tall buildings nearby that would lose status
and local market share have many ways to veto you. Maybe since most tall
buildings are prevented local builders have less experience with them,
and thus have higher costs to make them. And many few local builders are
up to the task, so they have market power to demand higher prices.Maybe local governments usually can’t coordinate well to build
supporting infrastructure, like roads, schools, power, sewers, etc., to
match taller buildings. So they veto them instead. Or maybe local
non-property-owning voters believe that more tall buildings will hurt
them personally.
Further proof, by the way, that the Tiebout model is wildly over-optimistic.
READER COMMENTS
mike davis
Nov 30 2013 at 9:32am
I didn’t see a link to the study Robin examined, but if it looked only at construction costs, it missed a part of the puzzle. Taller buildings are not only more expensive to build, they’re more expensive to use. This happens for a number of reasons but most importantly because of constraints on elevator technology. They even talk about the “elevator conundrum” (When the building gets taller, more floor space needs to be devoted to elevator shafts or transfer stations.)
http://en.wikipedia.org/wiki/Skyscraper_design_and_construction
There is also the risk of catastrophic failure (seen all too tragically on 9/11). A less concentrated city can be thought of as a more diversified city.
Richard O. Hammer
Nov 30 2013 at 10:45am
Consider Washington D.C. where the tallest buildings seem to be 10 or 11 stories. In my informal observation there does not seem to be a single 15 story building in the city. I understand this is because of a statue; no building may be taller than the Washington Memorial or the Capitol building or something.
In my thinking, this statute is part of the cause of the traffic congestion around Washington D.C. Many commuters would be eager and able to pay handsome rent for a 40th floor luxury apartment. But such apartments do not exist in D.C.
If it were not for this statute, I suppose the government buildings would soon be surrounded with skyscrapers providing residences for all the well paid seekers of government power.
Robin Hanson
Nov 30 2013 at 12:09pm
Mike, that just isn’t much of a problem for twenty story buildings, as a visit to such a building near you will verify. So that doesn’t explain why most buildings are shorter than that.
RohanV
Nov 30 2013 at 12:49pm
Couldn’t you call a local builder or architect that is constructing a new building which is less than 20 stories and inquire?
I would guess that it takes too long to build a tall building, even if it is cheaper per floor. A shorter building will actually hit the market within a decent timeframe.
MikeP
Nov 30 2013 at 5:38pm
I find this statement surprising. I would think the marginal additional floor inside an existing building is obviously cheaper than an additional floor inside a new building.
Of course, the greatest confirmation that taller buildings are more economical per square foot is that so very many cities prohibit tall buildings.
MingoV
Nov 30 2013 at 5:40pm
Tall building construction, on a square foot basis, is less than for shorter buildings. However, maintenance costs per square foot are greater for a tall building.
Powerful pumps are needed to get water up to the top floors of a tall building. Most tall buildings use huge storage tanks on the roof or top floor so that water distribution is based mostly on gravity feed. The water delivery system in a tall building requires mores costly maintenance than in a shorter building.
More floors means more elevators (otherwise wait times would be very long), and more tall elevators means high maintenance costs per square foot.
Maintenance and inspections of sprinkers, fire hoses, extinguishers, and fire alarms cost more in a tall building because they are essential: the upper floors cannot be reached by fire truck ladders.
Last on my list, but not least, window washing costs more per square foot in taller buildings.
Note: My brother was a project manager for a construction firm that makes large buildings of various heights.
Glen S. McGhee
Nov 30 2013 at 8:34pm
Wrong end of the argument? Should be: Why ARE buildings SO TALL?
Reason is that they are a status competition at the high-end, mounted by architects, builders, financers, and political entities, such as cities. Edifice complex.
Zoran Lazarevic
Dec 1 2013 at 1:52am
Building tall in Manhattan requires buying air rights from neighboring properties. Given that Midtown and downtown are already tall, and that air rights are maxed out there, this regulation amounts to a ban on new tall buildings.
Why do we have such regulations? Taller buildings imply high concentration of people, resulting in need for higher capacity water/sewage pipes and electrcal lines, more subway cars, more parking spaces, more traffic congestion and polution, etc.
mike davis
Dec 1 2013 at 8:40am
I think Robin is correct in thinking that the cost of using a relatively short building (say, less than 10 stories) is not proportionally less than using a somewhat taller building (say 10 to 20 stories). He’s also asking an asking an interesting question about why we don’t see more buildings in that range (should we call these taller, smaller buildings?).
I’m wondering, though, why he’s asking this question. My strong priors beliefs are that what we observe is optimal. That is, I’m pretty sure building size can be explained by costs and benefits that are obvious to the experts. I’d like to know what those costs and benefits are. But I certainly concede there may be other things at work that don’t fit onto a nice spread sheet. (Path dependencies, capital constraints, other weird multiple equilibria….who knows?) If they’re important, then we’ve come across something even more interesting than the relative importance of elevator shafts.
MikeP
Dec 1 2013 at 11:31am
I’m pretty sure building size can be explained by costs and benefits that are obvious to the experts.
The main factor that explains building size is suburban homeowners’ not wanting large cheap apartment buildings in their neighborhoods.
jon thiele
Dec 2 2013 at 8:21pm
Why aren’t buildings in a city all the same size?
Perhaps I am wrong, but I believe it costs more per square foot to build a tall building because of the engineering requirements. It is not a linear cost function; additional floors are not added at steady cost per floor, but rather additional floors beyond a certain level add costs to lower floors as well to keep the building strong against the wind. This increase increases as a design goes from 30 to 50 to 60 stories or something like that.
If that is so, then as the market moves towards equilibrium all new buildings should be more or less the same number of stories– not exactly the same but within the range of a certain cost/structural level. No?
Mike Meyer
Dec 4 2013 at 11:44am
Another reason buildings aren’t taller is that taller buildings are heavier and need a substantial foundation and the right type of soil in which to plant them. If I remember my New York geography correctly, the two main areas in Manhattan with tall buildings are also the parts of Manhattan with substantial granite rock formations relatively close to the surface. If you build a tall, heavy building on a bad soil foundation, it will sink and fall over. See Pisa, leaning tower of, 1 each.
james hass
Dec 4 2013 at 1:17pm
How about diminishing marginal utility for each floor? Rail hubs and other special features back in 1920 raised central city land values, leading to high prices and high buildings. Todays transportation systems are more auto dependent and distributed, so those reasons aren’t as strong. This doesn’t answer the problem “why are most new buildings squat instead of cubic?”
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