Bryan Caplan  

Why Buildings Aren't Taller

Barone on Personal Exemptions ... Illusory Bubbles...
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.

COMMENTS (13 to date)
mike davis writes:

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.)

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.

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 writes:

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 writes:

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 writes:
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.

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 writes:

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 writes:

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 writes:

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 writes:

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 writes:

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 writes:

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 writes:

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 writes:

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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