Finally, a financial explanation for Manhattan’s quirky skyline

For more than a decade, Jason M. Barr has been crunching a comprehensive data set about New York’s most famous structures. His book, Building the Skyline: The Birth and Growth of Manhattan’s Skyscrapers, is a little bit different from other skyscraper books you might have read; it’s not so much an architectural meditation on towers, but more a fact-packed economic history of the Manhattan skyline.

Barr looks at the financial implications of Manhattan’s high-minded landscape, from the construction costs of the first skyscrapers to how supertalls impact the neighborhoods around them. What’s most fascinating about Barr’s book is how skillfully he uses all of this data to bust long-held misconceptions about New York City’s development. Here are five particularly stubborn myths that Curbed asked Barr to debunk.

Manhattan’s skyline is shorter in the middle due to a lack of bedrock

FALSE. “Perhaps one of the most puzzling aspects of the Manhattan skyline is that skyscrapers are ‘missing’ from the area north of City Hall and south of Midtown. One of the most commonly given reasons for this is that the bedrock is particularly deep in the area north of City Hall. It is believed that this deep bedrock prevented developers from building skyscrapers there. Skyscrapers, because of their weight and size, should be anchored to the bedrock to prevent them from leaning over or settling in an uneven matter.

 Jason M. Barr
This figure shows the bedrock depths relative to sea level. The blue parts are where the bedrock is below the sea level and the orange parts where it is above. The deepest bedrock is in the Lower East Side (but that’s not why there are no skyscrapers there).

“There is no evidence that the bedrock valley was a reason why no skyscrapers [were built] north of downtown. The real reason is because the neighborhoods north of Chambers Street were where the historical tenement districts and factories were located. These were neighborhoods that were of little interest to high-rise developers because the rents there were too low to justify building tall.”

The “Roaring 20s” caused Manhattan’s skyscraper boom

FALSE. “It’s true that the second half of the 1920s was a period that roared. I don’t dispute that. It was one of the city’s greatest periods of skyscraper construction. But very little research has been done to ask why that’s so. Most of the discussion focuses on the three-way race for the world’s tallest building which took place within a one-year space (1930–1931) between the Bank of Manhattan Building (40 Wall Street), the Chrysler Building, and the Empire State Building.

 Maps by Eon Kim
From 1900 to 1919, skyscrapers were mostly built near Madison Square Garden, with a few along 42nd Street. From 1920 to 1945, skyscrapers were constructed in the corridor from Penn Station to Grand Central Terminal.

“But the key point is that these buildings were not representative of the period. By focusing only on these three we miss the larger point about the economic and real estate scene in the 1920s; in addition, we cannot judge the 1920s relative to the Great Depression, which was an event that never could have been predicted and was created by a ‘perfect storm’ of issues never faced before by the modern world. In short, the boom in skyscrapers in the 1920s was fundamentally due to the modernization of the American economy and the great demand for office space, which was becoming increasingly needed as the nature of work shifted from agriculture and manufacturing to services. New York, being the center of it all, has such a huge demand for new offices and tall buildings.”

Investing in New York City real estate is a sure bet

FALSE. “On his deathbed in 1848, John Jacob Astor allegedly spoke these words: ‘Could I begin life again, knowing what I now know, and had money to invest, I would by every foot of land on the island of Manhattan.’ His words have given rise to the belief that investing in Manhattan real estate is always a winner.

 Source: Spengler, E. H. (1930). Land Values in New York in Relation to Transit Facilities. New York: Columbia University Press
Land prices measure the value of geography; they indicate what people and businesses are willing to pay for the right to occupy a location in the city. As the 20th century progressed, land values increased northward and outward. Skyscrapers are both a cause and effect of high land values.

“Well, this is not true. For starters, today’s crazy land values are historically unprecedented. Second, from 1931 to 1977, the city experienced a massive land-value deflation. Land values started to rise by then but it wasn’t until the mid-1980s that land value (adjusted for inflation) reached their 1931 values. Think about all the movies about how horrible New York was in the 1970s and 1980s: Taxi Driver, Escape from New York, Fort Apache, the Bronx.

Skyscrapers are just tall, skinny versions of developers’, um, egos

FALSE. “Because skyscrapers are so large and they impose themselves on the urban fabric, many people naturally assume that skyscrapers are the embodiment of developers’ egos gone wild. That is to say, because the skyscraper can be used to show off, it must be the case that developers are wasting resources to enhance their public images and to make them feel good about themselves, or are competing with other developers to claim the ‘trophy’ of ‘tallest building.’

 Jason M. Barr
The Skyscraper Profit Index is created by dividing average Midtown asking office rents by the Turner Construction Cost Index. It is a measure of the relative profitability of office construction in Manhattan. As the graph shows, total height is strongly correlated with the Profit Index, suggesting that builders begin construction when the economic environment is favorable.

“While I don’t deny that from time to time there are buildings that are constructed as economically ‘too tall,’ the truth is that the vast majority of buildings are built because of profit maximization. The heights of buildings in New York City over the last 125 years consistently demonstrate a strong relationship to the underlying economic climate—as rents and real estate prices go up, so do building heights on average, when rents and prices go down, so do building heights.”

Every time a new “tallest” building is finished, financial collapse follows

FALSE. “Several years ago, an economist working for a major international bank created a graphic timeline that purported to show that major financial crises happen around the time when a new world’s tallest building is coming online. This prompted him to call this the Skyscraper Curse—that we should run for the hills when we see a new world’s tallest building.

 Jason M. Barr
The top graph shows the total additions to the skyline each year in feet. The bottom shows the height of the tallest building completed each year (in feet). During depression years, for example, the tallest building may be only at 50 feet, while during heady times, buildings can be taller than 1000 feet. Since 1890, there have been only five major skyscraper construction cycles.

“This is an utter fiction and an example of what I call Rorschach Economics—the mind naturally creates patterns that don’t really exist, and people make the pairing between skyscraper heights and economic downturns because it ‘feels’ like it should be so. But when one actually does a series of statistical, objective tests, one can show the curse is not true.”