The 1% truth of Knight Frank’s 2015 Skyscraper Report

The 1% truth of Knight Frank’s 2015 Skyscraper Report

If you keep up with the latest skyscraper news (preferably though our wonderful Flipboard magazine) you must have seen the headlines suggesting something like Hong Kong skyscraper office rents still the highest in the world or Who knew? Dubai skyscrapers among the ‘cheapest in the world’. All of these news flashes were based on an annual skyscraper report (PDF) published by the global real estate consultancy firm of Knight Frank. Next to ranking the office rents for skyscrapers in global cities, it shares a few future trends and general statements about skyscrapers. Let’s have a look at this. 

Headlines such as the examples above are often a popular interpretation of research, which in turn is, or should be, a thoughtful interpretation of collected data. Many, many things can go wrong in the process. For example, when making statements involving skyscrapers, the first order of business should be to define what a skyscraper is. I’m sure we can all agree on the Empire State Building, Burj Khalifa and Shanghai Tower being proper examples, but what about that 100-meter tall office building standing out in cities like Rotterdam, Milwaukee or Bogotá?

The popular but unfounded height threshold for a skyscraper is 500 feet / 150 meters, or if you decide it is a qualitative term, you can define a skyscraper as a building that likes to be tall. The only thing close to a definition in Knight Frank’s report is a line saying: London had added 23 new skyscrapers (a building over 350 feet) since the turn of the Millennium. Of the many attempts to define a skyscraper I have seen, 350 feet as a threshold height is a first for me.

knight_frank02The Shard and the new skyscrapers in the EC3 postal code being London’s latest vanity addresses. source: wikipedia

Really what the skyscraper is is an umbrella term for many building that literally stick out of the crowd. Amongst others, the Skyscraper Dictionary, distinguishes  between the supertall, cityscraperskyscraperette, superslender and landmark as different types of skyscrapers, each with their own appearance and merits. Throwing all types in a heap and draw conclusions from that might get you the kind of average result that doesn’t represent any reality.

Throughout history, skyscrapers have been sold to us as an necessity or an urban problem solver but mostly were built for the kick of it. The report acknowledges the latter by stating that skyscrapers are one of several means firms have found to make the office an exciting place to be. This is based on the idea that next to a handsome paycheck, employees look at the extras an employer has to offer. Or as the report puts it: Being in a skyscraper is another way to give the office wow factor in the eyes of staff  … Moving to a new tower can offer a sense of a new beginning that will encourage staff to embrace change. … Skyscrapers are seen as a way to give staff a workplace that feels special, and promotes esprit-decorps – an office you want to tell people about at a dinner party. The report acknowledges that it’s about more than an office with a nice view and suggests that locker rooms, showers, bike racks, eating establishments, extensive basement areas and retail concourses help attracting new staff, which interestingly are are amenities that typically can be found at street level instead of in the sky.

Next to the ability to keep employees happy, the report makes a few statements which exist mostly in textbooks: in order to accommodate economic and population growth a city can either move outwards or upwards. How about the option to increase the urban density? Residential density barely present themselves in high-rise zones but rather as densely built, street bound neighbourhoods. Ever since New York City adopted the 1916 Zoning Resolution we know that there are light and air issues involved when scraping the sky unchecked, meaning that as much as skyscrapers create space on a single plot in theory, in reality they also need space in order to maintain an attractive environment. 

Also: if more homes can be built near to work, commuting times are cut, which benefits social and family lives. This makes sense on paper but knowing that the median price of a house in New York and San Francisco is already close to, or more than 1 million us$, adding a fancy skyscraper with appartments only the happy few can afford is not going to offer much to the fresh and ambitious college grad.

Flipping through the report it becomes obvious it is happy to make general statements which are exemplified with the high-end exceptions of the skyscraper world. Looking at these examples it’s clear that it focusses mainly on the global top-tier cities (New York, London, Hong Kong, Shanghai), the financial Fortune 500 companies (HSBC, KPMG, PwC) and the trophy address real estate (London Shard, One World Trade Center, Shanghai Tower), or in other words, the 1% reality most of us will never be a part of is presented here as the new normal. Claiming that going skywards helps to keep a cluster local and skyscrapers reduce the need to sprawl on the back of that really is oversimplifying the case for skyscrapers, especially when your city’s name is not New York or Hong Kong.

Probably unintended, the report pretty much confirms the “happy few” sentiment by stating that one reason very large buildings are in demand: for funds which have very large amounts of money to deploy sub-$100 m deals can be too granular, however skyscrapers allow sums over the billion dollar mark to be invested in a single deal. In other words, exclusive skyscrapers are sought-after investments because they are expensive.

The main thing I’m getting out of this report is the confirmation that the traditional top-tier cities have moved up a few notches to become even more global, exclusive, expensive and hence, more slender and taller than they already were. Depending on if this either widens the gap with the rest of the world, or of this allows for the lower-tier cities to move up in the process, will decide whether that’s a good thing or not.

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