The skyscraper can definitely find a rightful home in Chicago. We have 1,264 completed high rise towers, 107 of which are taller than 500 feet. While the 108-story Willis Tower is currently the tallest, there is a familiar group of familiar statuesque structures that we can all admire.
And judging by the number of cranes in the air now, you'd probably be happy to see that more towers are going to move in and enhance the skyline. It's happening all around the world, really. But the Chicago Architecture blog revives an excellent contrarian point, spearheaded by economist Andrew Lawrence. According to him, there is a foreboding pattern to be found in a burst of building activity.
And it can be found in exceptionally tall examples from all over the globe. Here's an excerpt from his paper (click on it to expand).
His theory, called the Skyscraper Index, states that there is a correlation between skyscraper investment and an impending recession. Why? Because generally, skyscraper investment peaks just as economic growth runs out of steam. And then, you having the perfect storm for a gloomy downturn.
Also known as the skyscraper curse, Mark Thornton of the Mises Institute had built a model that seemed to signal worry at the beginning of August 2007, which preceded a 2008 we'd probably prefer to (financially) forget.
How does this theory's connection work? The trouble begins when interest rates drop. Borrowing is easy and cheap money abounds, leading to more hubris for taller, bigger, and better. In the sphere of construction, that translates to the ultimate symbol of achievement: skyscrapers.
We are perhaps in the midst of a national skyscraper bubble now, according to CNBC News. The article points to San Francisco's under construction Salesforce Tower, which will be 200-feet taller than any other building in that city's skyline.
Apparently, this pattern has happened a few times before. Zachary Pollack compiled a list of skyscraper construction projects during major economy shifts as past proof. Here are a few pertinent examples that focus on our city's towers:
The Auditorium Building was completed in 1889. A year later, the New York World Building in New York, was completed. In 1890, the British banking crisis and a world recession unleashed its fury.
Ready for another? Let's look at the Masonic Temple, completed in 1892. The US Panic of 1893 followed right after, punctuated by the railroad industry implosion, bank failures, and a run on gold.
One more. The Sears Tower, finished in 1974, occurred in a period of US currency speculation, the collapse of the Bretton Woods system, and rising OPEC price rises. Economic crises rippled around the world.
Final one, promise. Remember the Chicago Spire, originally proposed as the Fordham Spire in 2005 with 116 stories? Construction stopped in 2008, because we all know what an unfortunate year that was. That project is still sputtering.
Here's a handy chart by academic Eric Ross that focuses on the pattern with worldwide examples.
Of course, this theory doesn't always predict performance perfectly. The Woolworth Building of 1913 happened without a hitch in the economy. No building indicator predicated the 1980s crash. And, statistical analysis from the Applied Economics journal revealed that building height cannot accurately predict recessions, but GDP can predict the height of building construction.
Ultimately, this appears to be a "pop economics" indicator. After all, Lawrence named his original research paper The Skyscraper Index: Faulty Towers as a joke. Maybe it's just a good, quick and dirty signal to just pay attention.
What say you, you critical thinker, you? Do you believe this theory?
·Is Chicago's Skyscraper Boom a Sign of Impending Doom? [Chi Arch Blog]
·Mark Thornton: The Skyscraper Curse [Ludwig von Mises Institute]
·Skyscraper height and the business cycle: separating myth from reality [Applied Economics Journal]
·Skyscraper index [Wikipedia]
·Tech bubble: This is 'money in your mattress' time [CNBC News]
·Chicago Spire coverage [Curbed Chicago]
·All previous Skyscraper coverage [Curbed Chicago]