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Old Posted Dec 17, 2021, 12:38 AM
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Mr Downtown Mr Downtown is offline
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Some of you are new around here, so here’s my periodic reminder to fanboys that skyscrapers have to make economic sense. In the US, we don’t build them to stroke potentates’ egos. We build them to make the maximum profit for investors, many of whom are real go-for-broke wild-eyed gamblers like New York Life Insurance and California Public Employees Retirement System.

There’s an obvious tradeoff between height and elevatoring requirements. The higher you go, the more elevators you need—and the more floorplate they occupy. A supertall on a 6000-sq-ft building site will give you four corner offices on each floor and not much more. But you'll have to ask $80/ft because the building was so damned expensive to build and run.

Less obvious are two other tradeoffs: cost of construction (taller buildings require specialized concrete and other things) and time to occupancy. A developer doesn’t want a construction loan hanging over them for several years; they want to get a couple of big anchor tenants signed, build a building, and have them paying rent within two years. Though you can get an occupancy permit for part of the building while construction continues above, there are limits.

The “sweet spot” for all these factors coming together for maximum profitability is roughly 50 floors for office buildings in downtown Chicago, and around 35-40 floors for residential. Manhattan can go taller, at least for residential, because of more rich people but mostly because of overseas investor-owners who may never visit the site but see condos there as a no-lose place to park their money. Chicago doesn't enjoy that reputation.
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