Skyscrapers Are Here to Stay
June 17, 2002
Appeared in Commercial Property News Magazine
While the giant-ism that characterized downtown architecture in the 1960s and '70s is a thing of the past, there has been no widespread aversion among investors or tenants to signature office properties or high floors since the terrorist attacks of Sept. 11. That was the consensus of the panel "The Future of Signature Properties," held as part of the 36th annual conference of the National Association of Real Estate Editors at the Waldorf-Astoria on June 10.
"People are tripping over each other to pay record prices for trophy buildings in Manhattan," noted Ken Krasnus, senior managing director at Cushman & Wakefield Inc. "The lack of terrorism insurance has not slowed down real estate investment in New York City at all."
Mark Smith, a managing partner of real estate advisory services at Ernst & Young L.L.P., also finds tenants still interested in Downtown towers. Other speakers agreed. Observed Robert Selsam, senior vice president at Boston Properties Inc.: "Tenants still want to experience the allure of stepping off an elevator and seeing a magnificent view. ... I don't think that's going to change; Downtown concentration is here to stay." Michael Brown, a founding partner of the law firm of Ohrenstein & Brown L.L.P., offered other reasons: "Skies will continue to be an important part of our urban landscape. Land is extremely expensive and people like to congregate," he said.
At the same time, the panelists agreed that 110-story buildings such as the old World Trade Center towers are no longer viable either economically or from a security standpoint. Terrence Gillick, vice president of technology at Syska Hennessy Group Inc., pointed out that the difficulty of getting people up and down in very tall skyscrapers during crisis situations would most likely lead to future high-rises leveling off at about 70 stories. Stephen Budorick, senior vice president of Trizec Properties Inc., which owns many signature buildings in major U.S. cities, including Sears Tower in Chicago, said building new super-skyscrapers no longer paid: "It's just not economically viable anymore," he maintained. "The cost of building and running them doesn't make sense from the economic point of view."