Why Buildings Aren't Taller
By Bryan Caplan
Whenever Robin Hanson turns to urban economics, I expect to be edified. A prime example:
economics studies the spatial distribution of activity. In most urban
econ models, the reason that cities aren’t taller is that, per square
meter of useable space, taller buildings cost more to physically make.
(Supporting quotes below.) According to this usual theory, buildings
only get taller when something else compensates for these costs, like a
scarce ocean view, or higher status or land prices.
Knowing this, and wondering how tall future cities might get, I went
looking for data on just how fast building cost rises with height. And I
was surprised to learn: within most of the usual range, taller
buildings cost less per square meter to build.
the above figures are misleading somehow. But we know that taking land
prices, higher status, and better views into account would push for
even taller buildings. And a big part of higher costs for heights that
are rare used could just be from less learning due to less experience
with such heights. So why aren’t most buildings at least 20 stories
Perhaps tall buildings have only been cheaper recently. But the Hong
Kong data is from twenty years ago, and most buildings made in the last
years are not at least 20 stories tall. In fact, in Manhattan new residential buildings have actually gotten shorter.
Perhaps capital markets fail to concentrate enough capital in builders’
hands to enable big buildings. But this seems hard to believe.
Perhaps trying to build high makes you a magnet for litigation, envy,
and corrupt regulators. Your ambition suggests that you have deeper
pockets to tax, and other tall buildings nearby that would lose status
and local market share have many ways to veto you. Maybe since most tall
buildings are prevented local builders have less experience with them,
and thus have higher costs to make them. And many few local builders are
up to the task, so they have market power to demand higher prices.
Maybe local governments usually can’t coordinate well to build
supporting infrastructure, like roads, schools, power, sewers, etc., to
match taller buildings. So they veto them instead. Or maybe local
non-property-owning voters believe that more tall buildings will hurt
Further proof, by the way, that the Tiebout model is wildly over-optimistic.