When a Skyscraper Is More Than a Tall Building

Called Neom, a “built-from-scratch” metropolis could materialize in Saudi Arabia. Planners say it will occupy an area like Massachusetts. The Line in the image is a structure whose dimensions are 105 miles (long) and 1640 feet (high). Just 656 feet wide, it will accommodate as many as 9 million people:

The Saudi project reminded me of the Skyscraper Index.

Tall Building Construction

The Saudi Project

The Line’s planners say it will have parks and waterfalls and a ski resort. In just 20 minutes, a high-speed rail system will transport people from one end of The Line to the other. Neom will also include an airport and desalinization plants. The basic layout, though, is a layered vertical structure with homes, offices, schools, and all other requisites of daily life. The price tag for just the ski resort is $38 billion.

According to the Wall Street Journal, the Kingdom has scaled back what it plans to have completed by 2030 because of the massive multi-trillion dollar cost. Although they will need an extra 100,000 construction workers and gargantuan quantities of steel and glass, they have begun.

The Line in Neom could look like this:

A Skyscraper Index

In 1999, an economist at Barclay’s Bank suggested a correlation between extravagant tall building projects and a soon-to-dip peak in economic prosperity. Composed of a list of projects that preceded recessions, the Skyscraper Index includes NYC’s 1908 Singer Building and the 1930 Chrysler Building. Meanwhile, we had the Sears Tower in 1974, Kuala Lumpur’s Petronas Tower, 1997, the building of Taipei 101 spanning 1999-2004 and Burj Khalifa, the United Arab Emirates, 2010. All indicated a peak in optimistic economic sentiment.

The decline followed soon after.

We had a banking crisis in 1907, the great depression during the 1930s, stagflation from the 1970s to 1982, an “Asian Contagion in 1997-1998, the tech bubble in 2000 and the Great Recession from the end of 2007 to June 2009.

Still, economists suggest we are cherry picking our correlation. They conclude, somewhat less cleverly but probably more accurately, that super tall projects are not a leading economic indicator. They do not signal an imminent economic downturn. Instead, they merely reflect a response to affluence and perhaps an inflated view of what is possible.

The red dotted line compares The Line’s distinctive height to other tall buildings:

Our Bottom Line: Business Cycles

As the four stages of a business cycle–peak, contraction, trough, expansion–unfold, super tall skyscraper construction can reflect optimistic sentiment.

For the buildings that I selected, each was completed when an economic boom collapsed. And yes, this is “cherry picking” statistics because not all super tall buildings were built during the end of an economic expansion. However, we can say that super tall building construction tends to occur when loanable funds are available, and investors are willing and able to support capital expansion. And that optimism does coincide with the expansionary phase of the business cycle.

Like Neom.

My sources and more: It is always nice when several articles converge, even if it takes 8 years. During 2015, a 99% Invisible podcast inspired our first tall buildings post (that is partially quoted today). Then, last week, WSJ described Neom. A bit confused, I searched for more about The Line and found a “How Stuff Works” description. And finally, with a reality check, this paper challenged the Skyscraper Index.