Why aren’t all tall buildings in the same neighborhood the same height?

Let’s say there is a 40-story building and a 60-story building.  You would think the different builders face more or less the same costs for their height decisions.  If you want to own 60 stories, it is still the case that everyone can build the cheapest-height building, and you can buy the stories you want from a variety of sellers.

If you had lots of companies that needed 60 stories, and you didn’t want to split up those firms across locations, and lots of companies that needed only 40 stories, the differential building heights could be explained rather easily.  But that doesn’t seem to be the case.  Most tall buildings house a variety of tenants, and those tenants don’t “need the whole height” or anything close to it.

This puzzle is from Steve Landsburg, who says “color me stumped” in his new and forthcoming book Can You Outsmart An Economist? 100+ Puzzles to Train Your Brain.


At the 40-60 story heights, I think building cost goes up somewhere between the square and the cube of the height (please correct me if wrong!) Is the redwood forest theory applicable here? The tallest building in the local area gets a status bonus, but is more costly. So you will either go for the most cost-effective height, or the tallest height.

This model predicts one or two "tallest" buildings, and a larger amount of similar height buildings.

There would be a lot of noise in this model due to time-dependent costs for land, construction, and permits. But the idea of the tallest building getting a bonus seems to explain a large amount of this puzzle.

this is interesting. But surely the puzzle as presented is why aren't all buildings 60 stories. So your explanation might be enough if it's actually disproportionately expensive for the higher floors.

Research the offerings, and select whether the bank will
satisfy your needs. No standard bank would like to take
risk in sanctioning a brand new loan to people consumers whose previous behavior about repayments isn't good.

And then, as if that will put the icing around the cake,
he laughed and said the machine has become bro - Aken for about 4 years since he's been working there.

The construction cost as a function of height isn't actually the constraint, it's the elevator induced space loss.

A 16 floor building is basically two eight floor buildings on top of each other: you start to need express elevators or smart elevator software.
At 50 floors, you have 50 or so elevators in 6 banks.
At 100 floors, you need a sky lobby.

Construction is doable up to 300+ floors. We don't do it because it would assign most of the lower space to transit to the upper space.

I think it's a combination.

As height goes up so does status, and the cost of rent you can charge.
But as height goes up elevator problem raises the cost of building rentable space.

Depending on construction costs and real estate value you end up with some minimum height that creates the cheapest office space and those are your shortest buildings.

Then you have a handful of ultra-tall buildings to action off to the richest tenants.

And then you have many heights in between to capture different segments of the status market.

'Let’s say there is a 40-story building and a 60-story building.'

One built in 1961, the other built in 1991.

'You would think the different builders face more or less the same costs for their height decisions. '

Not when separated by three decades.

'This puzzle is from Steve Landsburg, who says “color me stumped” in his new and forthcoming book Can You Outsmart An Economist? 100+ Puzzles to Train Your Brain'

Yep, a classic recommendation from Prof. Cowen. Especially as one can easily look up the dates various building were built, and also correct for local factors - not all surfaces will support the same weight/height building within a city district's boundaries, much less an entire city's boundaries. But that is the sort of approach that someone familiar with working within an empirical framework would use - which seemingly excludes basically all economists. Bill MBride being a rare exception - his musings on such a particular subject would be worth reading, and probably explained in several data based paragraphs.

Of course other factors weigh in too - local infrastructure cannot be handwaved away, and if the sewage system can handle 2,500 more people without upgrading in a particular location, then it is quite likely than no plans will be made to build a high rise holding 5,000, especially when factoring in the cost of the necessary sewage upgrade to handle those 2,5000.

But date is a straightforward answer that can be empirically explored, as anyone with the least bit of familiarity with NYC would suggest without puzzling about it. Especially as date also handles the differences between periods in terms of different economic conditions, building technology, along with the assumptions about the future made at a particular point of time.

While date certainly plays a role the theory falls apart when you see two lots, practically next to each other, in the same zoning district, where one has no improvements whatsoever and the other has one of the tallest buildings in the country. Why didn’t the developer buy both lots and build two matching towers at half the size?

I'm not sure why everyone is latching on to the 'year in which the building was constructed argument'? It seems to me that it would be appropriate to consider the cost relative to it's era, i.e. inflation adjusted. If you do this, it is likely that building costs have actually decreased over time with technological improvements. Yes, the nominal cost of building skyscrapers has increased but this should not change the cost/benefit of deciding how tall to build the next one.

Technology may decrease building costs, but it's not the only trend and some are countervailing (e.g., regulatory compliance costs).

Time is a good first order guess as a discriminating factor but I'll comment that in general the question seems poorly thought out in light of heterogeneous preferences. I'll illustrate this by recasting Landsburg's question as: "Why aren't all houses in the same neighborhood the same square footage?"

It's easy to see that my question is flawed due to heterogeneous preferences that we're more familiar with. But just as surely we would expect I.M. Pei and D J Trump to produce different buildings.

Because the cost is not the only salient factor, as you've pointed out there are the benefits. The demand for housing in that area may also have gone up.

Using the year is a shorthand for "the costs of acquisition, permitting, and construction as well as the demand for housing in that location and benefits from being there may have changed" without incorrectly limiting one's argument to only construction costs.

The original puzzle claimed that construction and demand should be similar in the same block, but that's only a decent assumption at the same time as well as space. (That said, sometimes things built around the same time have different heights.)

Sounds interesting, with a concrete example - 'the theory falls apart when you see two lots, practically next to each other, in the same zoning district, where one has no improvements whatsoever and the other has one of the tallest buildings in the country'

Except you did not mention the actual dates of these two buildings, or where they were built, or who the intended tenants were. For example, the World Trade Center has a fascinating history, in large part because the assumptions made in building it were only covered by the 'builder' - the Prot Authority - using subsidies to fill it.

The port authority didn't build the WTC unless you consider air rights over a transit center a subsidy to a builder with a lease.

The replacement costs were much higher because of anti-terrorism feature mandates which were stiffer than the Empire State plane in fog mandate to withstand a twice as big bomber crash. Plus include a memorial.

Filling the WTC was no different than Empire State: demand fell during construction and supply increased from other projects adding supply at same time.

WTC economics can't be criticized retrospectively as its one of the earliest creating air rights market theory for public and private public transport infrastructure. Highways are public, rail is private public in that government turned public land long term to private interests like Penn Central RR where abandonment of rail reverts to public. Port authority owns abandoned rail infrastructure.

This is separate from another air right market, the view of landscape and Sun property. A market economics change spurred by Empire State et al. The first mover gets a subsidy in that costs to others must be paid by all who follow.

It's easy to build two, five, 60 floor buildings side by side if you own all the land impacted by shadow and you provide all supporting infrastructure. But how do you write sales flier to justify $1 million for a view of a wall of windows. You can buy land to leave open, or face a big public park, which becomes a subsidy to the view air rights, ie no taxes due on vacant land.

That's like asking why wouldn't someone who bought some abc stock plow all of his money into abc stock? Leaving one property vacant gives an option to make even more money later should demand grow (or lose less money now should demand fall)

"Let’s say there is a 40-story building and a 60-story building."

"One built in 1961, the other built in 1991."

Simply go to a place like Abu Dhabi or Dubai, where a lot of buildings are going up separated by very few years.

Identical widgets usually have an identical feature set and cost the same from different suppliers because there are many opportunities for the suppliers to change how their supply chain works, learn from their competition, and tweak their businesses to compete. Buildings aren't like that. By the time you have completed one building, the real estate market may have shifted enough that you must change your strategy for the next building.

Wouldn't this be mainly a function of time? At lot of tall buildings are quite old. The Empire State was put up in 1931. No sign of it being brought down any time soon.

It may be that someone built a building in 1955. At the time they only needed 40 stories. More just was not economic because there was not enough activity in the area. Two decades later someone might fight City Hall tooth and nail to put up a 60 story building because there are a lot more people who want to move in. Thirty years after that they might be desperate for more space but simply cannot get the deal together.

There is an inertia in building new buildings. Why knock down an old one which is reasonably full and paying its way just to put up a new one with a heavy debt burden and uncertainty about whether you can fill it? The shift is not cost-free.

Speaking of which, one of the most important things is likely to be permissions. In a lot of places run by Democrats these are hard for most people to get. So you can't knock down your old building, no matter how short it is, until you are sure you can build a new one. What do you think the effect of a more liberal permission regime would be? I think it would see a raft of old moderately tall buildings being knocked down and replaced by something taller. Very quickly.

Nice. Buildings are shorter because Democrats.

Are you certain that Republican penis envy is not at play here?

Democrats support loosening building codes or at least not increasing their impact and scope? Wow, news to me.

P.S. your penis comment is: body shaming, toxically masculine, patriarchal, heteronormative, a racist dog whistle, misogynistic, homophobic, transphobic, and just plain deplorable.

clockwork-prior is mostly right. (I am a real estate lawyer who is involved in a lot of NYC urban construction projects.) One additional factor is that on adjacent lots, the builder may have a total allowable floor area which he can allocate as he wishes. There may be a better return from a building a lower than maximum building on one of the lots and transferring the square footage to the other lot, because the very top floors may command a super-premium.

"In a lot of places run by Democrats these are hard for most people to get."

So, in a GOP country club elite community building a low income family high rise at the transit station is an easy approval? Economists say giving the poor family school choice is good.

No doubt, one merely need look at the design covenants at a high end HOA to get a clear idea of how Republicans actually think about liberalized guidelines, when its their own skin in the game.

What makes you think people living in that high end HOA are Republican?

The election yard signs.

Although, on reflection, it could be an elaborate liberal plot to make Republicans look like elitist country club snobs.

So we learn that you are a conspiracy theorist. But are you also an ideologue? We know by now that "culture" voting is a thing. People with Republican signs -- and what is your sample group? -- don't have to own top hots, silver spoons, etc.

It seems like uncertainty provides a relatively simple explanation. Assuming perfect information of the tenant demand in the future, I could see a model where the heights are all the same. But in a world where the demand has a fair degree of uncertainty, different builders comfortable with different risk return trade-offs could lead to this result I would think. Or, even if they are probably not making explicit risk return decisions based on expected demand distribution, different forecasts of future demand could also lead to this result.

I agree with other commenter that the year of the building matters. How often do multiple buildings of different heights go up in the same neighborhood at the same time? If they're built at different times, then the builders are responding to different market conditions.

How often do multiple buildings of different heights go up in the same neighborhood at the same time? Pretty frequently. Buildings are not always built to maximum zoning. Different uses also drive different decisions. It used to be that commercial (office) preferred tall and residential preferred short, but that has flipped in the last decade (in NYC and elsewhere). Different real estate developers have different risk tolerances and access to capital, all of which impact the details of the building you wish to bring to market. A single developer working on a large site with multiple buildings over the course of a decade or two will also have to content with public opinion, which usually favors varied building heights for both aesthetic reasons and concerns over excessive shadows if everything were maxed out.

This is a good example of economists trying to model the un-modelable because there's more human nuance to the issue, and therefore noise, than there is rules-based decision-making and logic. Anyone who has ever actually BEEN to a zoning hearing can attest to that.


See image above of towers on Manhattan's 42nd street, all completed between 1928 and 1931 under the 1916 building code. They're all basically the same height, apart from the 'flair' added on top of the Chrysler building, which was done more for reasons of ego and showmanship than economics. A great book to read on this is: "Form Follows Finance: Skyscrapers and Skylines in New York and Chicago" by Carol Willis.

Congratulations, instead of another Just So Story, you produced some data.

Some (most?) mid-size tower height is related to tenant size/demand. Where I live there is often a single office tenant per tower, and the staff size of these businesses at time of building is a key factor in the decision regarding the size.

Immensely tall buildings are examples of corporate egotism and anachronisms in the current age. With advanced electronic communications they are completely unnecessary. Furthermore, in the interests of energy efficiency it makes more sense to, like the beaver, go down rather than up. It's not impossible to build a structure in some locations with a 40 story basement, which makes sense, especially in view of events like 9-11.

You cannot replace face-to-face communication with electronics. A lot of business continues to be done over drinks after work or dinner. Probably in every field. That is just the way people are.

Energy efficiency is not a particularly important issue given how cheap energy is and how efficient heating and cooling are. Speaking of which, if you dig down you now not only have the problem of removing a large amount of heat, but also making sure people do not die of carbon monoxide poisoning.

"By the 2040s, it will be rare to have face to face contact without an interface for doing business." (paraphrase) - Ray Kurzweil

Virtual reality and telepresence will be much better within five years and more so by 2028, which will significantly decrease face to face contact. Ain't that right, Tyler?

Nope, because people are social animals and they (most of them) like being around other people. This explains why most big deals need to be in person, and why people like going to the movies and to concerts and to restaurants when they could consume media and food much cheaper at home.

Kurzweil is insane.

I agree, but why a single large building instead of a cluster of smaller building in a suburban campus, which many companies have today?

Google's headquarters is not a giant skyscraper in the middle of San Francisco.

Energy efficiency is not a particularly important issue

It just can't be that important since we hear about it constantly.

Building construction requires a certain number of air changes per hour regardless of how the building is constructed. Opening a window for ventilation is no longer the answer. Stationary humans emit about 300 btus per hr, no matter what floor they're on. It would be easier to cool and heat subterranean floors than those 1100 feet above the surface.

Excavated basement floors cost more to build than above-ground floors.

+1, It's both more costly and less valuable. People will pay more money for a room with a view.

Why don't you share this insight with Lloyd Blankfein?

I'm all ears.

[200 West Street, NYC 10282]

Of course, architecture and conformity are the theme of the philosophical bible of many dear readers, the hero being the architect who breaks free of tradition an conformity and designs buildings that please him not other architects or critics. If every other architect designs 40 story buildings, the hero designs 60 story buildings. Size matters. The worship of modernity is somewhat confusing, given the simultaneous worship of the ancient philosophers. But I digress. I would point out that Paris, the world's most beautiful city, has long restricted building height to 121 feet. Sadly, the height restriction is being lifted, along with the egos of a few architects.

Speaking of size, what about the size of "inflation". Pursuant to convention, the size of "inflation" takes into account the prices of some but not all assets. Thus, the height of today's "inflation" is low, especially in light of the height of unemployment. During the onset of the great recession, one famous economist suggested that the steep rise in asset prices that preceded the financial crisis was evidence of "inflation" lurking in the background. Having departed from tradition he was subject to ridicule, and worse. He quickly returned to tradition, and never again mentioned such a nonconformist view about "inflation".

Asset price inflation is inflation. Just not CPI inflation.

Inflation is too much money chasing too few things.

The too few might be caused by costs too high, as in Venezuela.

Or by monopolist blocking new assets at low costs.

On 60 Minutes Rockford IL faced inflation from generic drug maker buying its generic competition and then increasing drug price by 100 times, in pollution with drug benefit manager which had a peer distributor earning fees as exclusive distributor of this high profit drug. The manufacturing asset price thus inflated in price far above cost. The drug came to market in the 50s to serve 60 new customers born per year.

121 feet = 36.88 meters

Do you mean 131 feet (= 40 meters)?

Is this proposed building going to house a single company, with its name emblazoned at the top? Never discount ego as an incentive. My husband's firm was acquired by a Fortune 500 company, and as the acquisition was finalized, the chairman/CEO stood with my husband on the 50+ floor and gloated over the fact that his building was five floors higher than his competitor's across the street.

Also, what are the expected needs of the company in the next few years? They can't just add another ten floors next year.

OTOH, if the firm contracting for the building plans to engage tenants for the space, what are the expected rents? Since the cost of land is so high in places like San Francisco and Manhattan, more floors will help offset the cost of the real estate. As always, the calculation will be on the margin.

FWIW, there was a rule of thumb in Silicon Valley a few years ago that a firm that built its own building would go out of business within five years. The reasoning was that such firms were less careful with their resources; it would be wiser to rent the building rather than tie up the capital needed for growth in real estate.


Physicists have proven that random packings of disks of the same size between parallel walls always form a periodic structure, regardless of the width of the container. The results should help scientists to better understand the packing properties of microparticles.

Cities are packed disc, thus periodic. The disc walls make pressure. Likely related to congestion, it is hard to pack another 40 story in the morn commute when the building right next door is doing the same. Bandwidth, (commute arrival rates) are restricted.

I assume the cost of funding will be very different among different firms. Sometimes you just can't get enough financial resource to pull it off.

If you go look at some of the megacities China has been building, all the buildings are the same height. But as others have said, older cities didn't develop that way.
But if you developing an office center like the original World Trade Center, wouldn't build an assortment of sizes because different renters have different needs and also different abilities to pay?

Doesn't seem like anyone has mentioned "air rights".

I'm not sure how much this translates to other places, but in New York City, development is largely constrained by setting a maximum height for various plots of land, then allowing the owners of those plots to sell portions of that height to other nearby plots. It's a sort of cap and trade system that seems to more or less work, and results in more efficient allotment of development.

It also allows for some reasonable sharing of development value when increased height is allowed in a neighborhood. If our neighborhood has traditionally had 100 feet of air rights, and the city expands that by an additional 50 feet, then the only way a developer can build a 300-foot mini tower is to pay a bunch of neighbors for the privilege; this aligns neighbors' interests, at least somewhat, and leads to fewer lawsuits over blocking light and parking congestion and such.

mmmmm, you may be right https://streeteasy.com/blog/what-are-nyc-air-rights-all-about/

Came into the comments to mention them.

There are a lot of factors including: plot size and shape; plot specific regulations (i.e.related to access road size); developer strategy (presumably a high-end large unit model has different economics that a small unit low price model), continuous building cycle, etc.

I'm much more drawn to the explanation that costs vary by developer, site, and project rather than the explanation that costs vary by time.

I imagine a few of the restrictions that end up determining property size are:

(1) access to capital/finance
(2) ability to win approval from local government
(3) tolerance of risk, both financial risk and security risk*
(4) bargaining power with suppliers and contractors
(5) sites located next to each other are not necessarily identical when it comes to the challenges/obstacles of building there

* Immediately after 9/11, I read stories about real estate developers reducing the size of new skyscrapers. Among these was Donald Trump who lowered the size of his then-yet-unbuilt Trump Tower in Chicago.

It's too easy to say "developers are not rational".

So, for the sake of entertainment let's assume investors are rational and that they try to optimize an investment return function. This function must include at least land and building costs. Land is expensive in cities, thus it makes sense to build vertically. But, going too high becomes more expensive than buying more land, because columns require more floor space the higher you go. There should be an optimal point between a minimal and maximal height where building vertically is cheaper than buying more land. I have no idea if building costs and land price are correlated or not. If they are independent, the possible optimal outcomes of the height function are infinite.....but rounded to nearest integer floor level.

Perhaps the final answer is also simple, it's a sellers market.

>Can you outsmart an economist?

Seriously? What's next? "Can you outdance an electrical engineer?"

Because economists don't know anything useful.

Builders build what bankers will finance. Pure and simple.

An architect here, you all need to get out more. Developers are extremely rational. Other than some limited allowance for ego decisions on building height are very rational and based on the economics of the time. The relative cost of concrete vs. steel informs the choice of structural system, which affects height. The desires of the expected tenants informs the required floor plate size. As buildings get taller the core with stairs, elevators, and services gets larger reducing useable space, even on the lower floors, so the floors may not be useable for some tenants. Speed of construction is a factor which is critical when considering signing of tenants, timing of the market, and also financing costs. Plus, there may be zoning requirements that differ for adjacent lots. All this affects building height with the owner and designers making economically rational choices all along.

Nothing kills the fun like when somebody who actually knows what they're talking about comments.

And that is just a start. There are financing issues, market demand, the availability of all the inputs that to into a building.

Somewhere an economist working in the industry is muttering under his breath 'those who can't, teach'.

And very likely there are economists who know the answers and are part of the decision making, but their knowledge is hard earned and valuable. They don't typically blather on about it.

Exactly. Construction costs are NOT linear with height. A 60 story building could easily be twice the cost of a 40 story building. Buildings will be the height the market will bear.

Why don’t building heights conform to economic theory? Maybe there are lots of things that economics can’t explain. Maybe economics is not capable of defining all human activity.

Maybe economics is not capable of defining all human activity.

Dumb comment. Everything is economics if you define it broadly enough.

Not so smart yourself. Everything is anything if you define your terms broadly enough.

An excellent point.

I hereafter classify all of my future and past "Dumb" comments as "Smart" comments.

This comment is the present, so it stands on its own merits. ;)

Most economists reject laws of nature.

Ie, if a wall of buildings fetch a high price because of the view from floor 20, economist argue twice as many units can be sold at the same price by building a second row of buildings, doubling the wealth, because light, in economic theory, is not blocked by opaque objects.

If you take a look around the Empire State Bldg in Manhattan (opened in 1931, 34th St & 5th Ave) you'll see a five-story building next to it, and then a three-story building, and another 5-story building ... all in the same block.

Indeed, looking around Manhattan's hi-rise neighborhoods, one can often find an old building that's much, much shorter than it's neighbors. And an occasional "sliver building" that's much taller.

I don't have a good explanation for it, although I suspect some building sites are not large enough to be developed into an economically-viable hi-rise, and New York City's byzantine building codes make any attempt to build anything costly.

Nonetheless, the difference in building heights can be dramatic, and the Empire State Bldg is not exactly new.

Although it's true you'd have difficulty duplicating it today. After all, the old Waldorf-Astoria hotel had to be demolished for it (today it would be landmarked), and the entire timeline from groundbreaking to grand opening was a mere 18 months (which seems nearly incomprehensible today).

Some CEOs want a tall building to distract you from their small hands.

I wonder if the era in which skyscrapers were efficient has passed. Seems to me that if you housed your offices in a single building you would miss out on the perks of having a campus with some greenspace, and might even force your employees to spend more time waiting for elevators than they would walking between buildings. Not to mention the lack of parking, longer commutes, higher housing costs, etc. Most businesses , at least these days, probably derive an advantage from being located in a suburban setting possibly near a major airport.

I wonder if there are still some companies that benefit from being located downtown close to other large corporate and government offices. It doesn't seem obvious to me that there are any, or even if there ever were. What is the economic benefit of having corporate offices clustered together in a dense downtown?

Well, among other things, you get the benefit of having transit that allows you to draw from a bigger pool for staff. When recruiting, you get that value of the amenities that exist (e.g. restaurants and retail) nearby because you're not the only customer pool. You get the prestige of having your name on a prominent building. Depending on location, you get to let someone else (i.e., the city) provide the greenspace. You can also rely on others to provide most or all of the parking too.

Basically, the choice is low land costs on the suburban campus versus ability to rely on existing infrastructure and recruit talent that's not impressed by your low land costs.

.I don't think a downtown office is as appealing to as large a percentage of the labor pool as you think it is. Especially not the candidates who are married and have children - i.e. the more experienced workers. Generally when you rely on others (i.e. the city), to provide parking and/or greenspace, well, you get what you pay for.

Most humans like living in bigger houses with larger lots which are more easily accessible from a suburban location.

Not saying there aren't benefits to having a downtown office, but I don't think "because the employees like it that way" is one of them.

It's not only a question of appeal (although it's that too). It's a question of access. Your suburban campus will never connect to as many people via transit as a downtown location. You need young workers and support staff as well and experienced staff get you can (and do) compensate more overcome additional inconvenience, if there even is any.

I have no idea whether "most humans" like big lots in the suburbs, in part because we've been so heavily subsidizing that lifestyle choice for so long.

As I sit in my office in a downtown tower, I can tell you that nearly, if not all, of our support staff get here via transit. Among the professional staff, maybe half live in the city or in the immediate rings suburbs. Plenty of us also bike or use transit too. I can't speak for anyone else, but I wouldn't take the same job on a suburban campus.

Businesses that are insular can be located in big, isolated office parks (ie, Apple, Microsoft). Businesses that are transactional generally require proximity to many other firms because you have meet face-to-face with many different counterparties/clients/etc. In my business (financial litigation, incl distressed work) nearly all advisers are in NYC or another financial center. Many of the fund managers themselves have offices in other cities, but the portfolio managers are always flying in and out of NYC. All of our meetings are in NYC by default, and courts in NYC (SDNY, Bankr. S.D.N.Y., NY Supr.) tend to be the most common places to resolve commercial disputes, other than corporate governance matters. I suppose we may at some point do away with in-person meetings, but we've been meeting face to face for millenia, and I would bet we will still be doing it in 100 years. If so, then there are some businesses that will pay a premium to be in a commercial hub. If it became much faster to get between, say, Philly and NYC, you may see more firms moving some of their staff to less expensive locations and letting them commute to NYC for meetings/court, etc. - sort of how some fund managers are outside of the NYC, but send PMs into the city for meetings.

As for whether people prefer bigger houses with larger lots to apartments within walking distance to more amenities, different strokes for different folks. But I (like many married persons with children) pay a huge premium to live in a condo in a nice part of Brooklyn rather than a suburban single family. So I am not sure the preference for large lots is universal, or to what extent it is frequently a compromise forced by financial necessity.

This is a violation of the the standard economic assumption of homogeneous agents. All builders are not clones of each other. They see the same facts (or maybe not even that) and reach different conclusions. They choose different architects who offer different plans. They have differing financial constraints, expertise, and ability to sell different plans to investors and home buyers.

Well, for one thing, they aren't all built at the same time and building technology and materials costs change, as well as current and projected future market conditions for commercial rental space and local regulatory environments (e.g. how much and what type of parking is required). Also, these days they have mixed uses that vary, which may also make costs vary as ten stories of residential or twenty stories of hotel may have materially differents costs than just office space.

Oh, and then there are also varying preferences.

There's no guarantee that you'll fill all those spots with high-rent tenants. Building a bigger building incurs huge costs, and potentially big returns. It's a risk.

There is also the undeniable status aspect. Why do some people buy a BMW when a Toyota serves the same function? Why do some housewives buy an M3 when a 330 is, for them, the more functional choice at a lower price point? Owning the tallest building confers status.

When a developer studies a prospective property, the "highest and best use" analysis has a lot of factors.
Some are particular to the property- its zoning and available utilities for example.
Others are particular to the market- what is the absorption rate of office versus apartments?
Others are particular to the developer himself. How much can he borrow given his financial position, what is his field of expertise?
There are others, but you get the idea. With so many variables it isn't odd at all for two identical properties to have different results.

Vaguely related is subway depth. In Tokyo there are 13 lines and 285 stations, and two more lines are in the works. The cross-cross, so each new one gets deeper and deeper. Also, the track gauge is smaller in the newest couple of lines. The cost get exponentially higher as the depth increases, for various reasons, but one problem is water drainage. There's more water spewing out of the tunnel walls, and it's more trouble to pump it out.

From the rider's perspective, the endless escalators leading to these super-subterranean subway platforms take up a lot of time.

Different people arrive at different conclusions and make different decisions. Someone mentioned that new cities in China have buildings that are all the same height. That's the result of the same people deciding what height to build all the buildings. But give lot A to company A, lot B to company B -- and it's unlikely they will come to the same conclusions about what size property build. Of course, they also have different strategies, different resources, different risk-thresholds.

Look at the diverse strategies, opinions have stock market participants. One fund is buying Facebook, another is selling, lot sizes are different. They disagree about risk profiles, trend changes in the economy, etc.

This is the same type of question as "Why do brilliant people so often disagree?"

When you look at a city block, what you see on each lot is not an aggregate.

There is an additional reason that you don't want all of the buildings to be of the same size on an evenly-space grid: wind. You do not want to create wind tunnels among large buildings and considerable foot traffic and there is some benefit in strong winds and storms to having a broadly sloping skyline moving up from the edges to the center, something roughly similar to a mountain or a dome.

Lower -- typically 5-6 story -- buildings near to towers are called "podiums" and act as windbreakers sending gusts from the towers spiraling back upward. (The towers themselves may have "canopies", typically of glass, which jut from high up on the tower and have a similar dampening effect on wind gusts.)

Can it be that nobody here has mentioned the phrase "diminishing returns"?

The first skyscraper among buildings of ordinary height is very valuable; the second may be equally valuable but probably no more valuable. And so on, until the projected return is negative. Besides that, different buildings or lots will have different owners, mortgage situations, etc., and a developer would probably prefer to be the only skyscraper on the block rather than the fifth skyscraper on the block (better views, maybe less traffic or parking requirements?)

"Why aren’t all tall buildings in the same neighborhood the same height?"

Because very tall buildings are too a large extent signalling, and you don't want your special building to look just like the building across the street.

Agents do not have identical attributes, as assumed in mathematically tractable modelling.


Perhaps it has something to do with ego and the size of developers' fees.

Interestiing post, I agree with Jorod, it's all about the developers fee.

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