Bubble? Tech companies “express themselves” through architecture
Bubble? Tech companies “express themselves” through architecture by Simon Black – Sovereign Man
On August 2, 2004, Bank of America broke ground on its 2.2 million square foot, NYC headquarters – the Bank of America Tower.
The all-glass tower would rise 57 stories above midtown Manhattan, with a giant spire taking the height to 1,200 ft. It’s currently the fourth-tallest building in New York City, and it cost $1 billion.
The next year, investment bank Goldman Sachs broke ground on its $2.4 billion headquarters in downtown NYC.
The investment bank brought an entire village to its Battery Park City digs – including several restaurants from famed restaurateur Danny Meyer, a wine store, a florist, a bakery and a barber shop.
Goldman also bought a nearby hotel (which included a movie theater) and a parking garage.
But before either bank moved into their new headquarters, the Great Financial Crisis of 2008 hit. Bank of America and Goldman’s share prices fell by 93% and 79%.
In 1999, a real estate analyst named Andrew Lawrence introduced the “Skyscraper Indicator.” He notes the world’s biggest buildings are typically erected on the eve of a crisis.
It all started with a building called 40 Wall Street.
At the same time, another new building, The Chrysler Building, was planning a secret spire so it could claim the title of the world’s tallest tower.
But planners for the Empire State Building had them both beat.
The year was 1929.
Certainly there’s a part of the Skyscraper Indicator which shows ‘peak hubris.’ Big companies have to show off how rich and successful they are.
But more importantly, huge skyscrapers are also an indication that it’s way too easy to borrow huge sums of money.
And that ‘easy money’ is also an indicator of the top.
Right now we’re seeing this architectural hubris moving west… to Silicon Valley.
In San Francisco there’s a $1.1 billion, 1,070-foot high tower, set to open next year.
And Salesforce, the customer relationship management software giant, bought the naming rights. Salesforce paid the developer, Boston Property, $560 million to lease part of the building for 15.5 years.
When the company announced it would put its name on the building, it had never turned an annual profit.
Coincidentally, Salesforce also put its name on an NYC tower located at 3 Bryant Park – next door to Bank of America.