Boom in the Sky

Tall towers defy the slump

In the construction trade, one of America's most important industries, the economic signals are highly conflicting. Despite a modest improvement in single-family home sales in May, the housing market remains in a state of shock. At the present low rate of new residential construction, 1980 could gain the dismal distinction of being the worst year since 1945, when the U.S. built fewer than 1 million new homes and apartments. This performance is especially appalling because 35 years ago the U.S. population was only 140 million, in contrast to 220 million today.

But the tale in office construction is entirely different. Rather than being in a recessionary tail spin, commercial building has embarked on what may turn out to be its greatest boom ever. The burst of construction is being fed, in part, by the growth of white-collar jobs. During the past five years, the U.S. work force has risen dramatically to 106 million, vs. 95 million in 1975. Since much of the growth has taken place in the service and financial sectors, the demand for office space has outstripped the surplus supply created by the last big building bonanza in 1971-74.

Much of the new construction is also centered in downtown areas that only a few years ago were being written off as decaying disaster zones. Now the ever-threatening gas shortages, combined with the high cost of commuting by auto, have caused many companies to retain and even expand their offices in city centers. The long overdue establishment of efficient mass transit systems in many cities is also helping to renew urban areas. For example, by 1985 an executive in Atlanta will be able to step from the planned Georgia-Pacific Center on Peachtree Street and arrive 15 min. later by subway at the international airport. Downtown Dallas is experiencing its strongest construction surge ever. Says Clyde Jackson, president of Wynne-Jackson Inc., a Dallas real estate development company: "The suburban exodus of the '70s has stabilized."

The basic trends apply nationwide. Nonetheless, many cities have special characteristics. New York City has been revitalized by a large influx of European banks and rich private investors from Latin America and the Middle East. While only one building was completed there in 1977, at least 27 are now either being built or are in the final preconstruction stage. Miami is undergoing a renaissance as a growing center of trade between the U.S. and Latin America. At present, planners and builders are rushing to raise 15 new towers.

Houston, the epitome of urban sprawl, is now building in the center of town as well as the outskirts. Three magnificent monuments to this new financial capital are now rising: the 75-story Texas Commerce Tower, the 55-story First International Plaza and the 50-story Three Allen Center. In Chicago the demand for downtown office space is so great that speculative builders are going ahead and putting up new structures without even bothering to line up tenants first.

Is the office building boom about to bust? Obviously the industry is cyclical, and the current rapid rate of activity cannot continue indefinitely. The present construction, however, appears so soundly based that the outlook is optimistic. Given a bit of luck, the boom will continue for at least three years, and possibly four or five. Then the industry will need to pause for breath and find new funds.

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