Office Vs. Residential:The Economics of Building Tall 2. Journal Paper

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Title: Office vs. Residential:The Economics of Building Tall

Authors: James Barton, Director, Davis Langdon Steve Watts, Global Head of Tall Buildings, Davis Langdon

Subject: Economics/Financial

Keywords: Economics Office Residential

Publication Date: 2013

Original Publication: CTBUH Journal, 2013 Issue II

Paper Type: 1. Book chapter/Part chapter 2. Journal paper 3. Conference proceeding 4. Unpublished conference paper 5. Magazine article 6. Unpublished

© Council on Tall Buildings and Urban Habitat / James Barton; Steve Watts Economics/Financial Offi ce vs. Residential:The Economics of Building Tall

When it comes to tall buildings in London, the sky’s the limit, and not necessary in terms of height. With rents among the highest in the world and investors eager to see strong returns, the incentive to maximize floor plates, as well as the diversity of uses, has never been greater.

Introduction and price stagnation that is evident elsewhere in Greater London and the rest of the United James Barton Steve Watts London: Capital of Asia? That was the provoca- Kingdom. It has seen not only extraordinary tive title of a debate held at MIPIM in early price increases (30% more than elsewhere in Authors March this year, the annual jamboree of the the capital) but also an expansion beyond the James Barton , Director property industry in Cannes, France. It was traditional prime districts of Knightsbridge, Davis Langdon, an AECOM company Mid City Place, High Holborn prompted by the signifi cant fl ows of foreign Mayfair, and Belgravia into new areas along the London WC1V 6QS money that have been pouring into London in South Bank of the Thames and further afi eld. United Kingdom recent years, as the UK’s capital benefi ts from its Residential values in London are now amongst t: +44 207 061 7000 sophisticated market, quality of product, status the highest in the world, fueled by this foreign f: +44 870 048 6055 e: [email protected] as a leading fi nancial center and the inherent investment and limited supply. Many inner www. Davislangdon.com advantages of its location, time zone, legal London schemes are achieving £1,000/ft2 system, and relatively stable political environ- (£11,000/m2) sales now – considered a “prime” Steve Watts, Global Head of Tall Buildings ment. “It is a safety deposit box” for interna- value not that many years ago. At the other Davis Langdon, an AECOM company Mid City Place, High Holborn tional investors, Peter Rees, the City’s Chief end of the scale, super prime achieves between London WC1V 6QS Planning Offi cer has commented. £2,500 and £5,000/ft2 (£27,000 and £54,000/ United Kingdom m2). But it does not stop there: Candy and t: +44 7818 424 484 Lack of residential stock is fueling demand too, Candy’s One Hyde Park reportedly topped the e: [email protected] 2 2 www.alineaconsulting.com which, combined with high land prices, is the £7,000/ft (£75,000/m ) mark, and high-end reason why high-rise living (and investment in “specials,” like the apartments at the top of the it) is becoming increasingly popular. As Matt Shard at London Bridge will surely be striving at James Barton James Barton is a Director within the London Oakley of Savills says: “People are prepared to values towards this peak. Commercial Real Estate and Residential team at pay to own a piece of one of London’s towers, Davis Langdon. Since joining Davis Langdon as a graduate over eighteen years ago, James has spent and the recent completion of The Shard has Given all this, and the fact that a large majority the majority of his career focusing on the leadership whet the appetite of investors for building of purchases tend to be in cash, it is not and delivery of complex residential mixed-use and commercial schemes, including working on upwards.” surprising that the portfolios of many London a signifi cant number of high-profi le tall buildings developers include proposals for high-rise, globally. James’ understanding of the key success factors and design related cost drivers, particularly on While the array of new residential towers has high-value residential towers. And with offi ce tall buildings, combined with his work as a member been getting much of the headlines in this values, in real terms, no diff erent to the levels of AECOM’s tall building group, enable James to provide expert consultancy advice to clients around respect – with reports of developments such as they attained some twenty years or so ago, the world. Battersea Power Station selling their substantial there are a number of offi ce-led developments available lots off -plan to predominantly Asian that are incorporating a residential element, Steve Watts Steve Watts led Davis Langdon’s and AECOM’s global buyers in a matter of days – most landmark sometimes in the same building, creating a tall buildings groups for several years, combining a commercial towers in central London enjoy new typology of mixed-use tower. passion for research and innovation with a hands-on approach to projects. His CV includes landmark majority overseas backing. A Savills study has buildings from the HSBC Headquarters at Canary suggested that in central London 44% of Rewind a decade or so, and not only was the Wharf to the Shard at London Bridge and the Leadenhall Building in the City of London – as well as new-build residential developments are residential landscape quite diff erent, but the tall a number of international commissions. purchased from Asia; the comparative fi gure for commercial scene was almost unrecognizable Steve is a trustee of the CTBUH, UK Country Leader the offi ce market is 24%, a signifi cant number compared to today’s changing skyline. It is easy for the Council and heads its Finance & Economics Working Group. From May 7, 2013 he will be part itself. to forget the heated debates and polarized of a new venture that focuses on excellence in cost views surrounding the appropriateness of tall consulting: Alinea Consulting. The Central London offi ces market is by far the buildings in London, largely in terms of offi ce strongest performer in national terms, with tower proposals. Heron Tower led the way with capital values supported by this foreign its diffi cult passage through a public inquiry, investment. The prime residential market in but the Gherkin still courted controversy, with London has resisted the volatility in demand UNESCO worried about its impact on St. Paul’s

38 | Economics/Financial CTBUH Journal | 2013 Issue II Cathedral, and the Shard had to negotiate its Such a correlation is less clear in the commer- pavement-to-door “look and feel,” brand own public inquiry. Now they are being joined cial offi ces world. Rental fi gures for a certain association; and amenities such as members’ by other landmarks like the Leadenhall Building established landmark tower suggest an club, spa, childcare center, concierge facilities, and 20 Fenchurch Street, not to mention a host increase in rental levels higher up the building, etc. of other proposals both in and outside the but a number of agents have remarked that public realm, and the time, expense, and risk the lower fl oors were let fi rst, and by the time involved in such challenging projects is repaid the higher levels were negotiated, there was a The Cost of Creating Value (it is hoped) by the value of increased fl oor area premium attached to their exclusivity as well as on constrained plots, high-quality buildings, a general uplift in the market. Lies, damned lies There may not be an exact correlation between imaginative forms and a variety of fl oor plates. and statistics. There can be little doubt that a sales values and fi t-out costs in residential Tenants will no doubt appreciate all this, as well tall offi ce building attracts a premium of some developments. Each scheme will introduce its as the view, the attraction and retention of staff , nature, but articulating what that is, and how it own idiosyncrasies as marketing strategies or the address, and the sharing of a high-quality relates to particular levels, would seem to be diff erentiators. However, there is a general infrastructure with other like-minded less than straightforward. trend that demonstrates a relationship organizations. between the two key drivers (see Figure 1).

Enhancing that Value As a rule of thumb, apartment fi t-out costs The Value of Height equate to about 10% of sales values (above a Traditionally, the offi ce product does not really sales value of £1,000/ft2 or £11,000/m2 ). As with There are a number of drivers for tall building change with height. While residential all rules of thumb, this is open to challenge, but development, from city competition – some- developers will alter the fl oor plates and size of the fairly tight range displayed in Figure 1 does times encouraged by governmental incentives, apartments on the highest fl oors, locating give this some credence. That said, there are as is evident in the Pudong and Canary Wharf duplex or even triplex penthouses there to ways to underpin value by creating a quality enterprise zones of Shanghai and London, underpin the price premium, the offi ce fl oor product in more cost-eff ective ways – for respectively – to sheer ego. But almost without plate tends to be less diff erentiated. Planning example, through smart-sourcing of exception, towers are built equations founded and architectural infl uences may drive a components and intelligent procurement. on the development appraisal at its most tapering or reducing form, which lends itself to fundamental: value less cost equals profi t – more boutique operations or executive The value and cost of fi tting out is much less of whether they are commercial offi ce or functions, but the marginal value of this a consideration for offi ce developers, whose residential apartments. Maximize the residual element of the offi ce tower is less tangible – focus is on the shell and core building (and by increasing the former, and/or reducing the certainly at concept stage. base build defi nition). Value is largely derived latter, and your developer is contented. from the amount of space that can be Value in both sectors will, of course, be partly squeezed onto a plot within the constraints of While the principles across high-rise offi ces and determined by good design, specifi cation, and planning and aesthetics, and the quality of that residential are consistent, the two sectors can detailing, as well as natural attributes like space is a factor – but arguably with less appear to be divided by a common language location and views. But the residential consideration of usability. London and the at times. Their values are driven in diff erent developer has a box of other tricks to play with, United States represent an interesting ways and the resulting products are character- which can enhance the value and saleability of counterpoint in this respect: the landmark ized by quite diff erent building forms. the product, such as: balconies and winter towers of Central London are moulded within gardens; generosity of space and volumes; and between viewing corridors, rights of light

For starters, the correlation between value and £/ft2 NIA residential £/ft2 NIA sales values fit-out cost cost tends to be stronger in the residential £6,000 £600 product. Knight Frank’s Tall Towers 2012 reinforc- es this view: “In terms of height, the general £5,000 £500 £/ft2 residential sales values £/ft2 fit-out cost rule is, the higher the apartment, the greater £4,000 £400 the price premium. This not only refl ects the enhanced views, but also the increased £3,000 £300 exclusivity of living towards the top of a tall £2,000 £200 tower.” This report goes on to suggest that the typical uplift in value per square foot, per story £1,000 £100 is 1.5% (excluding penthouses). £0 £- 7.8 8. 7. 7. 8.5 9.8 9.4 9. 8.5 7. 7.8 9. 9.2% 8.5% 7. 8.5 8.2 9 13.3% 1 11.9% 1 1 1 1 1 13. 1 1 10. 11.0% 10.0% 1 10. 13. 13. 11. 1 12 14 1 1 1 1 10.0% 11. 12. 1 12. 10 1 10 1 .4 1 3.4% 3 1 4 1 3 1. 0 2 0 3 3 1 1. 0.8% 0 8 5% 6 6 2 5 2 .2% ...... 0% . . . .4% . . . . . % % % % % % % % % % % % % % % 4 5% 0% 2% 6% 8% 9 2 4 5 3 0 8 0 0 8 2 6 8 4 9 9% 4 8 0 0 Fit out £/ft2 as a % % percentage of P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14 P15 P16 P17 P18 P19 P20 P21 P22 P23 P24 P25 P26 P27 sales values

Figure 1. Comparison chart between apartment sales value vs. fi t-out cost. © AECOM Davis Langdon

CTBUH Journal | 2013 Issue II Economics/Financial | 39 Typ. residential Typ. offi ce Shell & Core elements tower tower (£/ft2 GIA) (£/ft2 GIA)

Almost without exception Substructure 8 20 “towers are built equations founded Superstructure 33 45 Façades 60 52 on the development appraisal at its Internal walls, fi nishes & fi ttings 11 23 most fundamental: value less cost MEP services 21 42 Vertical transportation 5 18 equals profi t. Contractor's preliminaries, profi t, contingencies 37 50 ” Sub-total: shell & core costs 175 250 Fit-out costs (developer's standard) 120 27 and others intrusions, while being crafted to be offi ce and residential Total including developer's fi t-out 295 277 architectural statements. In New York City they towers have to have generally been designed more from the address this “golden Table 1. Typical London offi ce and residential elemental costs compared (both shell- inside-out, starting with an ideal core-glass triangle” of fi nancial and-core and fi t-out). © AECOM Davis Langdon dimension to enable effi cient space planning challenges of high-rise development. The Cushman Wakefi eld report states as “signifi - for potential tenants. There is evidence that inter-relationship is complex, but critical to the cantly outperforming prime rental values in the these approaches have begun to change in success of the project, the challenge being to City.” With an assumed yield of 5%, this would both locations. squeeze every possible gain out of each equate to a capital value of between £1,100 (although a gain in one will often result in a loss and £1,400. Of course, aff ordable housing in another). provisions (or commuted sums) is a further The Financial Challenges of Reaching for the factor to be considered in the comparison. Sky Not only is there a marked diff erence in the value profi le of offi ce and residential tall High-rise offi ce cost drivers tend to stem from a Towers of whatever nature present a number of buildings, but their cost build-ups reveal very scheme’s shape, not least because it has a fundamental challenges, but the taller, more diff erent profi les too (see Table 1). These profound eff ect upon the structural solution complex, more constrained and sensitive “typical” high-rise costs show the relative together with the cost of the façades (because incarnations present higher hurdles in terms of build-ups in shell and core costs, together with of the extent of the external walls, as expressed the “regulatory tax” of the town planning the very diff erent fi t-out costs, the marked in the scheme’s wall-to-fl oor ratio). The process. The need to satisfy a number of diff erences in some elements the result of a superstructure costs and façade costs of a tall interested parties, not to mention secure diverse product (with a more detailed offi ce building are crucial: these two elements fi nance on appropriate terms, takes a lot of explanation beyond the scope of this article). represent the greatest height-related increases time and eff ort. This costs money and creates and they also show a vast range of potential uncertainty, not only in forecasting future costs, With fi t-out costs included, the total construc- costs, because of the array of architectural and but also in predicting the letting market several tion costs of the two building types are within engineering solutions that is evident in years down the line. It may even predict one or 10%. But their respective value profi les could London’s developing skyline. two property cycles, (hence the now infamous be quite diff erent, with the residential tower in Skyscraper Index). particular possessing a large value range, The residential tower will have its own depending on, among other things, its particular areas of focus, such as the incorpora- The larger towers can be massive engineering location, views, etc. The residential tower in this tion of balconies and diff erent approach to projects, crafted over many years, exposed to cost build-up assumes average sales values of plant location and servicing strategy, but shape political risk, forming part of the infrastructure around £1,500 per square foot (£16,000 per is the most important driver of cost in any tall network and involving eye-watering fi nancial square meter), whether this could be achieved building, from the size and profi le of fl oor commitment. in the City of London is a moot point, given plates (and their story heights) to the vertical planning constraints. However, a super-prime arrangement of fl oors. Larger towers inherently cost more to build product in the right location will exceed this. (per unit of fl oor area), take longer to bring to The prime offi ce tower, by comparison, could With offi ces there is an intense and sometimes site and construct on site, and are less effi cient struggle to compete with super-prime political relationship between high-rise in net-to-gross fl oor area terms. No matter residential values. However, new towers aesthetics and performance, which is no more what the building use, the fundamental scheduled for the next couple of years are evident than in the façades. The form and measures that underpin tall building viability quoted as achieving annual rental value of envelope of an offi ce tower create its identity, are cost, time and fl oor area effi ciencies. Both £55–70/ft2 (£80–110/m2), which a recent and its external walls play a crucial role in its

40 | Economics/Financial CTBUH Journal | 2013 Issue II passage through the town planning process. This array of shapes produces not only a large throughout the building, additionally meaning They also have to satisfy a number of perfor- range of costs but a considerable range of that money can be concentrated on excep- mance criteria, one of which is cost. wall-to-fl oor ratios; indeed, the latter goes a tional areas that help to create diff erentiation long way to determining the former. Wall-to- and “delight.” The wall-to-fl oor ratio refl ects the quantity of fl oor ratio is the principal implication of shape, façades; its specifi cation and complexity will representing the amount of wall area that has determine its elemental cost. Marry the two to be constructed for every unit of fl oor area, so Floor Plates Compared and you have a potent mix that can either from a cost perspective, the lower the better. make or break the scheme’s viability. An The size, shape and form of the fl oor plate are expensive façade allied to a shapely, articulated A comparison of Asian and London towers among the largest contributors to success. A tower can produce a façade that is three times provides an interesting contrast (see Figure 2). tower’s form and slenderness ratio infl uences the cost of a simpler solution on a more regular One could debate the architectural merits of architectural, structural and servicing strategies, tall building. For a “typical” landmark offi ce each and every one of these buildings for some in addition to more fundamental design tower in central London, this diff erence can time; they are all tall landmarks. But they economics, such as net-to-gross ratio and equate to tens of millions of pounds. possess very diff erent wall-to-fl oor ratios. The wall-to-fl oor ratio, which have a more direct projects from the Asia-Pacifi c region all score bearing upon viability and development The envelope of a residential tower is of course between 0.30 and 0.35, compared to a range in returns. also important, but the focus tends to be on London of 0.35 – 0.60 (with the majority 0.45 the eff ective incorporation of balconies, from and above). This is because the Far East To ensure optimum residential design juliettes to inset balconies (or winter gardens) buildings have larger, more regular fl oor plates, effi ciencies in London, a minimum optimum and the value/cost equation of each of these with centrally-located cores. The London fl oor threshold for effi ciency in the key metrics options. With planners’ demands for double- plates reveal a “sushi” selection of sizes, forms (net-to-gross and wall-to-fl oor ratios) is a fl oor aspect apartments, careful use of articulation and confi gurations, many of which alter as the plate of at least 600–650 square meters. means that these requests can be met while building rises. However, sometimes a smaller fl oor plate can driving value upwards. be made to work if the development density Therein lies one of the challenges to develop- can be increased suffi ciently (see Figure 3). Similarly, its structural design is usually based ing high-rises in historic locations: the impact Other markets are characterized by diff erent on the well-tried concept of a central concrete of small, irregular and constrained plots, forms. For example, locations within the Middle core with shear walls that double as apartment married to various infl uences in the sky, from East demand larger apartments, creating walls, and concrete slabs that address acoustic, viewing corridors to rights of light, all of which deeper fl oor plates. height and span requirements cost-eff ectively. determines form, horizontally and vertically. The concept of a central concrete core is also the most cost-effi cient one for offi ce towers, This is one of the but for various reasons it is just one of a reasons why it is diffi cult number of solutions evident in Central London. to provide rules of thumb for cost versus height questions – but 0 Common Metrics also the reason why understanding (and Wall-to-fl oor and net-to-gross are the two ratios following) the condi- Taipei 101Petronas TowersJin Mao International CITIC Shun Hing Central Bank of The Centre on which cost consultants feed. And with good tions for success is Tower Finance Centre Plaza Square Plaza China 0.330.400.30 0.32 0.33 0.33 0.34 0.31 0.36 reason, because these two numbers, more than crucial, from creating any other, succinctly provide clues to the the right form to viability of a tall scheme, whether offi ce or focusing (persistently) residential. on the detail and the opportunities presented Wall-to-fl oor ratio expresses the quantity of by economies of scale. external walls per unit of fl oor area and thus is a Cost savings are critical measure of cost effi ciency. London multiplied many times offi ce towers cover a wide spectrum of designs, over where they are both in terms of conceptual shape and applied to components The LeadenhallBroadgateHeron Tower The Shard PinnacleBishopsgate 20 Fernchurch Street articulation and specifi cation of the envelopes. or details that occur 0.620.61 0.60 0.50 0.47 0.37 0.30 Figure 2. Comparison of the wall-to-fl oor ratio between London vs. Asian towers. © AECOM Davis Langdon

CTBUH Journal | 2013 Issue II Economics/Financial | 41 When considering residential fl oor-plate size, it schemes where inset balconies or winter servicing, and can be more diffi cult to access is critical that the depth is maximized in order gardens are incorporated into the design. from a centralized core, without losing further to mitigate the slenderness ratio, thereby saleable fl oor area to circulation. improving net-to-gross and wall-to-fl oor ratios, The layout of apartments by fl oor also forms but this needs to be carefully balanced with one of the critical cost drivers. And by The assessment of the structural and core layouts and daylight factors, or it may have a maximizing the number of apartments per layout on a residential fl oor plate will need to detrimental eff ect upon sales values. service core, the shared costs (stairs, lifts, risers, be analyzed in order to maximize the saleable etc) are reduced per apartment, which will in areas. A centralized single-core option will be Offi ce layouts are subject to fewer confl icting part, drive the viability. In luxury developments, the most effi cient design solution; however the constraints, but they are nonetheless character- the need to maximize apartments per core can strategy and ratio of core, lifts and stairs will ized, in London anyway, by an array of sizes and however, produce a paradox, as the reverse is have a bearing on the costs and maximization confi gurations. The associated fl oor plates of more typical, where exclusivity and privacy of sales areas. the London towers, shown in Figures 2 and 4, minimize the ratio of apartments per core. demonstrate this. And yet fl oor plate size is also The eff ect of single- or double-loaded cores crucial to high-rise offi ce cost and area In both cases the need to comply with escape also has a fundamental impact upon the effi ciencies, with something like 1,700 square distances, and building and fi re regulations, as net-to-gross effi ciencies, in addition to the meters an average minimum target to avoid an well as daylighting and the marketing wall-to-fl oor ratios. Through the implementa- adverse eff ect on the key metrics. requirements to maximize external views and tion of single aspect apartments located either the number of aspects, will also drive fl oor side of a core/corridor, the net-to-gross effi cien- The façade of a residential development will plate design. cies (and the consequent viability) can be constitute a signifi cant proportion of its overall maximized, while maintaining a cost-eff ective cost, so it is important to achieve an effi cient The mix and size of apartments can also have a wall-to-fl oor ratio. wall-to-fl oor ratio. The determining factor in signifi cant bearing on fl oor-plate design. The wall-to-fl oor ratio is therefore a maximized fl oor density of apartments can aff ect the sales The focus in offi ce towers is in optimizing plate size, while minimizing articulation, values, which tend to be higher for smaller net-to-gross through the early development of although this may be an issue in some tall units, which are more aligned with the investor a tight core, with an optimized vertical market. Such apartments require more transportation design and plant/services distribution strategy, among other things. The preferred option will be a best fi t across cost and space take results.

Height and Effi ciency

Floor plate 705 m² 360 m² 825 m² Both residential and offi ce towers are less Wall-to-Floor 0.53 0.74 0.56 effi cient then shorter buildings because of the Typical Floor Net-to-Gross 83% 79% 77% size of the structure required to deal with wind Overall Net-to-Gross 79% 76% 73% loads in particular, the increase in core area Reducing Net-to-Gross Efficiency/Viability taken by plant/services distribution systems and the greater number of elevators, with Figure 3. Residential fl oor plates and effi ciencies comparison. © AECOM Davis Langdon associated lobbies and circulation. While these principles and their eff ect on effi ciencies are consistent across building types, the numerical eff ects vary.

Above-ground effi ciencies in offi ces suff er with height, but as with cost, the range is consider- Wall-to-Floor 0.29 0.43 0.74 able – and is driven just as much by size and £/ft² GFA £22/ft² £32/ft² £55/ft² regularity of fl oor plate as it is by height (see £344/ft² £/m² GFA £232/ft² £594/ft² Figure 5). % Uplift +45% +150%

Increasing Wall-to-Floor Ratio/Capital Costs Crucially, with residential towers, the relation- ship between core and fl oor-plate size is Figure 4. The impact of fl oor plate shape upon wall-to-fl oor ratio. © AECOM Davis Langdon

42 | Economics/Financial CTBUH Journal | 2013 Issue II Reduced Efficiencies

75% - 79% Structural Solution A city can accommodate only so 41-50 Vertical Circulation 75% - 80% Stories “many icons, and the challenge Servicing Strategy 31-40 76% - 81% Stories Refuse Strategy remains to make the rest of the 21-30 80% - 83% Stories Increased costs per m2 building stock effective, and to 11-20 81% - 84% Stories extract value out of existing 0-10 Stories buildings. Figure 5. Offi ce low-rise and high-rise effi ciency comparison. © AECOM Davis Langdon ” limited, albeit that core sizes inherently get which impact the well-being and productivity younger generation, as well as the more larger as building height increases, while of their people and the long-term performance venerable/retirement bands, from a fl oor-plate size diminishes and slenderness of the asset. If less can be spent on the branding, layout and amenity base. This may ratios increase. The resultant eff ect tends to structure and façades without compromising also extend to selection of materials, which highlight the reduction in net-to-gross ratios. quality, why not direct some of these savings may need longer life expectancies due to This is further diminished by the introduction into comfortable, fl exible and interesting “multi-generation” mortgages. of intermediate plant fl oors, which are typically environments? Considerations such as an . The destination – more focus on the target introduced every 15 to 20 stories. increase in ceiling heights and double-height market for location and purchaser traits, space can help to produce a sustainable, including specifi c accommodation diff erentiated product. requirements of overseas purchasers. The Future . The integration of intelligent technologies Residential developers are becoming more into residential living. Striving for landmark status tends to be more of experimental too. A recent IPINGlobal report an issue in commercial offi ce towers (or states: “In some cases, fl oor plates and designs While there are a number of drivers for tall mixed-use variants). There’s certainly a value in are being changed to create apartments across building development, and global cities icons, some elements of which can be diffi cult a whole fl oor… However, as high-rises become continue to create landmark towers to signpost to quantify, but equally can be clearly seen in more adventurous, consumers are asking for their increasing prosperity, there are developers buildings such as 30 St. Mary Axe (the Gherkin). more, including higher specifi cations and ease in locations around the world who are very A tower’s concept can, and indeed should, of access, such as private, super-fast lifts. This interested in these principles in both sectors, drive more tangible value: the Leadenhall means that investors looking to capture and who are looking to establish valuable tall Building’s investment in its mega frame creates high-end markets must seek out the highest assets in the most effi cient, innovative and large fl oors that are largely uninterrupted by towers and the bravest designs.” cost-eff ective ways possible. And in the internal columns; The Shard’s tapering form process, they want to learn lessons from lends itself to its mix of uses and enables a very The tall residential market has arguably even London’s current crop of towers, and our latest effi cient structural solution. more reason to look beyond these shores in its thinking for the next generation of tall readiness to absorb new ideas and initiatives, buildings. However, a city can accommodate only so such as: many icons, and the challenge remains to London, and those involved in its incredible make the rest of the building stock eff ective, . The American PRS route – using penthouse tall-building development over the last decade and to extract value out of existing buildings. In levels to generate amenities like private or so, is now giving as much in terms of commercial high-rise terms, London is now members clubs, rooftop gardens and pools. knowledge as it is taking. And long may the probably in a new development phase, with an . Greater fl exibility to internal fi t-out, even fl ows of learning, inward and outward, emphasis on elegant but rational forms – the internal arrangements – aided by new continue, to ensure that the tall-building savings from which can be invested in a methods of construction. typology, whether offi ce, residential, mixed-use combination of more competitive rents and . The Japanese genealogy route – increasingly or some other variant, progresses to ensure better internal spaces. expensive ownership may result in proper- that it addresses the challenges of high-rise ties being passed down through genera- working and high-rise living in a world that is It should be argued that money be re-directed tions, which may necessitate creating fl exible very diff erent and which will continue to into areas that are more valuable to occupiers, and dynamic space that can accommodate change. 

CTBUH Journal | 2013 Issue II Economics/Financial | 43