GLOBAL CITIES SKYSCRAPERS 2015 REPORT GLOBAL SKYSCRAPERS CITIES 2015 REPORT TABLE OF CONTENTS 4-11 12-14 TOWERING ABOVE SKYSCRAPER THE REST INDEX Firms are increasingly focused on keeping Our league table ranking the world’s their staff happy, and the skyscraper delivers leading cities as high rise centres an office people want to work in. of commerce and living. 15 16-17 18-19 WEST SIDE FIVE FUTURE A B O U T STORY TRENDS THE GROUP Manhattan’s Far West Side is experiencing What are the global trends that are sending a transformation with a new skyscraper city skylines across the world ever higher? district under construction. 2 03 LOOK SKYWARDS The world’s cities are in the midst of a skyscraper building boom and this report addresses the question, INTRODUCTION why do we need these giant buildings? INTRODUCTION BY — JOHNINTRODUCTION SNOW BY — JAMES D. KUHN Head of Commercial, President, Knight Frank Newmark Grubb Knight Frank Our analysis shows that skyscrapers are cut, which benefits social and are the optimum means of family lives. When offices and THE WORLD’S TALLEST addressing major economic and homes are lifted above street level, geographic challenges facing cities the ground floors and basements BUILDING TIMELINE today. These are: of buildings are freed up for shops and leisure facilities. The spaces » In order to accommodate between tower clusters can be economic and population growth developed as parks and public a city can either move outwards or areas; while skylines are enlivened upwards. Moving outwards breaks 2019 with iconic architecture. Kingdom Tower, up business clusters, and creates Jeddah political problems, like allowing » Global real estate capital markets 2010 Burj Khalifa, development on green fields around are seeing more activity from those Dubai cities. This moves the pendulum who wish to deploy money in very of debate in favour of building large sums (above the $1 billion 2003 Taipei 101, upwards to provide more homes mark). The size of skyscrapers makes Taipei and business space. them attractive to such investors, 1998 and this will encourage a movement Petronas Towers, » For companies today, staff Kuala Lumpur towards developing in scale. retention is high up the agenda. Losing star fee-earners is damaging Recent enthusiasm for skyscrapers 1974 The Sears Tower, for business, and even the cost reflects a shift in the global Chicago of replacing support staff can be economy towards city centres, as 1972 higher than the rent paid on their automation in factories means that World Trade Center, workstations. Skyscrapers are one more humans do knowledge jobs in New York of several means firms have found offices. Today’s knowledge workers 1931 to make the office an exciting place increasingly want to live near The Empire State Building, New York to be. Also, an inspirational office work, while firms want staff to feel can encourage staff to interact and inspired by their workplace. The 1930/31 The Chrysler Building, share knowledge, thus driving skyscraper is successfully delivering New York up productivity. the volume and type of homes and 1930 offices our cities require. Bank of Manhattan » As well as creating a better Trust Building, working environment, skyscrapers We hope you find this report New York can make the city a better place informative, and if you wish to 1913 to live. If more homes can be built discuss any of the issues raised, The Woolworth Building, New York near to work, commuting times please do not hesitate to contact us. GLOBAL SKYSCRAPERS CITIES 2015 REPORT TOWERIN ABOVE THE REST From New York to Shanghai, companies want exciting new work places to inspire staff, while more people want to live near work. The skyscraper is seen as the best way to achieve these goals. WRITTEN BY — JAMES ROBERTS Chief Economist, Knight Frank Skyscrapers are a rising tide in were out-of-town and low rise, the modern global city. London and thus cheaper, were growing has added 23 new skyscrapers in popularity with companies. (a building over 350 feet high) Skyscrapers like the city centres since the turn of the millennium, they occupied were viewed as compared to 17 in the preceding expensive and in decline. forty years. While New York However, firms today increasingly added four new towers in 2014 view real estate as a means of alone, including the iconic One controlling a much bigger cost, World Trade Center. This sounds namely staff retention. This has impressive until one considers coincided with a movement of that Dubai has built nearly 190 people back into cities, reversing skyscrapers since 2000, and the preceding exodus to the suburbs Shanghai over 90. – New York City’s population has The new enthusiasm for increased by 19% since 1980. Chicago’s Willis Tower skyscrapers is partly one of city (formerly Sears Tower) was status. Less mentioned are recent SKYSCRAPERS: IT’S ALL ABOUT PEOPLE the world’s tallest building from 1974 to 1998 changes in how firms perceive For private sector services firms offices, particularly in relation to (the mainstay of city office their workers. occupation) salaries typically In the past, offices were typically account for around half of viewed as a cost that companies operating expenses. However, an wanted to minimise, with little unquantifiable cost is the loss of thought given to how they could value when successful staff leave, 20 Fenchurch Street, boost productivity. Consequently, and the additional expense of one of London’s new in the 1970s and 1980s, offices that replacing them. wave of towers For a worker earning over £35,000 for staff who wish to jog or cycle to SKYSCRAPER (UPPER FLOORS) RENTAL GROWTH p.a. in London’s The City financial work are becoming common, as is SIX MONTHS TO END OF 2014 04-05 district, should they leave, the fee replacing car parking spaces with Source: Knight Frank Research, Dubai: The city has added Newmark Grubb Knight Frank Research paid to a recruitment consultant bike racks. A gym in the building, REST almost 190 skyscrapers to replace them is greater than and eating establishments are also since 2000 20.0% 13.2% 11.3% 10.6% 7.7% 6.1% 2.9% 2.1% 1.5% 0.8% 0.0% -1.2% the annual rent on their office now increasingly valued by tenants. work station; and that head-hunter Extensive basement areas and retail charge is just a small part of the concourses that are typical among overall staff turnover cost. This skyscrapers can help on these issues. means that even for staff in support roles the expense of replacement overshadows property costs, and MOVING TO A NEW TOWER TOWERING ABOVE THE this is before considering the effect CAN OFFER A SENSE OF A an enhanced working environment NEW BEGINNING THAT WILL can have on productivity. ENCOURAGE STAFF TO EMBRACE As a consequence firms when THE CHANGES. approaching property now strive for: To this backdrop, skyscrapers are 1 The office as the place to be: flourishing. They are seen as a way Firms aim to create offices to give staff a workplace that feels that staff want to spend time special, and promotes esprit-de- in. This is partly achieved by corps – an office you want to tell innovative fit-out, ranging people about at a dinner party. from games rooms, to buffets and cafés, to private work EVERYONE GETS LIGHT areas. Being in a skyscraper is Insurance firm, Markel, has another way to give the office New York (Midtown) York New Frankfurt Hong Kong Angeles Los (City) London Singapore Shanghai San Francicso Taipei Sydney Dubai Beijing recently moved their London office wow factor in the eyes of staff. into 20 Fenchurch Street, a Rafael 2 The office as a catalyst of Viñoly designed tower. Andy Davies, integration: This is where firms the COO and CFO, sees being in a use the office to bring about skyscraper as a way of improving changes in working habits, so the workplace experience. people mix and interact to create Markel found a tower floor plate has a greater sense of community. an advantage over a conventional Staff are encouraged to leave building as there are no desks desks and move around the remote from a window. According office and speak face-to-face. to Davies: “Wherever you go in the Moving to a new tower can new office, everyone gets natural offer a sense of a new beginning light, even at their desk; and the that will encourage staff to views are spectacular.” embrace change. Markel installed internal staircases 3 The office which is close that pass through the floors to to home: This final point in encourage staff to circulate in the particular has brought offices office rather than remain tied to back into city centres from desks. This increased the incidence out-of-town locations, which of chance encounters where makes skyscrapers important knowledge can be shared. Again, to re-introduce more business the open environment and natural space into crowded CBDs. light facilitate this cultural change Many firms now want to support – according to Davies, “in the new the work/life balance, and try to office, you can’t hide”. fit the office around lifestyles. For instance, locker-rooms and showers CONTINUED ON 06-07 GLOBAL SKYSCRAPERS A CITIES 2015 REPORT SKYSCRAPER PRIME YIELD SPREAD OVER B 10 YEAR BONDS (BASIS POINTS) Source: Knight Frank Research, Newmark Grubb Knight Frank Research, Thomson Reuters CONTINUED FROM 04-05 SHANGHAI’S SUPER TOWER C ICONIC IS NOT ENOUGH The Shanghai Tower, which Martin Jepson, President & COO for is now the tallest building in Brookfield’s UK division, believes China, is part of this movement that the best means of achieving towards skyscrapers that allow the staff-friendly skyscraper is staff to interact, according to the via a very efficient floor plate.