Professor Elam

Weekend Sept 30 2012

I highlighted the Skyscraper Theory in my address to the Structural Engineers State Meeting this past Friday. Expansive social mood leads to expansive projects. These are usually planned near the top of an economic boom. The problem is that the building then opens during the following downturn. The Empire State Bldg was built from 1928-1930 but then opened in the worst real estate market ever in the early 1930s. 

An article in the Express News this morning offers more convincing evidence of the theory. The iconic Tower Life Building in downtown opened June 1, 1929. The Majestic Theater opened two weeks later on June 14. the first feature was Follies of 1929, a fitting title for the top and then crash to come that October. 

Marion Koogler McNay's home was just being finished at this time, it would open to expansive parties held as the economy tanked in the early 1930s. 

After opening at the very top of the market in 1929, the Majestic would close for several years near the very bototm of the 1974 marklet which took the Dow Industrials to 577. It was re born in 1989 after the 1987 crash with a $4.5 M renovation. 

Just this past week the one kilometer tall Kingdom Tower was announced in Saudi Arabia. It will cost billions if indeed it is finished by 2018. Such audacity only occurs near market tops when people feel emboldened by years of economic expansion.