Sell Me a Story

How the dismal science applies to your life.
Sept. 6 2001 9:00 PM

Sell Me a Story

Two skyscrapers, built at the same time in the same block. One's much taller. Why? 

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First of all, it's not always true that you can reduce costs by equalizing building sizes. Here's why: Even though very tall buildings cost more per story than very short buildings, the cost does not increase continuously as you add stories. Instead there are sudden points where going up only one more floor dramatically increases the cost. Some examples are four stories (you can really only go three stories with wood-frame construction), seven stories (kicks in additional requirements for being a high-rise in most jurisdictions), and 15 stories (wind and seismic bracing start to get much more complex around this point). So in between, say, seven and 15 stories, there's no real advantage to equalizing the heights of two buildings; an eight-story building and a 12-story building cost about the same as two 10-story buildings.

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Second, some tenants—but not most tenants—are willing to pay a premium for either the exclusivity of a short building or the extra amenities (newsstands, restaurants, health clubs, observatories, and prestige) of a tall building. Therefore it can be profitable to put up a few of those unusually sized buildings, even if their heights fail to minimize construction costs.

And there you have it. Hats off to Mr. Feely, thanks to whom I can sleep again at night—just as soon as I figure out this whole ticket-pricing thing.

Steven E. Landsburg is the author, most recently, ofMore Sex Is Safer Sex: The Unconventional Wisdom of Economics. You can e-mail him at armchair@landsburg.com.

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