Newspaper article The Evening Standard (London, England)

Skyscrapers That Point to Trouble

Newspaper article The Evening Standard (London, England)

Skyscrapers That Point to Trouble

Article excerpt

Byline: ANTHONY HILTON

Hedge problems City Comment READING a Lehman Brothers circular does not normally put one in mind of Deputy Prime Minister John Prescott, but it did this week.

It emerged a couple of days ago that, wearing his hat as the minister with ultimate responsibility for planning, he had agreed the construction of a 600-foot tower near Vauxhall in south-east London which, if it is ever built, will be the tallest residential tower block in Europe.

Coincidentally, a few days earlier the investment bank published a commentary on the Skyscraper Index, which discussed the observation that a decision to build "the world's tallest building", or something akin to it, is almost always the harbinger of an economic crash.

The reason is not hard to fathom.

Such sometimes-grandiose projects are conceived in the latter euphoric stages of a boom when the last vestiges of caution have disappeared but money is still no object. The projects are then begun just as the mood changes and recession sets in.

Often they - or strictly speaking their developers - go bust. But even if they get through the building stage, these developments stand empty, possibly for years, until the recovery from recession gets under way.

Thus it was in New York with the Woolworth building as far back as 1916, and again with the Empire State Building in 1932 and the World Trade Center and the Sears Tower in Chicago in 1975.

Nor is it just an American phenomenon. Looking abroad, the completion of the Petronas Towers in Kuala Lumpur and the Bank of China Building in Hong Kong coincided with the Asian financial crisis, In this country, the 1980 recession was marked by the arrival of what was then the City's tallest building, then known as the NatWest Tower and now called Tower 42. A decade later, Canada Tower at Canary Wharf was a casualty of the 1992 recession here.

Today, some believe that China's attempt to produce the world's tallest building, which is currently under construction in Shanghai, is a speculative leap too far even for that astonishing city. …

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