Categories Economy, Narrative, Uncategorized

Who Will Be the Uber of CRE?

Anytime you look to the future, the word disruption always enters the conversation. I spend way more time now looking at companies that are trying to disrupt the brokerage business than I ever did in my entire career. As a 25-year CCIM, I found the below article worth sending out as one of my narratives. Many of these trends apply to other businesses, but are particularly interesting for commercial real estate.  So what are we doing to stay relevant?

—We are hiring the best talent possible.  On our team today, we have brokers with a finance degree & 2 MBA’s, a structural engineer, a construction management degree, and an attorney.

—We have all our brokers continuously growing and learning (all our members now have their CCIM, and two have SIOR’s and CRE).
—We are providing more services and more unique processes than ever.  (Here is a link to our unique process)
Yes, there will be fallout as technology continues to evolve. We will as well.  There is one thing that never gets disrupted: relationships. In my book, Chasing Excellence, written with our Founder, Bill Lee, we have a chapter on this topic. Click here to learn more. 
Call me to start a relationship today.
Craig
602.954.3762
P.S.- How many people can say they are 2nd and 3rd generation AZ natives that donate over 1,000 hours a year to local charities? Coppola-Cheney can. Click here to hear about some of the organizations we work with/donate to.
Serving the Community
(Having trouble viewing the video? Click Here)

Disruption Ahead!

Who will be the Uber of commercial real estate? 
By Surabhi Sheth
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Feb.16

Every new generation demands and creates new ways of living, working, and doing business. Millennials, who will comprise 70 percent of the workforce by 2030, want to break free of the cubicle, and prefer an open, flexible work culture that allows them to work anywhere, anytime. To meet the needs of this new workforce, companies are leveraging technology developments – cloud computing, mobile, analytics – to create innovative products and services that, in the process, make existing business models obsolete. For instance, startup companies in the shared economy, unheard of just a few years ago, have capitalized on location technologies and transformed the local transportation and hospitality industries in cities worldwide.The commercial real estate sector is ripe for disruption, the same as many other legacy industries. For instance, high-quality Internet has enabled advanced payment systems, the Internet of Things, and geolocation services. Combined with urbanization and changing consumer patterns, these trends have the potential to redefine the commercial real estate demand-supply dynamics and business model, including real estate usage, site location, development, design, valuations, leasing, and financing.

While disruptive trends abound, some are generating more energy than others in the commercial real estate sector. For instance, technology-driven disruption of the brokerage model is forcing brokerage and leasing companies to innovate from the grassroots level. At the same time, three other trends are gaining relevance: the rise of the collaborative economy, demand-supply gap in talent, and changes in the last-mile delivery options of retailers. 

The Cloud Over Brokerage and Leasing

Technology-enabled access to information that was once available to just a few – at a high price – is bringing down barriers between commercial real estate owners and potential tenants, and diluting the role of real estate brokers and leasing representatives.
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New entrants are leveraging cost-effective and real-time availability of property information to offer new service models that further enable this trend. For instance, property listing websites, such as Hubble and 42Floors, now provide services ranging from basic aggregation of leasable space to offering online marketplaces for owners and prospective tenants.

Other companies such as CompStak and DealX are now leveraging the power of crowdsourced lease comparables and offering them for public consumption, along with information such as tenant name, rent, lease duration, and landlord concessions. Real Massive and VTS have even broader platforms, offering property listings and market and other related information to owners, tenants, and brokers. Such online marketplaces are creating data ubiquity and transparency, which is empowering tenants and property investors to make more informed decisions independent of brokers.

Technology is further disrupting the traditional brokerage model. For instance, geospatial technologies help automate several activities related to site analysis, sales, and marketing, as well as provide information that allows more informed location-related decision-making for property owners and tenants. Artificial intelligence is automating tasks that in the past could only be done by humans.

Likewise, online property sites are eliminating the need for the broker-mediated property tour by offering virtual tours. For example, the Brazilian real estate website VivaReal uses a remote-control robot to offer virtual access to model apartments. In New York, developers are giving virtual reality tours to prospective tenants of office buildings and retail centers still under construction.

While the onslaught of technology is rendering the traditional brokerage model irrelevant, it is also enabling the use of unproductive commercial real estate. Practitioners should consider diversifying their core business focus, from largely brokerage to consulting opportunities in space-need and location advisory, as well as property and facility management.

Client relationship management will hold the key to success. Similar to consulting firms, brokerage firms will need to shift their service model from regional to central client relationship management. Existing brokers can use innovative services, capitalizing on their prior experience and client relationships. For instance, companies can combine their rich bank of tenant data with geospatial and cognitive technologies to generate better insights on future real estate choices.
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Traditional players can also consider investing in or collaborating with startups to meld client relationships with new tools and technologies to offer the best of both worlds.

The Collaborative Economy

The commercial real estate sector as a whole is poised for a transformation as collaborative space usage gains ground. Many new players are capitalizing on this trend. For instance, one company leases large office spaces and subleases them on demand. In the retail space, online marketplaces such as Storefront offer a platform to brands, designers, and artists to find physical retail space for short duration pop-up stores. The collaborative economy can optimize rates on short-term spaces and create more value as it helps tenants obtain space that closely aligns with their needs.
However, current leasing and tenant approaches lack the flexibility to accommodate tenants’ varying demands. In response, traditional commercial space owners may have to rethink their approach to designing, developing, and redeveloping their properties. Along with fluid spaces, companies will need to consider new ways to enhance tenant experience. For example, in office properties, a hybrid approach may be the way forward, with a mix of long-term leases for core spaces and short-term flexible leases to manage ups and downs in workforce numbers.

The Talent War

Slowing population growth, the baby boomer retirement wave, and talent demands from competing industries – particularly health care, community services, and science, technology, engineering, and mathematics clusters – are likely to result in a war for talent in the next decade. That gives new emphasis to the workplace preferences of the incoming generation of professionals, the millennials, who tend toward freedom and flexibility. Their work-life barriers are porous, with many preferring to work from home or freelance.

As such, the per-employee office space requirement is likely to shrink. According to a Deloitte Canada report, the average office space per employee is projected to decline from 250 square feet in 2000 to 150 square feet in 2017, and 90 to 100 square feet in companies that have nimble workplaces. The upshot may be a demand for mixed-use spaces that include office, residence, and recreation options with many tenants even demanding small offices in their apartments.
As the war for talent intensifies, talent dynamics should be an integral factor in location-based decisions, especially for office property owners. Companies should estimate the future workforce using existing employment data and evaluate areas where knowledge workers are likely to live, work, and play. These may be close to the regions where they study and grow, such as cities with strong academic components.

The Last Mile

Growth in online retailing is redefining the use of brick-and-mortar stores, with retailers increasing focus on enhancing customer experience. Further, 3D printing will enable manufacturers to move to a build-to-order model rather than build-to-stock, which will allow them to sell directly to consumers. Indeed, retailers and some retail real estate owners are using different and flexible delivery options such as same-day or next-day delivery to create differentiation at the last mile.
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While brick-and-mortar stores will remain integral to some retailers, their utility will continue to evolve. They are likely to be used primarily for products that require touch and feel, or have significant service components. Overall, demand for traditional retail spaces will be weak.

That said, retail properties will be utilized in different ways. They could double up as fulfillment centers, especially for commoditized products that do not necessarily require touch and feel for purchase decisions. Further, on-demand retailing and manufacturing will reduce inventory holding, and potentially the demand for large warehouse spaces.
Retail property owners should continue to try different store formats, tailored spaces, and innovative techniques to enhance the end-customer experience. This would require incumbents to embrace sophisticated technologies.
Distribution and fulfillment centers should be a prominent part of industrial real estate owners’ property portfolios. As existing industrial property owners plan new development, they will likely benefit from acquiring and developing smaller and more flexible spaces within city limits that meet the demands for rapid delivery to end consumers.

Clearly, the physical and digital worlds are fast blurring. Technology, which is at the center stage of the current wave of disruption, also has the potential to help commercial real estate players meet these challenges. Companies will have to re-engineer operations and figure out optimal ways to organize and access talent. Bottom line, existing commercial real estate players cannot afford to ignore this disruption: The choice is between responding proactively to the evolving business landscape or risk being disrupted by the new entrants. 

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Categories Uncategorized

Why Use a Broker?

Our team handles 50+ tenant advisory assignments every year. Why? We like to think it is because we are really good. But there are many other reasons to hire a broker including:

  1. Researching and looking into office space takes up a large amount of time. Do you have the luxury of stepping away from your immediate job responsibilities for an extended period of time? Most don’t.
  2. Wouldn’t it be nice to have landlords fighting over your business? Good tenant reps make this happen.
  3. Not only do we ensure that you save money in negotiations, our services are free. The Landlord pays the commission.
  4. These relationships aren’t fleeting. Having a long-term business relationship with an incredible tenant rep like Coppola-Cheney will aid in all future real estate endeavors for your company.

Below are two articles that spell out some other reasons to hire a team like ours. 
 
We also put together a 3 minute video that showcases why we are the best at what we do. Give us a call if you would like to learn more about how our tenant representation services can help your business. 

Ink Man
If you are unable to play the video, please click here.

Craig
602.954.3762
ccoppola@leearizona.com


Why should a business owner use a Commercial Tenant Representation Broker to help them locate & negotiate commercial space?

Why should a business owner use a Commercial Tenant Representation Broker to help them locate & negotiate commercial space?

Answer: We do not know if you are currently under a commercial lease agreement or your experience with analyzing and negotiating commercial leases, which may affect your decision; however, you can review industry articles and suggestions on Commercial Tenant Representation Broker services at several websites, which include these common considerations:

Reasons why you may need tenant representation:

1. Do you have the time and expertise to research the real estate market, including opportunities that are currently available or will become available in the future?
2. Do you know the effective leasing rates and inducements being offered to those leveraging their real estate requirement?
3. Do you have the time and expertise to deal with brokers and landlords in a site search, while at the same time handling all of your other job responsibilities?
4. Do you know how to use real estate to improve the financial and competitive position of your business or corporation?
5. Do you know that the quoted rental rate of your building includes brokerage fees?

Ways a tenant representative can help:

1. Analyze space needs
2. Investigate all available properties and determine which are the most appropriate for your needs
3. Create a bidding war among several landlords for your business
4. Protect you during lease negotiations so that you come away with terms that meet your present and potential needs
5. Serve as a buffer between you and the landlord
6. Identify lease provisions that could cost you money during the lease term
7. Handle the paperwork and other details of the lease negotiation
8. Settle disputes that arise after the lease is signed


10 reasons working with an office tenant rep is better than flying solo

October 09, 2014 | Staff Writer
RE Journals

Finding and leasing office space presents challenges for any business, but it can be especially difficult for companies that lack the knowledge and expertise to make an informed decision about their real estate needs. While researching different buildings and neighborhoods is often a good place to start, working with an experienced broker who’s already familiar with the options that exist in the market not only saves time and money, but also ensures businesses end up in a location that will work for them over the long term.

“Just like attorneys and medical professionals, commercial brokers have specialized knowledge that can prove invaluable during an office search,” said Frank Chalupa, president of Amata Office Solutions, a Chicago-based real estate company that specializes in office solutions for companies requiring up to 10,000 square feet of space. “By handling the majority of the legwork, brokers are able to streamline the search process while generating better results for their clients.”
According to Amata, the top 10 benefits of working with an experienced tenant rep are:

1) Their services are free: A common misconception is that the benefits of working with a commercial broker are offset by the cost. “What some businesses don’t realize is that tenants are not responsible for paying brokers for their services,” said Chalupa. “Instead, these costs are covered by the landlord, with the tenant rep splitting the commission with the listing agent.”

2) They can help businesses determine what goes in the cloud and what stays in the office: Cloud-based file storage and other technologies have enabled businesses of all sizes to cut costs by reducing their overall footprint. “A broker can assess a company’s needs to give them a more approximate idea of how much physical space they require to operate efficiently yet comfortably,” said Chalupa. “They can also help clients plan for growth to ensure they aren’t paying for space they won’t use.”

3) They’re connected: By taking advantage of their relationships with fellow brokers, building owners and other real estate professionals, tenant reps can educate clients about the best options in the market, including recently vacated spaces that are not yet publicly listed. “The improving economy, along with a lack of new office development, has caused demand for existing space to soar,” said Chalupa. “Today, available spaces are filling up before some companies even have the chance to look at them, making it all the more important to work with brokers who have their finger on the pulse of the market and can make clients aware of new spaces as soon as they come online.”

4) They save valuable time: Finding office space and negotiating a lease is a time-consuming process that can pull business owners and corporate decision makers away from the day-to-day operations of their business. “For many tenants, time is money, especially in the case of small businesses that simply do not have the resources to conduct a thorough office search,” said Chalupa. “In addition to money saved through the lease negotiation process, brokers also save their clients valuable time by handling much of the back-and-forth communications with the landlord leading up to the actual signing of the lease.”

5) They know how to find the needle in the haystack: Experienced tenant reps are well-versed in the local real estate market and have the keen ability to match companies’ needs to a specific location. If, for example, a startup is looking for a smaller space to expand their operations, they can benefit from working with a broker who specializes in spaces smaller than 10,000 square feet. “An office search can be overwhelming, especially for businesses that are going through the process for the first time,” said Chalupa. “By drawing on their familiarity with different buildings, as well as the people who own and manage them, tenant reps help clients identify the space that will best meet their current and future needs.”

6) They think about auxiliary items: While the look and feel of an office is important, there are several other factors that tenants should consider before signing on the dotted line. “Access to public transportation, parking and building amenities are just a few of the things that businesses should evaluate when leasing office space,” said Chalupa. “A good broker will help clients identify certain wants and needs that they might not think about if they were leasing space on their own.”

7) They give tenants more leasing power at the negotiating table: As with a job interview or presentation, it’s important that tenants come to the negotiating table prepared. “Brokers are the key to unlocking value during a negotiation, whether it be through lower rents, higher tenant improvement allowances or some other concession,” said Chalupa. “Most landlords have been through the negotiation process countless times before, so tenants that go it alone are at a significant disadvantage.”

8) They know the ins and outs of leasing: Leasing agreements are full of clauses and provisions that, together, dictate how much flexibility tenants have over the course of their lease. “Everything from rent escalations to the ability to sublease is spelled out in this document,” said Chalupa. “Because most tenants are eager to move into their new space, they may not stop to examine their lease as carefully as they should. A broker will ensure the leasing agreement reflects prior communications with the landlord and may even be able to recommend a real estate attorney who can review the lease before it’s signed by the tenant.”

9) They can act as your first line of defense if issues arise with your landlord: Even the most thorough of office searches can fail to identify problem landlords that can end up causing big headaches for tenants. “By acting as the messenger, a tenant rep can help resolve landlord-tenant disputes and save clients from awkward exchanges with their landlord,” said Chalupa. “If the problem cannot be resolved, brokers can help tenants evaluate their options and, in some cases, find a new home.”

10) They can help clients renew or relocate when their initial term is up: Although brokers often help clients with their immediate needs, their relationship can last years or even decades. “Tenants that maintain a relationship with their broker have a head start when it comes time to renew their lease or move to another location,” said Chalupa. “Brokers spend a lot of time getting to know their clients, so they’re familiar with a company’s needs.”

Tags | amata white paper, Commercial Real Estate
© 2016 Real Estate Communications Group. Duplication or reproduction of this article not permitted without authorization from the Real Estate Publishing Group. For information on reprint or electronic pdf of this article contact Mark Menzies at 312-644-4610 or menzies@rejournals.com- See more at: http://www.rejournals.com/2014/10/09/10-reasons-working-with-an-office-tenant-rep-is-better-than-flying-solo/#sthash.YObTIl2z.dpuf

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Categories Narrative, Tech Industry, Uncategorized

Game Changing Trend is Happening Right Now

Each January, I attend Abundance 360 produced by Peter Diamandis. One takeaway this year was how fast driverless cars are becoming a reality. This will happen in our lifetime. Google autonomous cars have over 1,000,000 miles in Palo Alto (click here). Tesla has a new package that will drive your car on the highway (click here) and there are at least five companies spending over $100 million on creating a driverless car. Kids born today will probably never have to learn to drive.
 
How that affects commercial real estate is a brand new topic to this narrative. I have been thinking about it and believe that this will change a couple of paradigms. First, quality locations with limited parking will become even more desirable. Second, over the past 30 years, we have been adding more and more parking due to increased densities. In Phoenix today, we have been constructing buildings with 5 spots for every 1,000/sf. In time, this requirement will disappear, creating areas that will need to be repositioned. Until then, you still need all the parking you can get. How we navigate this transition will be interesting to watch.
 
Read below for more on this topic from the Wall Street Journal.

 

Craig
602.954.3762
ccoppola@leearizona.com

P.S.- In this week’s video, I discuss one of my rules on life–living without moderation. Whether it’s dedication to our business or a 100-mile run, we are relentless until we achieve our goals– click here to see the full video on our website. Give us a call if you’re looking for this type of determination for your real estate needs.

Nothing in Moderation
Please click here if you are unable to view the video

 

Private car ownership is on the road to becoming a rarity
In 25 years, the only people owning cars will be hobbyists, hot rodders and Flat Earthers

By: Dan Neil
WSJ
Published: Dec 23, 2015 11:53 a.m. ET


Driverless cars, a dream since the mid-20th century, will soon become reality and ultimately commonplace — and can be counted on to accelerate the recent trend away from private automobile ownership.

Henry Ford was a smart guy, but he never did the math when he decided to put every American household on wheels.

A century after the Model T, the world has a problem with cars. The U.S. and China will consume about 40 million light vehicles in 2015, according to IHS. Globally, we’re on track to hit 100 million vehicles in 2020.

That’s not a lot of cars. That’s an ocean of cars, an inundation, wave after wave breaking on the shores of the industrialized world. And yet policy makers and common folk alike have been powerless against the siren song of the automobile. Even in the most car-blighted burg in the world, the toxic parking lot they call Beijing, the appetite for the automobile—as status item, as luxury, as totem of personal mastery in a fragile postcolonial mind-set—is driving millions more into its smoggy embrace, despite limits on ownership and the government’s rising alarm.

The absurdity of our century-old, ad hoc approach to mobility is captured in one statistic: The utilization rate of automobiles in the U.S. is about 5%. For the remaining 95% of the time (23 hours), our cars just sit there, a slow, awful cash burn, like condos at the beach.

But what if, like condos, automobiles could be shared? It’s one of life’s first lessons—how to share toys, parents, rooms, feelings. But as little consumers grow into adults, they forget the joys of selflessness. That’s about to change. And I don’t mean the collaborative consumerism we see around us—peer-to-peer transportation like Uber—which is symbolic and transitional, lasting only until automation happens, at which point we can get rid of the wetware. And by wetware, I mean us.

Within a generation, automobiles will be endowed with what’s known as Level 4 autonomy—full self-driving artificial intelligence for cars—which will not so much change the game as burn down the casino. Autonomy will make it possible for unmanned automobiles to be summoned, via app, to your location. And not just any passing tramp steamer, but exactly the vehicle you need for the occasion, cleaned and fueled, for as little or as long as you need (offers may vary in your state). When you’re done—poof!—it will go away.

You don’t pay for the car. You pay for the miles. And only the miles. It’s a whole new way to fly. Let’s start small. Need a pickup for three weekends a year but don’t want to pay for the other 49? Autonomy can make that happen easily without a visit to the dreaded U-Haul depot. Need a car to take mom to the doctor’s, or fetch a spouse from the airport? A decade hence, major auto makers and smaller players will be at each others’ throats for the privilege of sending consumers vehicles a la carte, for a one-way trip, an afternoon, a weekend, a month. These transactions will move through the glowing bowels of your monthly credit accounts, and you won’t even feel them.

Americans will look back on pre-autonomy like the age of Casio calculators and DOS prompts. Remember cab drivers? Remember traffic jams? Remember when parents lived in dread that their children would die in a car accident? Death and major injury from traffic accidents will drop drastically. The automobile’s other costs—decreased productivity, fuel burned in uncoordinated traffic—will be swept away. “Beyond the practical benefits, autonomous cars could contribute $1.3 trillion in annual savings to the U.S. economy alone,” wrote Ravi Shanker, a Morgan Stanley analyst covering the U.S. auto business. Global savings? Somewhere in the neighborhood of $5.6 trillion.

You may be wondering, back here in 2015, if the auto industry is worried about shared mobility. Doesn’t it spell declining sales? It could. But in a mature market like the U.S. turnover will remain fairly stable. What would change is the number of passengers that passed through every vehicle—including a vast untapped market that doesn’t drive today. “Level 4 AV technology, when the vehicle does not require a human driver, would enable transportation for the blind, disabled or those too young to drive,” says the Rand Corporation in a report on the subject. “The benefits for these groups would include independence, reduction in social isolation, and access to essential services.”

These same benefits would return mobility to millions on the margins, including the elderly, the working poor and those who have lost their driving privileges due to a criminal record. (It’s not hard to see the throughline between autonomy and the hobbling economic effects of mass incarceration.)

In August 2015, Morgan Stanley nearly doubled its price target for Tesla TSLA, +0.26%, to $465 per share, based on an analysis of Tesla’s so-far secret shared-mobility plan. “We view this as a business opportunity,” wrote Morgan Stanley analyst Adam Jonas, “[that could] more than triple the company’s potential revenues by 2029.”

And, far from funneling consumers into fleets of lustless electric drones, autonomy could have the opposite effect. Immersive-connected consumers will be able to draw from a vast and constantly replenished motor pool of shared vehicles—dune buggies, pickup trucks, German luxury sedans—with little or no notice, a cast of automotive avatars.

At this point a fair reader might wonder if I have ever been to America. The notion that we as consumers will forgo the awesome pleasures of the automobile—the privilege, the mobility, the identity—to share vehicles is, I grant, unfamiliar.

But America’s much-sung-about love affair with the automobile has grown cold. Rates of motor-vehicle licensure are already plummeting among young Americans. The obligations and costs of transportation—an average 17% of household budgets—are driving them out of automobility altogether. And enthusiasm for automotive culture is waning too, as the empty seats at Nascar events attest.

Personal-vehicle ownership isn’t going away. Some people will own and cherish cars. But those people and their cars will be considered classics. Rates of ownership will decline, an artifact of an era of hyperprosperity and reckless glut. Twenty-five years from now, the only people still owning cars will be hobbyists, hot rodders and Flat Earth dissenters. Everyone else will be happy to share.

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Categories Narrative, Uncategorized

Employee Engagement Sucks. Why?

I spend a ton of time working with my team on growing their individual skills, increasing our deliverables and really making sure we are engaged. As we work with big and small companies and I talk to our clients, engagement has become one of the most desired (and least attainable) traits in companies today. A few years ago, Gallup blew everyone out of the water with its first State of the American Workplace in 2013. Sadly, there has not been much change in the past 18 months. The war for talent is hot and getting hotter. How we all perform is directly attributed to our teams.
 
Below is a good summary on why engagement is not getting better and some suggested changes to your management style and methods. Winning the war for the best people is a start. Then you have to engage them. I can tell you unequivocally that my team is the best in the business and they are engaged. I am also happy to discuss how we hire, what we do to train and how I know my above statement is true. 
 
Read below for more. Of course I have highlighted for easy reading using two colors to separate some interesting statements and some suggested changes you can make in your organizing to get on the right path for engaged employees.

Craig
602.954.3762
ccoppola@leearizona.com


 

Employee Engagement Isn’t Getting Better And Gallup Shares The Surprising Reasons Why

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By: Mark C. Crowley
Dec 9, 2015

Employee Engagement 6

American business is losing its war on engagement.

As a quick reminder on why we took up arms in the first place, it was June 2013 when Gallup first released its State of The American Workplace study that revealed only 30 percent of the nation’s workers were fully engaged in their jobs.

Since then, companies have gone on to launch all kinds of well-intended missions, campaigns and strategies, all with the goal of upending apathy, discontent – and the low discretionary effort too often displayed by their rank and file employees.

Yet despite all these noble and seemingly effective efforts, we’re confronted with a sobering truth: we’ve gained very little ground.  According to Gallup, growth in engagement has remained flat for most of 2015 – and we’ve seen little more than a two-point increase over the past two and one-half years.

Employee Engagement Graph 3
“How could this possibly be?” is a question many people will be asking, particularly if their organization’s deployed significant resources to rally back their troops.
 
To help me provide the most informed answer, I recently met with Dr. Jim Harter, Gallup’s engagement Jedi for the past three decades. I asked him to weigh in on why engagement remains such a critical metric for organizational success, why we have so little to show for all the additional focus that’s been given to improving it – and to share some of the uncommon things high-performing companies have discovered move the engagement needle in a more meaningful way.

One thing’s for certain. Traditional leadership practices have produced the enemy that is low engagement. To defeat it, we must have the courage to reject many of our archaic methods, and to adopt ones known to have the greatest impact on inspiring human performance in the workplace.

Why The Engagement Metric Matters
When Gallup began measuring engagement in the 1990’s, scepticism about the meaningfulness of the metric was common. But over time, as other well-known research organizations initiated their own studies, it’s become much more widely accepted that engagement elements predict how well an organization will perform – all the way down to the bottom-line.

According to Harter, “those outcomes range from basics such as absenteeism, employee retention rates, service levels and productivity; and ultimately it all adds up to about a 22 percent difference in profitability when you compare top quartile business units to the bottom quartile.”

Most Organizations Are Just Moving Peas On Their Plate
Perhaps the biggest reason engagement hasn’t budged is because many organizations are under the illusion that they’re already succeeding.

“What a lot of companies have done,” says Harter, “is to simply replace the terminology for their annual survey and call it an engagement instrument. Making things worse, they vary widely in terms of their definitions and what they measure. A whole lot of things are now being called engagement that shouldn’t be.”

Very often, Gallup finds that the hodgepodge of questions being asked produces greatly inflated engagement scores that create a false comfort. “Reporting high numbers seems to make a lot of leaders feel good,’ says Harter, “but those won’t get them where they need to be.”

It may also come as a surprise that the top organizations Gallup works with have just 65% of their workers fully engaged. While this number is twice the national average, and is inherently best-in-class, it belies what many of us imagined represented the highest level of success.

Engagement’s A Big Ship That Won’t Move Quickly If All We Do Is Measure It
I asked Harter if he was surprised that the engagement needle hadn’t been more significantly improved over the past 30 months, and he reminded me that big ships don’t turn quickly. “When you’re changing the culture of a working population, it’s going to take time.”

Nevertheless, the best companies Gallup works with consistently see a 7-to-9 percent improvement in a given year, and it’s because they intentionally align their performance management so that everything they do is on the same path. Stressed Harter, “the employee engagement survey is not treated separate from everything else they’re trying to get done.”

The rapid progress of the most successful organizations led me to wonder if most American companies have really begun taking engagement seriously. And Harter had this rather unambiguous answer at the ready: “I’d say it’s serious enough that it’s become a check-the-box HR activity, but not serious enough to have a meaningful impact and raise their score.”

To get engagement moving – and for all employees to believe its something to which the organization is fully committed – “it really needs to start at the CEO and executive level,” Harter told me. “The reason is that people need to know that it’s a firm expectation to which every manager and leader in the company is fully accountable. The gap today is that engagement’s being consistently surveyed, yet few companies have created the culture that lines up with their expectations.”

Most Perks Have Modest Impact
Gallup is surprisingly indifferent to perks noting that they’ve proved to be neither a cure-all to an ineffective boss, or even an influence on high achievement. Perks often give workers joy and convenience, but they don’t prove to retain people.
But extensive research has revealed two particularly valuable insights: 

Engagement Has The Hallmarks Of Flow: “When people work too many hours, don’t have enough vacation time or are expected to look at e-mails after normal work hours,” says Harter, “the data shows their stress levels increase significantly. But we’ve discovered that employees who have the right work environment, and who are truly engaged in their work, really manage that stress.” Said another way, being engaged in one’s job directly influences feelings of well-being even when that job is especially demanding.

Flex-Time Is A Great Perk: Harter told me he does some of his most important work from his home office, and for 30 years Gallup has afforded all of it’s workers tremendous work-day flexibility. “Letting people work from home some days, arrive at work later to avoid a tedious commute or stay home with a sick child – these accommodations are highly valued by people. What makes it so meaningful is that it’s individualized. Employees know that you’re intentionally being supportive of them, and those feelings drive up engagement.” Harter insists that this flexibility must be accompanied by accountability, yet people often work harder in response to caring support.

Engagement Largely Comes Down To Whether People Have A Manager Who Cares About Them, Grows Them And Appreciates Them
“We’re now at just 32 percent engagement; and for all the people in management roles today, this is their scorecard,” says Harter. “There’s simply no question that managers are one of the top root causes of low and flat-lined engagement.”

The clear implication is that many people in managerial positions are failing for one of two reasons. They either lack the skills needed to effectively motivate people to perform, or they lack an understanding of what practices consistently drive workers to become fully engaged.

We think high-performing managers have five talents,” says Harter. “These are leaders who not only engage their teams, but who consistently drive high productivity, service levels, retention and profit:

  1. They’re motivators. They’re excellent at challenging themselves and others to improve.
  2.  They’re assertive. They push past obstacles and make tough decisions.
  3. They accept accountability. They create processes to help their team deliver on goals.
  4. They’re relationship builders. They’re naturally good at personalizing how they manage.
  5. They’re decision makers. They have a natural capacity to solve complex issues and plan ahead.

 
Remarkably, Gallup’s discovered that only twenty percent of the entire population possess all these talents – that they’re hard-wired into very few of us. And even with focused training, only three-in-ten people will ever successfully master all five.

Consequently, if organizations really want to see their engagement skyrocket, their first and most important step going forward must be to ensure only people who demonstrate these unique abilities ever get promoted into management roles.

But for companies who are truly committed to driving uncommon engagement, they must raise the bar even further. That’s because there’s another traditionally unappreciated quality that’s been consistently proven to turn managers into talent magnets: they care deeply about their people.

“They share, teach, coach, support, and appreciate their employees,” Harter told me. Regardless of what’s on their plate, they invest the time to know their people personally, what motivates them – their career dreams and aspirations. And “this kind of nurturing is the undercurrent of all five talents.”

Within its 12-question engagement survey, Gallup asks workers whether they “feel someone at work cares about them as a person.” And as soft as this one question may seem, it’s proven to have a direct impact on a multitude of hard business outcomes including employee retention, discretionary effort – and profit.  The key take-away from all of this: Managers with highly engaged teams intentionally lead with heart.

Conclusion
While American businesses have taken aim at improving engagement for quite some time now, meaningful progress has so far proved illusive. So I asked Harter if Gallup would put out a challenge for 2016:

“Assuming companies really got behind it and began to adopt many of the practices known to greatly improve engagement, how much higher could the US score be at the end of next year?”

“If the commitment is really there, we could hit 40% engagement by next December, Harter insisted. “And if we get there, we’d all have a tremendous achievement to celebrate, not to mention some great organizational success that will undoubtedly come with it.”

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Categories Narrative, Uncategorized

An Analysis of U.S. High-Rise Construction Activity in This Century

Below is a 2013 article Andy Conlin sent me analyzing high-rise construction in the United States. David Holmes takes an in-depth look at the major economic factors affecting skyscrapers (defined as buildings 18 stories or higher in this article) built since 2000. This timeline would include only one construction cycle and two recessions, but the conclusions are interesting. I’ve highlighted the important parts to make this a quicker read.
 
Tying the article to Phoenix, it’s impressive that we made the top 25 list for number of skyscrapers built since 2000. Our seven projects built consisted of four office towers, two hotels and one residential high-rise.
–Skyscrapers serve as a source of civic pride and a symbol of economic vitality for the city.
–High-rise construction is on the decline inside the United States vs. the rest of the world. This is due to the continued long term trend of people wanting to get closer to home. This affects their office space, retail and hotels for guests.
–Phoenix may not add future skyscrapers as defined in the article, but we are adding projects that are five to 15 stories throughout the Valley of the Sun.

Craig
602.954.3762
ccoppola@leearizona.com

P.S. As we wind down another summer, we wanted to share a very cool video that shows one of our most spectacular annual shows if you are here—Monsoon season. Here is an 8-minute video link purely for your viewing pleasure–https://www.facebook.com/video.php?v=10152386878532358&set=vb.273664702357&type=2&theater

Monsoon Video

 


An Analysis of U.S. High-Rise Construction Activity in This Century

High Rise Facilities logo
 

By: David Holmes
high-rises
August 21, 2013
At least 74 high-rises have risen in Miami since the year 2000. Dozens of other high-rise residential buildings have been built in nearby cities such as Miami Beach and Sunny Isles Beach. Image credit: Wikipedia user LonnyPaul

Skyscrapers and skylines have long played a role in the perception of major U.S. cities. The decision by an individual developer or company to “build high” is driven only in part by corporate office space needs or by local market demand for apartments, condominiums, or hotel rooms with a view. The construction of high-rise buildings is also influenced by ambition, ego, and other non-economic factors.

Skyscrapers play a unique role in the urban landscape, serving as a source of civic pride for local residents (for whom the buildings can serve a physical embodiment of the economic vitality of their chosen home city), as a symbol of power and economic might for their developers, owners, or occupants, and as a visible manifestation of human ingenuity and engineering prowess.

Since 2000, the development of high-rise buildings in the U.S. has been influenced by a series of economic and other events. These have included:

  • the 2001-02 recession;
  • the 9/11/2001 terrorist attacks – which added a new element of risk for owners and occupants of the highest towers, as well as led to an increased perception of some major U.S. urban areas as being potential targets weapons of mass destruction;
  • the significant rise in oil prices beginning in 2000, and further escalating during 2003-2008;
  • Hurricane Katrina in 2005 – which increased the potential long-term risk associated with high-rise developments in cities on the Gulf and Atlantic Coasts;
  • the real estate boom of the early to mid-2000s – which resulted in an unprecedented wave of construction of residential towers in many major U.S. cities, followed by the real estate market collapse beginning in 2006, and later the financial crisis of 2007-08 and Great Recession;
  • the slow recovery in both real estate and the U.S. economy that has been in progress since 2009

As these events were unfolding, the construction of high-rise buildings outside of the U.S. accelerated, and the status of the U.S. as a center for high-rise building construction continued to diminish. Evidence for the global increase in the construction of high-rise buildings includes the completion of 58 of the 78 one-thousand-foot or taller skyscrapers that currently exist in the world having occurred since 2000. Evidence for the diminished status of the U.S. as a center for construction of high-rise buildings includes the completion of 54 of the 58 recently constructed 1,000-foot or taller buildings in countries outside of the U.S. – with the most noteworthy of these likely being the 163-story, 2,717-foot tall Burj Khalifa completed in Dubai in 2010.

As a frequent visitor to both Chicago and Miami, I was aware of the boom in high-rise construction that occurred in at least these U.S. cities since 2000. However, I was curious as to the actual extent of high-rise construction that occurred not only in these cities, but in other major U.S. cities this century, and what insights this might provide into the patterns of urban development occurring in different major U.S. urban areas. This article presents the findings of an investigation I performed to find answers to these questions, based on a review of construction data for high-rise (18-story or taller) buildings completed in 67 major U.S. cities during 2000-13.

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Las Vegas has a greater number of hotel rooms than any other city in the U.S. (more than 152,000 as of 2012), with significant numbers of these rooms located in high-rise hotels constructed since 2000.

Methodology

The approach I used to perform this study was to make use of the building construction database available on the skycraperpage.com website. The database at this website includes data for nearly 1,300 U.S. cities and a comprehensive listing of nearly all buildings either 12 or more stories or greater than 115 feet in height, as well as select listings for shorter but otherwise noteworthy buildings. The data for each building typically includes the number of floors, years of construction and completion, current building uses, as well as many other types of information. I restricted my analysis to buildings that are 18 or more stories in height, partly to facilitate an analysis of New York City (for which information on over 5,800 buildings is included in the database) but also in recognition that buildings with a lesser number of stories have limited impact on the skylines of most major cities.

I included in my analysis data for the 50 largest U.S. cities, as well as 17 additional cities representing the principal cities of one of the 50 largest U.S. metropolitan areas. The city and metropolitan area rankings were based on populations as reported by the 2010 census. I included the 17 additional cities in recognition that cities such as St. Louis and Pittsburgh may no longer rank in the top 50 U.S. cities by population, but remain the principal cities of major metropolitan areas as well as cities with large central business districts that have been historical centers for construction of high-rise buildings.  For each of the 67 cities, I tabulated the number of buildings having a specific number of floors (ranging from 18 to 108) for various construction completion dates including the periods pre-1960, 1960-69, 1970-79, 1980-89, 1990-99, and each individual year from 2000 through 2013.  As of June 2013 (when I performed the analysis), a total of 5,398 buildings 18 or more stories in height were present in these 67 cities, including exactly 1,000 completed since 2000.

One limitation for my analysis is that the construction completion dates were not listed for 225 of the buildings (or approximately 4.2% of the total). However, nearly all of the undated buildings are likely to be older buildings, constructed prior to 2000 for which historical construction data are not readily available, that are not relevant to my primary focus on buildings constructed since 2000. One further limitation is that the data are of unknown completeness and accuracy. As a long-time resident of the Milwaukee area, I was able to review the data in detail for the City of Milwaukee, and did not note any errors or omissions in the buildings listed, their construction dates, or listed building heights. Although I cannot vouch for the completeness and accuracy of the data for other cities, the skyscraperpage.com database has reportedly been available on-line for 15 years, providing ample opportunity for errors and omissions to be noted by on-line “champions” of various major cities, and corrected through the crowdsourcing process that includes input from greater than 40,000 registered members. Therefore, I believe the data are accurate enough for my intended purpose of evaluating the relative performance of the major U.S. cities in terms of the completion of high-rise buildings this century, as well as to provide insights regarding differences in recent development patterns in these cities as expressed in the form of high-rise buildings.

To gain further insight into the dynamics driving construction of high-rise buildings in different major U.S. cities and metropolitan areas, I also calculated two ratios: (a) the number of high-rise (18-story or taller) buildings constructed during 2000-13 per 100,000 metropolitan area residents, and (b) the number of high-rise (18-story or taller) buildings constructed during 2000-13 per 100,000 person increase in metropolitan area population from 2000-10. The first ratio was calculated based on a presumption that that the number of high-rise office and residential towers is likely more closely correlated with the size of metropolitan areas than the size of the principal cities. The second ratio was calculated based on the presumption that metropolitan areas experiencing significant population growth since 2000 should see a certain amount of new construction driven solely in response to population growth and increased market demand for new housing (one form of which would be new high-rise residential buildings), and market demand for additional commercial space that should be associated with the increases in the number of jobs and local business activity that typically drive or accompany significant population growth (a portion of which could be met through the construction of new high-rise office buildings).

Rankings of Major U.S. Cities Based on the Number of High-Rise Buildings Completed Since 2000

The data for the highest ranked cities based on the total number of new high-rise buildings constructed as well as the ratios of the number new high-rise buildings per 100,000 metropolitan area residents and per 100,000 increase in metropolitan area population, are presented below together with discussions of key observations related to each ranking method. Table 1 presents the top 25 ranked cities based on the number of buildings with 18 or more stories completed since 2000 for the top 25 ranked cities.  The table also includes data on the current total number of high-rise buildings in these cities and their associated rankings.

Table 1. Top 25 U.S. Cities for High-Rise Buildings Constructed 2000-13
City Total New High-Rise Building Completed (2000-13) Rank Total High-Rise Buildings (as of 2013)  Rank
New York 281 1 2,151 1
Chicago 149 2 701 2
Miami 74 3 130 7
Atlanta 50 T4 134 6
Las Vegas 50 T4 96 11
Houston 38 6 174 3
San Diego 35 7 67 15
Seattle 30 8 100 10
Dallas 22 T9 116 9
San Francisco 22 T9 149 4
Boston 21 11 89 12
Arlington 17 12 47 19
Portland 14 T13 41 T21
Austin 14 T13 27 T32
Los Angeles 13 15 127 8
Philadelphia 12 T16 135 5
Charlotte 12 T16 31 29
Tampa 11 T18 28 T30
Denver 11 T18 69 14
Orlando 11 T18 27 T32
Milwaukee 10 21 40 23
Minneapolis 9 22 76 13
Baltimore 8 23 51 18
Phoenix 7 T24 34 T26
San Jose 7 T24 10 T50
High-rise = 18 stories or greater.  Totals are as of June 2013.

One surprise for me was the very large number of high-rise buildings completed in New York City since 2000. I was surprised because none of the post-9/11 news stories I recall reading noted the extraordinary boom in high-rise construction that apparently occurred in New York City since 2000 (at least 98% of which was unrelated to construction occurring at the site of the former World Trade Center). The high-rise construction boom was robust both in the number of buildings completed (281) and in the number of buildings having 40 or more stories (53). I also hadn’t fully appreciated the historical dominance of New York City in terms of high-rise buildings in the U.S., with the current total of 2,151 buildings nearly equal to the combined total of 2,499 for the next 24 highest ranked U.S. cities.

The boom in high-rise construction in Chicago was even greater than that for New York City on a per capita basis, and was also expressed both in the number of buildings constructed (149) and in the number of buildings having 40 or more stories (42). These included residential towers of 71, 86, and 98 stories completed in 2009-10. Together, Chicago and New York City account for 430 of the 1,000 high-rise buildings completed this century in the 67 major U.S. cities evaluated.

The boom in high-rise construction in Miami (which includes completion of at least 74 high-rise buildings since 2000) has been widely recognized, partly as a consequence of the frequent appearance of the Miami skyline on various TV shows and movies. It should be noted that the data for Miami perhaps to a greater degree than any other principal city do not fully reflect the magnitude of high-rise construction that occurred in the metropolitan area as a whole, as dozens of high-rise residential buildings were completed since 2000 in other cities in the Miami metropolitan area (such as Miami Beach, North Miami Beach, Sunny Isles Beach, etc.).

The relative performance of Los Angeles and San Diego was also interesting to me. Nearly three times as many high-rise buildings have been completed in San Diego since 2000 as in Los Angeles, even though the population of the Los Angeles metropolitan area is more than four times greater than that of the San Diego metropolitan area, and in spite of both cities being southern California coastal cities that are major tourist destinations.

One additional surprise for me was how few high-rise buildings were completed since 2000 in the other 42 major U.S. cities evaluated but not included on Table 1. A combined total of 72 high-rise buildings were completed in these 42 cities since 2000. This is 2 fewer than the 74 buildings completed in the City of Miami alone during this period. The individual totals for these other 42 cities are summarized on Table 2.

Table 2. Summary of High-Rise Construction in Other U.S. Cities (2000-13)
Total # of High- Rise Buildings Constructed 2000-13 U.S. Cities
5 Nashville-Davidson, Sacramento, St. Petersburg
4 Jacksonville, Long Beach, St. Louis, Salt Lake City
3 Indianapolis, Norfolk, Oakland, Pittsburgh, Raleigh, San Antonio, Virginia Beach
2 Cleveland, Columbus, Fort Worth, Hartford, New Orleans, Omaha, Providence
1 Cincinnati, Detroit, Kansas City, Louisville/Jefferson Co., Oklahoma City, Richmond
0 Albuquerque, Birmingham, Buffalo, Colorado Springs, El Paso, Fresno, Memphis, Mesa, Newark, Riverside, St. Paul, Tucson, Tulsa, Washington D.C., Wichita

The lack of high-rise construction in several of the “rust belt” cities included on Table 2 is probably not too surprising given widely reported population declines and economic contractions in several of these cities.  Washington D.C.’s lack of high-rise construction represents a special case, in that the Height of Buildings Act of 1910 limits building heights to the width of the adjoining street plus 20 feet (resulting in a maximum allowable height of 160 feet).

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Oklahoma City had 7 high-rise buildings constructed during the period 1971-1984, but only one, the Devon Energy Tower, during the past 29 years. Image credit: Wikipedia user urbanative

I was surprised by the relative lack of recent high-rise building construction in cities such as Columbus, Fort Worth, Indianapolis, Kansas City, Oklahoma City, San Antonio, St. Paul, and Tucson. All of these cities have a favorable reputation in terms of economic growth, quality of life, etc. All of these cities are located in metropolitan areas with population growth rates during 2000-10 that exceeded 10% (and in the case of San Antonio, exceeded 25%). The lack of high-rise construction in these cities during a period that included perhaps the greatest boom in high-rise residential construction in U.S. history potentially does not bode well for major enhancements to these cities skylines over the next several decades.

Although my analysis was focused on the total number of new high-rise buildings constructed, it is probably important to acknowledge that quantity does not necessarily equal quality.  The most compelling example of this may be Oklahoma City, where the single high-rise building constructed this century was the 52-story 850-foot tall Devon Energy headquarters – which is both an attractive building in its design and execution, and noteworthy nationally in being the tallest building completed in the U.S. in 2012.

One interesting aspect of high-rise construction during the period 2000-13 is the apparent lack of a boom in the construction of high-rise office buildings in the major U.S. cities that are centers for the oil and gas industry (such as New Orleans, Tulsa, and Oklahoma City) in response to the significant rise in oil prices that has occurred this century (with oil prices increasing from an annual average of $11.91 in 1998 to $91.48 in 2008). The lack of high-rise office building construction in these cities is in marked contrast with booms that occurred in nearly all of these cities during the energy crisis and period of escalating or high oil prices from approximately 1974 through 1985.

For example, in New Orleans, 28 high-rise buildings were constructed during the 1970s and 1980s, including one residential tower, 10 hotels, and 17 office buildings. Only two new high-rise buildings have been constructed since 1989 (one hotel and one residential building). Similarly, 14 high-rise buildings were constructed in Tulsa during the period 1970-1986 (10 of which were office buildings including major towers of 52 and 60 stories), but only one high-rise building (an 18 story office tower) has been completed during the past 26 years. Oklahoma City had 7 high-rise buildings constructed during the period 1971-1984, but only one (the Devon Energy headquarters) during the past 29 years. Denver had 45 high-rise buildings constructed during the 1970s and 1980s, but only 11 since 1990 (and nearly all of these are residential high-rises rather than corporate headquarters which dominated the previous energy-business related building boom).

Rankings of Major U.S. Cities Based on the Number of High-Rise Buildings per 100,000 Metropolitan Area Residents

In order to better understand the relative performance of U.S. cities in terms of high-rise construction, I “normalized” the results based on population by calculating the number of new high-rise buildings per 100,000 metropolitan areas residents. Higher ratios indicate a greater ”intensity” of high-rise construction relative to the population of a metropolitan area.  The results for the 15 highest ranked major U.S. cities based on this ratio are summarized below.

Table 3. Top 15 Cities Based on Number of New High-Rise Buildings (2000-13) per 100,000 Metropolitan Area Residents (2010)
City Metro Area Population (2010) Total # of New High-Rise Buildings Completed in City (2000-13) Rank High-Rise Buildings Completed (2000-13) per 100,000 Metro  Residents (2010) Rank
Las Vegas 1,951,269 50 T4 2.56 1
Chicago 9,461,105 149 2 1.57 2
New York 18,897,109 281 1 1.49 3
Miami 5,564,635 74 3 1.33 4
San Diego 3,095,313 35 7 1.13 5
Atlanta 5,268,860 50 T4 0.949 6
Seattle 3,439,809 30 8 0.872 7
Austin 1,716,289 14 T13 0.816 8
Charlotte 1,758,038 12 T16 0.683 9
Milwaukee 1,555,908 10 21 0.643 10
Houston 5,946,800 38 6 0.639 11
Portland 2,226,009 14 T13 0.629 12
Orlando 2,134,411 11 T18 0.515 13
San Francisco 4,335,391 22 T9 0.507 14
Boston 4,552,402 21 11 0.461 15

Las Vegas ranks the highest based on this measure, which is likely attributable to its status as a major tourist destination having a greater number of hotel rooms than any other city in the U.S. (more than 152,000 as of 2012), with significant numbers of these rooms located in high-rise hotels constructed since 2000. These hotels reportedly include 25 of the 50 largest hotels in the world based on the number of rooms.

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Chicago, pictured here, and New York City accounted for 430 of the 1,000 high-rise buildings completed this century in the 67 major U.S. cities evaluated.

The next two highest ranked cities by this measure are Chicago and New York City, with ratios of 1.57 and 1.49 recent high-rise buildings completed per 100,000 metropolitan area residents. Both cities are very similar in being: (a) historical centers for high-rise construction in the U.S., (b) major business centers, and (c) major tourist destinations.

Although Miami ranks 4thbased on this ratio, I suspect that it might challenge Las Vegas for the top spot if the number of high-rise buildings constructed in the metropolitan area as a whole was used for the calculation rather than just those high-rises constructed within the city proper.

In general, three categories of cities appear to rank highly by this measure: (a) the two traditional centers of high-rise construction – Chicago and New York City, (b) other major business centers (having greater relative numbers of major corporations and corporate headquarter buildings), and (c) major tourist destinations (with greater relative numbers of major hotels and high-end residential developments targeting retirees or seasonal residents). Because New York City and Chicago represent all three categories, it makes sense that they rank very highly on this measure.

Similarly, Miami is both a major business center and a major tourist destination and should therefore be expected to have a disproportionately large number of high-rise buildings relative to its metropolitan area population. The four cities ranked in the top 15 that don’t necessarily fit into one or more of these categories are Austin, Charlotte, Milwaukee, and Portland. I suspect that high-rise development in these cities is being driven by their status as significant regional business centers, as well as cities with high quality downtown or near downtown urban environments. Overall, I believe that the ratios on Table 2 offer the best rankings of major U.S. based on the “intensity” of high-rise construction this century relative to other cities.

Rankings of Major U.S. Cities Based on the Number of High-Rise Buildings per 100,000 Person Increase in Metropolitan Area Population

The final analysis I performed was to evaluate the intensity of high-rise construction relative to the growth in metropolitan area population, recognizing that increases in population (and the associated increases in jobs and local business activity) should serve as a driver for new residential and office construction – some of which should occur in the form of new high-rise buildings. Therefore, I calculated the ratio of the number of high-rise (18-story or taller) buildings constructed since 2000 per 100,000 person increase in metropolitan area population from 2000 to 2010. Table 4 summarizes the results for the 15 highest ranked U.S. cities based on this ratio.

Table 4.  Top 15 Cities Based on the Number of New High-Rise Buildings (2000-13) per 100,000 Person Increase in Metropolitan Area Population (2000-10)
City Metro Area Population Change (2000-10) Total # of New High-Rise Buildings Completed in City (2000-13) Rank High-Rise Buildings Completed (2000-13) per 100,000 Increase in Metro Area Population (2000-10) Rank
New York 574,107 281 1 48.95 1
Chicago 362,789 149 2 41.07 2
Milwaukee 55,167 10 21 18.13 3
Miami 557,071 74 3 13.28 4
Boston 161,058 21 11 13.04 5
San Diego 281,480 35 7 12.43 6
Providence 17,855 2 T40 11.20 7
San Francisco 211,651 22 T9 10.39 8
Las Vegas 575,504 50 T4 8.69 9
Seattle 395,931 30 8 7.58 10
San Jose 101,092 7 T24 6.92 11
Baltimore 157,495 8 23 5.08 12
Atlanta 1,020,879 50 T4 4.90 13
Portland 298,128 14 T13 4.70 14
Philadelphia 278,196 12 T16 4.31 15

New York City and Chicago are again ranked highest among major U.S. cities, and by a significant margin. Milwaukee and Providence have the greatest increase in their rankings based on this ratio versus their rankings based on the absolute number of high-rise buildings constructed. They are also the two smallest metropolitan areas represented in the top 15. The significance of this ratio is probably a good topic for debate, as only a small percentage of the population resides or works in high-rise buildings. Slow growth cities score well based on this ratio.

Summary of Key Findings

In summary, the most significant or most surprising findings for me included:

  • The dominance of New York City and Chicago which accounted for 430 of the 1,000 total new high-rise buildings completed this century in the 67 major U.S. cities evaluated.
  • The apparent lack of any negative impact from the 9/11 terrorist attacks on the boom in high-rise construction that occurred in New York City, as well as Chicago.
  • The magnitude of the high-rise construction boom in Miami, as well as the apparent lack of impact from Hurricane Katrina in dampening the enthusiasm for constructing new high-rise buildings in oceanfront locations that are likely most at risk from future major hurricanes.
  • The surprising lack of recent high-rise construction in a majority of the cities evaluated, with the combined total of only 72 new high-rise buildings in 42 cities (2 fewer than were constructed in in the City of Miami alone).
  • The higher than anticipated performance by several cities, in particular Milwaukee, which ranked 21st, 10th, and 3rd by the three measures, in spite of its current status as only the 39th largest metropolitan area in the U.S. (and a city not frequently recognized for its skyline).
  • The apparent absence of recent high-rise office construction in the major U.S. cities that are centers for the oil and gas industry, in response to the recent period of high oil prices, which is in marked contrast with booms in the construction of high-rise office buildings that occurred in nearly all of these cities during the 1974 to 1985 energy crisis and period of escalating or high oil prices.