In the early 20th century America built big. America was becoming the biggest economy in the world, and New York City was the most prosperous city in America. The biggest of the big buildings were going up in NYC. Starting with the Flatiron building in 1902. Its steel framework allowed it to be built taller, and at 285 feet tall it was the world’s first skyscraper. That was the start of a global competition to build ever higher. That race is still going on, but the biggest buildings in the world today are being built in Asia and the Middle East. Things have changed.

During the last half of the 20th century, the economies of many countries rapidly developed. Nothing says a nation is a global player like a super-tall building. Most of the world’s super-tall buildings are in Asia and the Middle East. Super steel and the latest concrete made it possible to build the Burj Khalifa in Dubai is twice as tall as New York’s Empire State Building.

Then, 9/11 happened. America’s super-tall buildings took a time-out. But once again more demand than supply led to pressure to build more commercial real estate. And COVID hit. The resulting questions about working from home, or even working from home in a different state, brought up all sorts of questions about the future of commercial real estate and the downtowns of big cities.

Workers rebelled against old work assumptions, demanding more pay, more respect, and choices about where they work. But if workers don’t return to their old offices, what happens to America’s 100 Billion square feet of commercial space? If vacancy rates continue to rise, will corporations cancel leases? When real estate developers lose money banks don’t get paid, and we could see a new banking crisis.

Is a new crisis on the way? Or is this all overblown? We need to remember that remote workers are just now being told to return to work. Depending on the source, 25% to 40% of commercial space was vacated due to remote work. Yet, a recent survey of 1,000 employers found that 90% will require workers to return to the office by early 2024. If true, vacancy rates are about to shrink dramatically.

Also, it’s unclear how many remote workers want to continue to work remotely. Young, single workers need exposure to more experienced workers to learn their jobs. And face-time with senior managers is critical in being assigned sought-after projects and promotions. You don’t get points for working late if your boss doesn’t see you working! More established workers, especially those with children, may want to exchange their daily commute time for more family time. A remote worker might move to a state with lower-cost-of-living so they can buy a house.

Still, the combination of adding more commercial space via super-tall buildings while existing commercial buildings are less than full could lead to falling prices. Given that new buildings will undoubtedly have better amenities and probably a more desirable address, older commercial buildings will disproportionately suffer. If only there was some way to repurpose less desirable office buildings. Oh, wait, there is!

New York City, and most American cities, suffer from a chronic shortage of housing. Especially affordable housing. Not all of the tens of thousands of commercial buildings in NYC can be effectively converted to residential. However, smaller and older commercial buildings are the best fit due to cost and design. These are also the least useful and least valuable buildings in the current market. Converting as many of them as possible to a new life as residential buildings just makes sense.

Of course, it’s more than just a matter of pure economics. Cities need to think about the whole of their downtowns, all of their commercial space. Citizens have been uncomfortable about giving super buildings free rein. If new buildings or new real estate trends change where workers and residents are located, will new bus lines and train stations be needed? What about additional water and power lines where populations for growing neighborhoods. And, perhaps most important of all, outdated regulations that define what can and cannot be built.

Regardless of the constraints, NYC and other big cities are building new, bigger, super-buildings. New tenants are moving in. If all works out, downtowns will expand, city property revenues and mortgage payments will continue to flow, new residential buildings will be built, and some remote workers will continue to work from where they want to work.

What do you think? Will buildings continue to build upwards? Will super-tall buildings dominate commercial space? Or is 1,000 feet high (or so) good enough? Let us what you think the next decade will look like… readers want to know!