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Proposal At 1500 Smith St.


ricco67

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This may not be the appropriate forum for an economics lesson, but can somebody explain why the marginal costs of each additional floor increases exponentially? In my business (midstream energy) we build plants. The cost to mobilize on site almost always justifies building bigger. Sorry if this is too far off topic.

There are numerous factors that drive construction costs up as a building becomes increasingly vertical. The pilings need to be sunk deeper, need to be larger, and the structural members need to be stronger. Different techniques and materials are used at different thresholds, per the instruction of a structural engineer.

Bear in mind that if you put 50 stories on the ground, then you only have so much weight and so many vector forces that have to be built for. If you put a 50-story building on top of another 50 story building, then not only does the top 50 have to be able to withstand the same downward force vectors, but it has to perform better in high winds because the building as a whole has a higher center of mass and will tend to sway more. Simultaneously, the bottom 50 floors have to support much greater downward forces.

Safety is a factor. It is always riskier to have people working in the sky; they are compensated accordingly. Likewise, while the building is under construction and its envelope is not sealed, it is more subject to catastrophic failure, either from human error or from natural disaster. Although unlikely, if it occurs, it is worse to have lots of already-completed floors underneath those that were being worked on up top and that were more likely to fail. This is reflected in commercial property insurance rates, or if the general contractor, an engineering firm, or another party is indemnified, then it is reflected in their costs.

Larger cranes and heavier-duty equipment cost more to buy or lease.

Lower parts of the building tend to have smaller leaseable floorplates because elevator and service shafts take up so much room. At certain levels, skyscrapers have sky lobbies to serve elevator transfers; these account for common area that the building owner isn't going to be compensated for and that a shorter building could forgo.

The developer also recognizes an opportunity cost because the structure won't be physically occupied for a much longer period of time than if they were building a smaller building, but is still making massive financial outlays with lots of associated interest expenses.

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Brookfield is describing the spot as ideal for more than just an office tower now:

The site offers a prime location for a hotel, residential and/or restaurant/retail concept, or could accommodate a 500,000-square-foot office tower with 25,000-30,000 square foot floor plates

http://www.brookfieldproperties.com/content/houston/1500_smith_street-5497.html

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Brookfield is describing the spot as ideal for more than just an office tower now:

http://www.brookfieldproperties.com/content/houston/1500_smith_street-5497.html

In-place infrastructure exists, including parking and loading dock.

Well, thank goodness. Because if I'm splashing out $50 brazillion wedging a new skyscraper onto Smith Street, you know I'm going to want to cheap out on the loading dock.

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  • The title was changed to 1500 Smith Proposal
  • The title was changed to Proposal At 1500 Smith St.

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