Capital Markets, the Development Industry, and Urban Office Market Dynamics: Rethinking Building Cycles

Abstract

In this paper it is argued that more attention should be paid to the role of supply-side factors in accounting for the spatiotemporal evolution of urban office building cycles, particularly during the recent boom of the 1980s. Urban office building dynamics are critically related to changes in the structure and operation of finance capital, the development industry, and state intervention; changes which in turn are related to shorter term macroeconomic fluctuations and longer waves of economic and political restructuring at different geographic scales. A comparative analysis of the timing, periodicity, and magnitude of booms and slumps in downtown office construction activity between 1963 and 1986 in major metropolitan areas of the United States reveals a convergence in the timing of booms and slumps in downtown office construction between individual cities and on the national trend in the late 1970s and early 1980s, and a persistence of important differences in the relative volume of downtown office construction between cities. The convergence in timing can be traced to an increased degree of national and international integration of capital markets and the development industry, and the increased flow of capital into commercial real estate. Analysis of interurban differences in the volume of building activity suggest ways in which powerful international and national trends are mediated by locality-specific local economic and political structures and conditions.