overlooked innovation
Issue 90 - June 24th, 2022
Elevators are one of those things we just take for granted in the modern world, but I often think about how incredible innovations like this have had a massive effect on the path of real estate development in our world.
Just think for a second if elevators did not exist…how different would cities function?
I posted a poll on my Twitter account this week asking this very question:
The overwhelming majority seem to agree that the number of elevators will increase over the next decade as we continue to develop cities and more dense urban centers.
The elevator is among only a handful of inventions that helped cities to grow upward. In fact, elevators enabled the urban environment we know and love today. It's an often-overlooked mode of transportation that helped build cities, transformed how people live and work, and revolutionized architecture itself.
First introduced in New York in 1857, elevators catalyzed the development of skyscrapers, and forever transformed urban architecture, landscapes and living.
The world’s first successful safe passenger elevator was designed by Elisha Otis and installed in March 1857 in the five-story 24-meter tall Haughwout Building on Broadway in New York City. It cost $300 and moved at about 20 cm per second.
Haughwout Building in New York City
This development led to exciting times. As designers and architects began to appreciate the possibilities offered by elevators, much higher buildings became feasible, eventually leading to the enormous skyscrapers of today.
The elevator impacted society by allowing cities to continue to grow and expand because developers could now build buildings taller and taller.
The hierarchy inside the buildings also changed. Before the elevator, the poorer tenants lived on the higher floors; after elevators were installed, richer tenants began to move into the higher floors.
The earliest known elevator is believed to have been built by Archimedes in approximately 236 B.C. Elevators that were steam and water-powered were used in the mid-19th century. These elevators had ropes that could be worn out and were not generally used by passengers.
The Otis elevator helped revolutionize cities by making skyscrapers possible. Taller buildings quickly arrived in the cities, including the 20-story Masonic Temple in Chicago and the 55-story Woolworth Building in New York. Before elevators, servants and the poor were expected to climb the stairs and live on the higher floors. After elevators were installed, the higher floors became more desirable because they were quieter and offered better views of the city. Hotels turned the top floors into penthouse rooms and began renting out roofs for garden parties.
Has any other invention had such a measurable impact on real estate development?
Newsworthy Links To Share
The 30-year mortgage rate in the US has risen to 5.78%, its highest level since November 2008. Last year it hit an all-time low of 2.65%. The 2.66% spike in mortgage rates over the last 6 months is the largest 6-month increase we’ve seen since 1981.
First, it was Tesla. Then it was The Boring Company. Now, it appears another of Elon Musk's businesses is establishing a presence in the Austin area: SpaceX. (Austin Business Journal)
Goldman Sachs to lease 800k square feet of space at a newly-constructed office tower in Dallas: The company expects shift as many as 5,000 jobs to the city. “Chief Executive Officer David Solomon has been seeking to reshape US operations to cut expenses and shift thousands of jobs to cheaper locales. Goldman already has nearly 4,000 employees in North Texas, at sites including the Trammell Crow Center in downtown Dallas and Galatyn Commons in Richardson.” Goldman and developer Hunt Realty are investing roughly $500mm in the project, which will be located at 2323 N. Field St. (Bloomberg)
New Jersey, Illinois and California Have Highest Concentration of Vulnerable Housing Markets (Attom)
The breakdown in home sales by price range reveals an interesting dichotomy. While lower priced homes are seeing a sharp decline in sales activity over the past year, higher priced homes are still increasing. Why is that happening? Likely due to the fact that higher inflation and rising mortgage rates disproportionately impact lower income buyers. Does that mean the higher end market is immune to the affordability collapse? Not at all, just that it will take a bit more time to see it’s effect on demand, activity, and prices.