Dennis McMahon McMahon Commercial mcmahoncommercial

I spoke last time about how this year could possibly play out as far as commercial property is concerned and referred to some of the variables in the crystal ball predictions.

I was reminded of another this week.

A recent report from Barclays Capital mentioned the 'unhealthy correlation” between the construction of skyscrapers and economic crashes.

The world's first skyscraper, the Equitable Life Building in New York, was completed in 1873 and coincided with a five year recession.

The Empire State Building was built in 1930 at the start of the Great Depression.

The Petronas Towers in Kuala Lumpur were built in 1997 amid the turbulence of the Asian crisis.

The Dubai Tower was finished in 2010 amid the Global Recession.

The report comments that the trend seems to show a widespread misallocation of capital before an impending economic correction.

This would reflect what Greenspan termed the 'Irrational Exuberance” of markets which invariably seems to foreshadow the impending day of judgement.

Now, the scary aspect to this observation is that China is currently constructing over half of the one hundred and twenty four sky scrapers planned worldwide over the next six years.

Should we be worried?