Why does the US have more office towers than Canada cities?

[nec209]

I notice the US has a lot more office towers and skyline of office towers in US cities even smaller US cities unlike Canada.

Dallas with population of 1.3 million people have nice skyline that even Toronto or Vancouver does not have and a Dallas being 9 largest city.

Dallas

https://visit-dallas.imgix.net/images/do...in&fp-x=0.5&fp-y=0.5&h=1280&q=80&w=1920&

https://downtowndallasparks.org/wp-content/uploads/2017/05/36759135_l.jpg

https://www.hudsonandemily.com/wp-content/uploads/2017/07/Dallas-4.jpg

Even really small city like Tulsa with population of 400,000 people being 48 largest city have nice skyline.

Tulsa

https://wallpapers.com/images/hd/amazing-aerial-photo-of-downtown-tulsa-rop9l8owo3lynchs.jpg

https://www.rent.com/blog/wp-content/uploads/2020/01/tulsa_hero.jpg

I notice the US has a lot more office towers.

Canada seems to build more high rise residential for some strange reason unlike the US. It skyline is more high rise residential than office towers.

[north 42]

You have got to be kidding me!

[Crawford]

The U.S. prolly has more per capita office space than Canada, and other first world nations. The economy is a bit more services oriented and there was a gigantic glut of 1980's suburban office space. Most U.S. markets have too much office space.

[mhays]

Federally-guaranteed non-recourse loans before 1990 or so played a HUGE role in many big skylines. It's much riskier to build one big tower vs. a handful of small lowrise buildings, but these loans took much of the risk away.

It does seem like Canada has less office space in TOD districts.

[Nouvellecosse]

Toronto has more office towers than Dallas, at least based on the SSP diagrams section. Of completed and u/c large office towers with an official height of 500ft or more, Toronto has 19 while Dallas has 14. SSP only lists 13 but one of Dallas' (One AT&T Plaza) is listed as mixed use but is mainly an office tower. Which is close but not surprising given the similar metro area sizes. It just looks like Dallas and others have more office towers is because their towers are on full view since they don't have so many other non-office towers surrounding them. Dallas has a total of 20 completed and u/c towers of all types over 500ft while Toronto has 122. So Toronto's office towers get lost in the crowd.

But one reason why Dallas, and probably some others, have more office towers than one might expect is that in the US it's more common for office buildings to be built on speculation. That means the developers and financiers predict that there will be enough demand to warrant a development even if they haven't actually signed an official agreement with prospective occupants. As a result, the office vacancy rate tends to be a lot higher (the buildings are emptier). In fact, a major Dallas office building recently completed a conversion from office to hotel and residential which isn't something I'm aware of ever happening to a building anywhere near that large in Canada.

https://en.wikipedia.org/wiki/First_National_Bank_Tower_(Dallas)

[Crawford]

I don't think it's about office "towers" or CBDs. Dallas office space is prolly 90%+ suburban and lowrise. U.S. office space is overwhelmingly more of the office park model.

AT&T, a big downtown Dallas anchor, just announced a new world HQ somewhere on a north suburban greenfield. This kind of stuff is generally more prevalent in U.S. than in other first world nations.

[jmecklenborg]

The U.S. has way, way, way more big companies. Can anyone even name any of the top 10-20 Canadian companies by revenue or market cap?

https://en.wikipedia.org/wiki/List_of_largest_companies_in_Canada

[mhays]

That's only one factor in the prevalence of office towers.

Office inventory stats are generally sketchy if you're not paying a five-figure subscription, but I believe Canadian cities have US-level volumes of office space and office workers.

Further, a lot of US cities with big skylines don't have huge HQs. Denver for example.

A lot of the big HQs in the US are in shorter buildings. For starters they can grow more incrementally that way, vs. a four-year plan to build a big tower that may or may not be what they need when it's completed.

[edale]

Originally Posted by mhays

That's only one factor in the prevalence of office towers.

Office inventory stats are generally sketchy if you're not paying a five-figure subscription, but I believe Canadian cities have US-level volumes of office space and office workers.

Further, a lot of US cities with big skylines don't have huge HQs. Denver for example.

A lot of the big HQs in the US are in shorter buildings. For starters they can grow more incrementally that way, vs. a four-year plan to build a big tower that may or may not be what they need when it's completed.

Hardly anyone is building office skyscrapers on spec these days. Thinking of recent office skyscrapers in the US, they're almost all for corporate HQs. It seems to be about the only way an office tower can get financing. Sherwin Williams HQ in Cleveland, CAA's new HQ in Century City (LA), Omaha's u/c Mutual of Omaha HQ, 270 Park Ave in NYC is JPMorgan Chase's new HQ...

And this isn't even a super recent phenomenon. SF and Philly's new tallest towers only came to fruition because they serve as the Salesforce and Comcast HQs, respectively. Cincinnati's tallest was only built because it's the headquarters of Great American Insurance, and that was built back in 2011.

American cities built a lot of office towers in the 80s and 90s, and not always for specific corporations. But those days seem to be in the past. So it would certainly seem like the comparative lack of large corporations in Canada would have a significant impact on the relative lack of office towers vs American cities.

[Steely Dan]

The 5 most recent major office towers built in chicago were all built on spec by developers who got a lead anchor tenant signed on before the construction loan closed.

I can't remember the last time a corporation built a HQ trophy tower for itself here in chicago.

McD's built a fancy new HQ for itself in the west loop after moving downtown from the burbs years ago, but at only 9 stories tall, it's hardly a "tower" by chicago's standards.

However, those 5 recent towers all got funding before WFH fully turned the local office market on its head, so who knows when chicago might see a new major office tower go up?

[JManc]

Originally Posted by mhays

Federally-guaranteed non-recourse loans before 1990 or so played a HUGE role in many big skylines. It's much riskier to build one big tower vs. a handful of small lowrise buildings, but these loans took much of the risk away.

It does seem like Canada has less office space in TOD districts.

This. I remember Houston as a kid in the 80's; office towers going up everywhere and then they sat empty for years. Since the 90's, very very are getting built and our skyline more or less looks the same as it did 40 years ago. More residentials than office but Houston isn't a big residential highrise market though.

[LeftCoaster]

Originally Posted by nec209

I notice the US has a lot more office towers and skyline of office towers in US cities even smaller US cities unlike Canada.

Dallas with population of 1.3 million people have nice skyline that even Toronto or Vancouver does not have and a Dallas being 9 largest city.

I think it's probably the inverse, US downtowns have less office space per capita on average than Canadian cities.

To use your example cities:

Dallas is a metro area of 8.3 million but only has 24M sq ft of office space in their CBD per CBRE.

Vancouver is a metro area of around 3 million and has 28M sq ft of office space in their CBD per CBRE.

The explanation for this is pretty obvious, the US is a much more suburban focussed country and as such a lot of their office space is spread out in office parks along freeways which is much less common (though still prevalent) in Canada. Metro dallas has 223M Sq ft of office space in total, so only 10% of it is downtown. Metro Vancouver has 54M sq ft of office space and 52% of it is downtown.

As for why it may appear as though the US has more offices in photos, well I'd say it is because they have fewer residential buildings downtown, therefore only their office is visible. In Canada the office buildings are often hidden in a sea of condos and rental buildings.

[edale]

Originally Posted by Steely Dan

The 5 most recent major office towers built in chicago were all built on spec by developers who got a lead anchor tenant signed on before the construction loan closed.

I can't remember the last time a corporation built a HQ trophy tower for itself here in chicago.

I think Chicago is a notable exception, then. In the rest of the country, spec office towers are almost unheard of these days.

[Crawford]

I'm pretty sure every office tower in NYC currently u/c and planned is spec. Some might want a lease to commence construction, but I don't think there are any company-owned towers or single company properties planned. That new tower on West 57th, one at Hudson Yards, two on Fifth, three on Madison, three on Park, all spec.

[mhays]

Originally Posted by LeftCoaster

I think it's probably the inverse, US downtowns have less office space per capita on average than Canadian cities.

To use your example cities:

Dallas is a metro area of 8.3 million but only has 24M sq ft of office space in their CBD per CBRE.

Vancouver is a metro area of around 3 million and has 28M sq ft of office space in their CBD per CBRE.

The explanation for this is pretty obvious, the US is a much more suburban focussed country and as such a lot of their office space is spread out in office parks along freeways which is much less common (though still prevalent) in Canada. Metro dallas has 223M Sq ft of office space in total, so only 10% of it is downtown. Metro Vancouver has 54M sq ft of office space and 52% of it is downtown.

As for why it may appear as though the US has more offices in photos, well I'd say it is because they have fewer residential buildings downtown, therefore only their office is visible. In Canada the office buildings are often hidden in a sea of condos and rental buildings.

These are apples to kumquats numbers.

CBRE and other brokerages have vastly different ideas about geography, how much work they put into their stats, and even what sorts of space they consider "office" from one location to another. Sometimes they list maybe half the space even in the areas they say they're counting.

I mentioned the "five figure subscription" option. That's the only way to get reasonably accurate numbers. (Though as a former subscriber I have issues with their services too.)

[mhays]

Amazon is an exception, with three towers in Seattle in the 520' range a decade ago, and two in Bellevue more recently at 600'. However that's a special case given that each represented a fairly small percentage of its total space. They also pre-leased the office portion of an 849' tower in Seattle but never occupied it.

WaMu was another exception before those, but they signed the deal on that about 24 years ago, and it was a co-development with the Seattle Art Museum, who occupies a big part of the lower portion of the complex.

Otherwise our tallest office buildings are all multi-tenant or substantially shorter.

[mrnyc]

canada is mostly back offices because technically its another country and there are business benefits to that status.

[LeftCoaster]

Originally Posted by mhays

These are apples to kumquats numbers.

CBRE and other brokerages have vastly different ideas about geography, how much work they put into their stats, and even what sorts of space they consider "office" from one location to another. Sometimes they list maybe half the space even in the areas they say they're counting.

I mentioned the "five figure subscription" option. That's the only way to get reasonably accurate numbers. (Though as a former subscriber I have issues with their services too.)

I will admit I'm not particularly familiar with downtown Dallas, however I am extremely familiar with brokerage research reports and I really don't think the apples to kumquats comment is fair.

The office space numbers for downtown Vancouver are quite accurate, and vary by 1-2M between brokerage houses, so roughly 5-7%.

Like I said I'm not particularly familiar with Dallas but the downtown (especially as it relates to high-rises which is what this original post was about) seems quite easy to define as the density drops off pretty quickly. Is the figure quoted not accurate for downtown? If so what is the right number?

I'm happy to take a look at the paid services, I have access to all of them, but the figures I have seen so far all seem pretty similar, and when I do the quick eye check of dallas via google maps and a quick analysis of the major towers it looks like a ~30M sq ft downtown to me.

Either way at share dallas should be 77.5M sq ft of downtown space for it to have the same office space downtown per capita as Vancouver, which it most certainly does not.

[mhays]

If the brokerages use consistent methods for two downtowns, that's unusual. First, they're not attempting to define "downtown." They're only breaking out some version of the middle for statistical tracking. That could be 1 square mile or 50. That's only one variable among several.

I gave up my CoStar subscription, but for offices it's probably the best source. (It's not very good at other things unfortunately, and $$$$ expensive) If you draw a map for each downtown with reasonable parallel methods and compare the two, it's likely to be far more accurate.

[LeftCoaster]

Every city, let alone brokerage houses will have a unique view of what their 'downtown' is, but in this specific case the question was about office high-rises in the downtown skyline. I can say that the Vancouver definition of downtown from all the major brokerage houses covers the downtown CBD office towers and not much else. From what I can see the Dallas definition does as well. So I'd say without trying to split hairs the downtown CBD skyline office towers are contained in both definitions of downtown and it shows that if anything the original post has got it backwards with their examples.

Like I said before, given the suburban nature of US urban planning it's really not that surprising that proportionally more of the office space in US cities is outside of downtown.