Reader, if you seek his monument, look around you.
-- Inscription on the tomb of architect Sir Christopher Wren in London's St. Paul's Cathedral.
Last Monday, the owner of New York's iconic Empire State
(NYSE:ESRT) Building attracted its first analyst coverage since going public. On Tuesday, what was long known as the Sears
(NASDAQ:SHLD) Tower lost its title as the tallest edifice in the Western hemisphere. (Its stock still scraped the sky, surging 15.52% on the week.) And Wednesday's top S&P 500
mover was Macy's
(NYSE:M), whose 111-year-old Miracle on 34th Street just announced a major makeover, though the wooden escalators will remain.
The story of high finance -- where it is often said your most important assets are those that walk out of the building each evening --
could thus be told in tall tales. With One World Trade Center newly anointed the nation's tallest building, and stocks simultaneously stretching into the stratosphere, the "Skyscraper Index" is again in the news. It claims that elaborate buildings are often testaments to hubris, and tend to occur at market tops. The term's coiner, Dresdner Kleinwort Wasserstein’s former Research head Andrew Lawrence, did not have to look far for evidence. In 1998, just as work began on Dresdner's glitzy new Gallileo Tower in Frankfurt, the bank was hit with an $18 billion lawsuit over Nazi-looted gold, and separately reported a sharp operating loss due to an emerging market mess and the Long-Term Capital Management debacle.
This pattern is limited neither to the West nor the 21st century; the construction of Petra's fabled Treasury presaged a ruinous decline for its mighty ancient empire.
Much like Wren's epitaph, the evidence is indeed all around us. Come with me, then, as we take a random walk down Wall Street, Fifth Avenue, Madison Avenue, and Times Square to examine several blunders of the world. Oh, if these walls could talk…
Our story (or in this instance, 50 stories) starts with the most fabled address in all of finance, One Wall Street. Work on the building, now Bank of New York Mellon’s
(NYSE:BK) base, began in 1929 and ended in 1931. The Roaring Twenties raged when the first shovels broke dirt; soup kitchens and shantytowns blighted the land by its completion.
The Chrysler Building, that Art Deco masterpiece on 42nd Street, crowned its spire on October 23, 1929. Twenty-four hours later -- truly, if you sent such a script to Steven Spielberg he would dismiss it as far too fantastical -- came "Black Thursday" five miles downtown, an 11% drop in the Dow
(INDEXDJX:.DJI) that began the Great Crash.
John D. Rockefeller, Jr. leased the land for the RCA Building in 1928, when shares of Radio Corporation of America were the hire-wire act of the Jazz Age. (Its stock, which stood at a scant $1.50 in 1921, reached $85.50 that year.) Shares subsequently tumbled to $10 in 1931, and remained every bit as unloved when the building opened in 1933. But the jinx did not end there. The complex encompassing "30 Rock," now known as the General Electric
(NYSE:GE) Building, was bought by Japanese investors on October 30, 1989. On December 29, 1989, Tokyo's Nikkei 225 Index
(INDEXNIKKEI:NI225) hit 38,915, an all-time high it hasn’t remotely approached again in the intervening quarter-century.
"The seven seconds that broke the back of the American century" was how Don DeLillo indelibly described JFK's assassination, an event of which we've heard much this week. That tragedy unfolded in the rear of a Ford
(NYSE:F) Lincoln Continental, but General Motors
(NYSE:GM) unveiled its eponymous showroom building on New York's Fifth Avenue in the equally fateful year of 1968 which claimed his brother Robert. Right on cue, Motown's muscle car heyday gave way to the United Automobile Workers strikes, oil shocks, and Asian imports of the ‘70s.
Go back four blocks and forward 10 years, and we arrive at the AT&T
(NYSE:T) Building, the brainchild of master planner Philip Johnson. Work began in 1978, which outgoing Chairman John D. deButts described in his annual report as “[The company’s] most successful year.” The 53-story structure, famed for its Chippendale furniture design, was finished in 1984, the very year Ma Bell broke up. It later became known as the Sony
(NYSE:S) Tower, although the Japanese electronics giant disposed of it for $1.1 billion in January. (Elvis has literally left the building, for Sony owns publishing rights to Presley’s songs. And to judge by last week’s 10.51% stock price surge, it is doing just fine without the 37-story structure.)
New York’s World Financial Center, headquarters to several blue-chip companies including American Express
(NYSE:AXP), was built on World Trade Center landfill by recently deceased Canadian real estate developer Paul Reichmann. It arrived on the scene in 1987, just in time for that year’s crash. (Mr. Reichmann’s Olympia & York also had a major hand in lavish Thatcher-era London banking hub Canary Wharf, which similarly proved to be a canary in the coal mine for coming financial calamity.)
The New York Times
(NYSE:NYT) dropped the ball when abandoning its Times Square headquarters, the newspaper’s home since 1904, for a grandiose 52-story tower nearby (pictured below; photo by Geoff Livingston/Flickr). It opened on November 19 2007, and shares touched the lowest level in their history within weeks. Amid multiple layoffs as media increasingly migrated online, the palatial surroundings quickly became a white elephant for the Old Gray Lady. It has lately looked to lease out a full floor at the Eighth Avenue address. (Several would-be spidermen have tried to scale the building’s “ladderlike horizontal rods,” to use the paper’s own description of one such incident in 2008. Perhaps the climbers mistook the meaning of "paywall.")
Reverse engineering Joni Mitchell, Goldman Sachs
(NYSE:GS) paved a parking lot – literally --and put up paradise. (Or at least a 2 million square foot behemoth worth over half a billon bucks, from which its employees can more opulently go about doing “God’s work.”) The blingy 200 West Street facility, which rather incongruously sits near an Irish Hunger Memorial, replaced the bank’s longtime location at 85 Broad Street. (As an aside 85 Broads, originally a networking group for the firm’s female executives, was recently bought by ex-Citigroup CFO Sallie Krawcheck.) Ground was broken in 2005, the year Goldman reported the biggest profit in the history of the securities industry. In December 2007 – the month America officially entered the Great Recession – some seven tons of metal at the construction site came crashing to the ground when a crane collapsed. An ominous omen? At any rate, the first occupants arrived in 2009, the year Goldman’s reputation plummeted to an all-time nadir after being assailed as the “Great Vampire Squid.”
A stone’s throw from Goldman’s headquarters stood the home base of Merrill Lynch. (Fierce competitors, the distance was likely tested literally during Stanley O’Neal’s tenure at Mother Merrill, which he catastrophically tried to remake in Goldman’s image.) O’Neal’s overreach saw the firm subsequently swallowed up by Bank of America
(NYSE:BAC), which knows all about architectural angst. The 255.5-foot spire on its gleaming $1 billion Bryant Park tower topped out in 2007. As did, at about $55, the company’s stock price. On September 17, 2008 -- the very week the bank bought Merrill – a pane of glass from the building plunged 50 stories to the ground. Miraculously, no one was hurt, but the Dow did drop 449 points that day. Falling even faster was BofA equity, which traded to a lifetime trough of $2.53 in 2009, the year construction was complete. The building does at least boast waterless urinals, which are estimated to save some 8 million gallons per year. (Too late, alas, to prevent John Thain from splurging $35,000 on that infamous commode.)
Across the Atlantic, archrival "The House of Morgan
" (NYSE:JPM) unveiled 25 Bank Street in the English capital as its European headquarters in July 2012. This just as the “London Whale” scandal blew up in the company’s face. The building, clearly cursed, was previously home to Lehman Brothers. (Incidentally, some say that September’s $724 million purchase of One Chase Manhattan Plaza, that 2.5-acre emblem of midcentury America, by Sino tycoon Guo Guangchang marked a market top in China. If so, hold on to your hard hats.)
It's an axiom of architecture that "form follows function" but Bankia’s
(OTCMKTS:BNKXF) quixotic leaning tower in Madrid may take this motto a little too literally. Put up in “irrationally exuberant” 1996, when a flush post-Franco Spain was awash with pesetas, the financial firm’s Puerta de Europa
towers now look like a needlessly extravagant example of tilting at windmills. Amid the continent’s ongoing economic crisis, its shares have subsequently dropped down to Earth faster than the building’s 15-degree incline.
Meanwhile the front office for Edinburgh’s Royal Bank of Scotland
(NYSE:RBS), a key FTSE 100
(INDEXFTSE:UKX) component, makes a mockery of that country’s reputation for frugality. The $500 million folly, built on the grounds of a former insane asylum, was opened by Her Majesty in the relatively booming Blair economy of 2005. Red ink quickly followed ribbon-cutting as the institution, now government-owned after being bailed out by taxpayers, continues to lose billions.
Will these stories ever end? Unfortunately the skyscraper curse, much like Gaudí’s famously unfinished Sagrada Família, never does. Indeed just last week LG Electronics
(KRX:066575) contentiously started work on its new $300 million North American headquarters in Englewood Cliffs against an acrimonious backdrop of 300 protestors at the property gates shouting “Leave the Palisades alone!” That very day, the company was overtaken by Lenovo
(OTCMKTS:LNVGY) in global smartphone sales.
(NASDAQ:FB) is going forward with a Frank Gehry-designed campus, and this week Apple
(NASDAQ:AAPL) got the green light for its ostentatious Norman Foster “Spaceship” headquarters. Ironically, the spartan Eisenhower-era house in Los Altos where Steve Jobs revved up Apple's first computer (in the garage) was designated a historic site only last month. Based on the dreaded “skyscraper index,” both tech titans may now have fantastic futures already behind them.