Real Estate Developer Profiles

John Raskob and Al Smith - Empire State Building

A shot was fired in the skyscraper wars of the early 1900s: developers announced the Chrysler Building would reach 925 feet. As a result the real estate developers of 40 Wall Street announced plans to go to 927 feet. The Chrysler Building announcement was a ruse, however: a tower constructed inside the Chrysler Building was affixed to the spire to make it the height champion of the world. For all the fanfare it caused, its reign was short-lived: in 1931 the Empire State Building was completed, becoming the tallest building in the world. Its construction changed the business model for building development and onsite construction and workflow, and in its time was a model of development planning.

The Empire State Building eventually rose to 1,250 feet. (Plans to install a gigantic dirigible docking tower were later abandoned as unfeasible.) Breaking the thousand-foot mark was the construction equivalent of breaking the sound barrier and produced astonishment among the construction world. Designed by William Lamb, Bill Starrett was the commercial contractor and was in charge of its actual construction; he considered it the culmination of his and the Starrett brothers' careers.

The original development plan for the Empire State Building was based on ambitious goals: real estate developers John Raskob and Al Smith simply wanted to create the tallest building in the world. Raskob bought the land for $16 million. Reportedly he met with William Lamb, the architect, and held a pencil vertically and asked, "How high can you make it so it won't fall down?" From that meeting came the design for the building.

Lamb created a centralized structure: space in the center, arranged as compactly as possible, was to contain the vertical circulation, mail chutes, toilets, shafts and corridors. Surrounding the central chute was a perimeter of office space 28 feet deep. His design created an internal structure of non-rental space surrounded by rentable space. The goal was to maximize the building's usefulness and convenience for its tenants while allowing it to be as tall as possible. Other buildings in New York were based on the same premise: land costs were high and constantly rising, so creating vertical space rather than horizontal space was critical to keeping costs low and therefore rents attractive for new tenants. Raskob literally took that concept to new heights.

Once the design was finalized, commercial contractors were asked to bid on the job. One of Raskob's requirements was that construction take place as quickly (and safely) as possible, since major construction projects had (and have today) a tremendous impact on neighboring businesses. As developer, Raskob was sensitive to the impact construction would have on traffic and access to nearby buildings.

Starrett estimated an eighteen month time frame, and also detailed an unusual proposal. When asked how much equipment and labor resources he had available, Starrett reportedly said, "Nothing. Not even a pick and shovel. Gentlemen, this building of yours is going to represent unusual problems. Ordinary building equipment won't be worth a darn on it. We'll buy new stuff, fitted for the job, and at the end sell it and credit you with the difference. That's what we do on every big project. It costs less than hiring secondhand stuff, and it's more efficient." While an unusual approach, it also made sense due to the construction challenges presented by the building's design and sheer size. As the developer, Raskob also appreciated the approach: the more quickly and affordably the building was constructed, the faster investors could receive a return on investment and tenants could move in.

Starrett acted both as the commercial contractor and as the general contractor - he hired more than fifty different contractors and construction companies to handle different aspects of the job, and he created a just-in-time materials flow that represented a breakthrough in building construction (and manufacturing as a whole.) Finished supplies were made on-site, and work in progress space was limited due to the constraints of the area surrounding the property.

The foundation was dug by over 300 men. On March 17th, 1930 the first steel was erected. Based on requests by Raskob, the contractors and their associated construction companies developed a number of innovative construction techniques to save time and produce greater efficiencies. While the outside of the building was being constructed, electricians and plumbers began installing the infrastructure of the building. Starrett's construction team in effect created an assembly line process of building construction, an innovation that had repercussions for major construction projects since that time. Components were engineered to be easily duplicated in quantity with near-perfect accuracy. The steel posts and beams arrived at the site marked with their place in the framework and with the number of the derrick that would hoist them. Workers could swing the steel into place and have it riveted as soon as 80 hours after it had come out of the furnace.

The Otis Elevator Company was hired by Raskob to construct and install 58 passenger elevators and eight service elevators in the Empire State Building. Though these elevators were rated at up to 1,200 feet per minute, existing building codes restricted speed to 700 feet per minute. Raskob installed the faster and more expensive elevators in the hopes that building codes would eventually change. His gamble paid off: a month after the Empire State Building was opened, the building code was changed and the elevators were the fastest in the world.

Due to advance planning by Raskob and excellent execution by Starrett, the Empire State Building was constructed in just over one year, coming in on time and under budget. The cost of the building, including the land was slightly over $40 million - almost $10 million below the $50 million budgeted expense level.

The building weighs approximately 330,000 metric tons. The building has 6,500 windows, 73 elevators, and 1,860 steps to the top floor. Although the lower floors occupy the entire block, there are various "setbacks" in the building's design, as required by law at the time, to prevent the building from casting quite such a large shadow on its neighbors. (Real estate developers were at the time restricted by building codes long-since changed.)

Even before the building reached nearly-full occupancy, operating expenses were covered by admission fees from visitors riding the elevators to the observation deck. Even today, over 35,000 people per day ride the elevators to the top for a few of the city. The Empire State Building stands as a testament to a developer's willingness to follow his own vision, and to harness new techniques and concepts to make that vision a reality.