A Modern Twist on the Cantillon Effect

12th of February, 2018

“Same, Same, but different”.  That’s how we often describe the cycle.

You see if the cycle repeated exactly the same every time, it would be easy for everyone to see it. The markets just cannot allow this to happen. The market must do whatever it can to fool most of the people, most of the time.

New legislation and different political agendas. Innovative financial products and solutions along with fresh social and moral standards. The latest world and geopolitical tensions and of course investor memory and the herd mentality ensure this cycle can NOT mirror the last precisely.

It’s the drivers that are important though – our all-important Five Underlying Drivers.  If the drivers are in place, then the cycle will find a way to manifest.

The Cantillon Effect is understood by Architects and Developers, but somehow, Economists completely miss the point. It’s this theory that explains just why the world’s tallest building must open at the top of the cycle. It will be empty, and the developer inevitably will go bust.

It’s the Cantillon Effect that explains our lust for taller and taller phallic symbols that mark the modern skyline.

So here’s a modern twist for this cycle on the Cantillon Effect and the world’s tallest building.

You see Ohio-based design studio OI IO has come up with an abstract design for what they call “The Big Bend”.

This unique design will lay claim to the world’s “Longest Building”.

With a height of 600m and a stunning length of 1,200m it certainly would be an iconic landmark in the New York City skyline.

Such a building can only even be contemplated due to the technological advancements in such areas as construction and lifts.

Although an elevator capable of traversing such a building is currently still not a reality, it’s thought that it is not too far away. Soon they will be able to travel horizontally as well as up, down and in a continuous loop.

Interestingly for Cantillon’s, the design was imagined in order to deal with New York City’s zoning laws.

“New York city’s zoning laws have created a peculiar set of tricks through which developers try to maximise their property’s height in order to infuse it with the prestige of a high-rise structure. But what if we substituted height with length? What if our buildings were long instead of tall?” design studio OI IO

Now this building design is purely a concept for New York’s 57th Street. There are currently no plans or approval for it to be built so it doesn’t help us with any timing.

However, it does highlight how every cycle is “Same Same, but different”. That the drivers must manifest differently each cycle, so we need to be aware of what is happening around us each cycle.

We will keep our eye on this unique concept as it would not surprise me to see this concept play a role later in this cycle.

Cheers, Jeremy

PS if you want to learn more about the all-important Underlying Drivers, then click here to check out our course “The Essential Drivers of Property Prices”.