The Empire State Building opened in 1931 with huge fanfare, marked by an event where then-U.S. President Herbert Hoover switched on the building’s lights with a ceremonial button from the White House. It was the tallest skyscraper in the world at the time, the first one to exceed 100 floors, and hailed for its architectural excellence.
More than 90 years later, the Empire State Building is, by most accounts, the world’s most famous building. It held the title of the world’s largest building until the completion of the World Trade Center in 1970. But the construction and opening of the famous skyscraper coincided with the start of the Great Depression and resulted in tough early financial times for the owners. The Empire State Building’s offices sat largely vacant for several years, leading some to call it the “Empty State Building.” It was a marvel of construction and engineering when it opened, but the building didn’t even turn a profit until the early 1950s.
Tall and empty
Commercial real estate was booming during the recovery from World War I and during the Roaring 1920s. Also, the completion of the Eiffel Tower in Paris in 1889 marked the early beginning of a great skyscraper race in the 20th century. The Manhattan Company Building (now 40 Wall Street) opened in the fall of 1929 at 927-feet-tall, beating the Woolworth Building (792 feet tall) to become the world’s highest skyscraper. Shortly thereafter, the Chrysler Building temporarily took the title of the world’s tallest at 1,046 feet, partly thanks to a secretly manufactured spire. The 185-foot-tall spire in the building’s fire shaft was raised in 90 minutes to literally put it over the top as the world’s tallest.
Planning for the Empire State Building had begun by then, primarily the idea of John Jakob Raskob, an American capitalist and financier known for urging people to invest in the stock market just two months before the 1929 crash. Construction for the skyscraper began after the crash. The breathtakingly fast project took just one year and 45 days and employed more than 3,500 workers at its peak, many of whom were Irish and Italian immigrants. The building officially opened on May 1, 1931, about 45 days ahead of schedule. The developers came up with innovative new ways to save time and money during construction. One was using an on-site railway system with cars that held up to 8 times more than a wheelbarrow. It made moving construction materials much easier and more efficient.
The opening of the skyscraper effectively ended the race to the sky in New York for a while, at least. The Empire State Building stood at 1,250 feet tall, and while some people believed it was possible to build higher, doing so during the Depression was considered uneconomical. Even after winning the skyscraper race, the owners of the Empire State Building had a more pressing problem: filling the building with tenants.
Office space in New York City had significantly increased between 1920 and 1930, and filling those offices amid the Depression was challenging, to say the least. The Empire State Building was 75 percent empty when it opened in 1931 and faced financial difficulties throughout the 1930s. Generally, everything above the 41st floor of the new skyscraper was vacant because the higher the office was, the higher the rents were. So much new office space came onto the market simultaneously, and all the new buildings competed against each other for paying tenants during a time when business and sales were massively down. The building was in debt from the beginning, losing $1 million (what would be about $20.8 million today) per year by 1935.
King Kong-sized publicity
The job of trying to rent out space in the Empire State Building went to former New York Governor and presidential candidate Al Smith. Investors were confident the new skyscraper would sell itself, but Smith’s experience proved otherwise. He begged the New York governor and later President Franklin D. Roosevelt to move state and federal agencies into the building. Some of them did, but it still wasn’t enough for the building to meet its mortgage payments.
Al Smith also turned to publicity stunts to drum up tenants. He got the world’s tallest man to visit the world’s tallest building, taking a cue from the popular carnival shows of the era. When Prohibition ended in 1933, a five-ton wagon filled with Budweiser was carted to the building by six Clydesdale horses. The following year, Smith opened “the world’s highest bar” and sold 25-cent martinis next to the “world’s loftiest” soda fountain and tearoom on the 86th floor.
The greatest publicity for the Empire State Building, though, was free and came from the 1933 film King Kong. When the giant ape dangled actress Fay Wray from the top of the skyscraper in movie theaters nationwide, it helped establish the building as an American icon. Unfortunately, it didn’t do much to entice well-paying tenants. The reputation of King Kong attracted tourists and celebrities to the building’s observation deck. People paid $1 ($21 in today’s dollars) for observatory deck admission during the worst of the Depression. By 1938, the observatory was hauling in at least $1 million annually, as much as the owners were making in rent. With the offices not filling up, the observatory revenue helped. But without tenants bringing in more money, investors had to prop the building’s finances up. Raskob, one of the owners, put his own money into the building, which he hated to do, and some of the skyscraper’s biggest backers, like the Metropolitan Life Insurance company, began moving in to help ease the pain.
Standing the test of time
By the 1940s, the tide had turned, and the Empire State Building finally began drawing tenants because of its reputation. Perhaps Al Smith’s (who passed away in 1944) hard work and publicity stunts had paid off, too. The skyscraper was nearly 98 percent occupied at various points in the ‘40s, according to the 1994 book by Donald Reynolds, The Architecture of New York City: Histories and Views of Important Structures, Sites, and Symbols. In the 1950s and after World War II, the iconic skyscraper broke even for the first time and was on the road to profitability.
John J. Raskob, the financier and principal owner of the building, died in 1950, and his estate listed the building for sale in 1951 despite the turnaround. Real estate broker Robert L. Stevens and a syndicate bought the building for $50 million, the highest price paid for a single structure at that time. By then, Empire State was fully leased and had a “sizeable waiting list” of companies wanting to lease space.
The skyscraper was sold again in 1961 for another record-high price of $65 million to Lawrence A. Wein, a New York lawyer and organizer of realty investment syndicates, after a three-year negotiation. At the time of the sale, the New York Times wrote Empire State was “said to be one of the most profitable single building operations in the world, despite its shaky future when it opened 30 years ago during the Great Depression.”
The Empire State Building is no longer the tallest skyscraper in the world or even New York City, but it’s proven to be one of the most resilient. And it continues to remake itself, having undergone years of modernization, leadership in energy efficiency, and investment in indoor environmental quality. Today the building is solidly leased and has high-credit tenants like LinkedIn, which occupies more than 500,000 square feet of space. Empire State’s observatory visitation is also close to pre-pandemic levels, according to a spokesperson.
Empire State Realty Trust, the NYC-focused REIT and owner of the world’s most famous building, declined to comment. But a spokesman pointed out the building was recently voted the top tourist attraction in the United States and third worldwide by Tripadvisor. Native New Yorkers may be more accustomed to the sight of the Empire State Building in the dazzling skyline, similar to native Philadelphians like myself who take attractions like the Liberty Bell for granted. But visitors to the Big Apple still flock to see the building because of its international cultural icon status. Since King Kong in 1933, the building has been featured in more than 250 movies and TV shows.
Filling office space in the Empire State Building was a struggle in its early years, but it isn’t anymore. Many office landlords are worried about vacancies and the market today, and the world’s most famous building may offer some lessons. There will always be challenging times in the real estate market, and even the most incredible buildings aren’t immune to the effects. But exceptional, well-designed buildings can stand the test of time, even through something as dire as the Great Depression. The pandemic and onset of remote work may seem daunting for the office market now, but buildings like the Empire State have seen worse and survived.