What Malinvestment Looks Like: Forever Empty Office Buildings

Mark Thornton has justly received notoriety for his work on the Skyscraper Index as a harbinger of recession following an inflationary boom. His thesis is that record-breaking skyscrapers are most often undertaken toward the end of an inflationary boom and the beginning of their construction is a good sign that recession is not too far around the corner. He provides empirical evidence as well.

Well, Bloomberg News just published a piece about the Dubai commercial real estate scene that corroborates Thornton's theory. The global boom fueled massive office construction, including the newly-christened tallest building in the world, The Burj Dubai. Presently office space in Dubai is only 40% occupied with another 20 million square feet of space that is scheduled to be complete over the next four years. There is so much office space available that some buildings will be vacant forever. Ladies and Gentlemen, THAT's malinvestment.