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When the financial markets start coughing, office markets quickly catch a cold

Book review of: Colin Lizieri. Towers of Capital. Office Markets and International Financial Services
Sabine Dörry
Bibliographical reference

Colin Lizieri. 2009. Towers of Capital. Office Markets and International Financial Services. Chichester, Wiley-Blackwell.

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1Where does property ‘fit’ into the dynamics of value creation under contemporary capitalism?” and “What about the economics of property?”, only recently did Christophers (2010: 94) address these questions to his fellow geographers. With Towers of Capital, Lizieri has now presented a long overdue book, which insightfully investigates the multifaceted – though primarily economic – phenomena of office markets, specifically in international financial centres (IFCs), and their strong entanglement with the financial markets. By writing this book, Lizieri follows a long tradition established by Coakley (1994), Daly (1982), or Pryke (1993, 1994) who more or less critically examined the early stages of the so-called financialisation and the eventual reification of office property into tradable financial assets. However, in the past years research in this field has lacked continuity, thus provoking questions like the above mentioned by Christophers and others (Blomley 2005).

2It is not that the field of real estate research has been completely neglected in the recent past; inspired by the critical examinations of neo-liberal politics and the strong financialisation propensity, research activities on real estate markets have rather focused on the complexities of social, cultural, linguistic, political, or time-space-power analyses. This might partly explain the abandonment of rather descriptive empirical work on the property markets by urban social scientists. Seemingly irritated by this fact, Lizieri unequivocally formulates his various frustrations with real estate research at the beginning of his book and states its objective “to set out a framework for understanding real estate and the transformation of the built environment in financial centres, based both on the development of global capital markets and on micro-level research into the functioning of office markets” (p. xiv). On the one hand, he expresses his incomprehension and harsh criticism of “the cultural turn in urban geography and urban social science ... [as a] drift away from critical empirical work to focus on the symbolic and political implications of urban form and a mode of analyses which often produces opaque, esoteric work that is inaccessible to outsiders” (p. xii). On the other, he is also deeply concerned with the “neglect of the key role played by real estate and ... [the] superficial view of property that ignores change over time and the importance of market structures in determining spatial outcomes in the office markets of cities in different countries and regions” (p. xiii).

3Indeed, Lizieri’s book hits a sore spot, delivers a cutting edge, seminal, and very detailed scholarly piece. He skilfully unravels the interrelatedness of financial activities, real estate market processes, risk aspects, and the volatile returns of real estate. Unfortunately, the book overlooks any implications such dynamics in the real estate markets can have on the urban economy, although Lizieri does not claim to have the intention of elaborating on this matter.

4Towers of Capital largely follows the imperative of today’s global inter-urban competition. To understand the basic principles of the allocation of offices and introducing office space as fundamental production factor for business and financial service industries, the first three chapters of the book start off with an expansive yet useful overview of the evolution of the (global) urban hierarchical system, while also critically reflecting the development of business and financial service industries located in such urban economies by using concepts of agglomeration and physical co-location to identify their (flexible) demand for modern office space. For this purpose, Lizieri avails himself of several fundamental geographical approaches, such as the world and global city debate or the world systems analysis, enriching them with statistical and empirical evidence.

5In the second part of the book, which covers chapters 4 to 6, Lizieri offers a superb insight into the office market on a micro-level, relating the business activity’s demand for office space to the space created by (internationally operating) developers. Further, via global capital in- and outflows, he links the physical real estate construction activities to the office rental and investment activities. By depicting this dynamic system, he carefully examines the various feedback mechanisms, since each single element is tightly connected to the other and any alterations of one element directly influence the others. Attempts at providing answers to complex questions like “Do developers misread the rental signs?” (p. 89) are made both by employing econometric models (rent models, rental adjustments, cf. chapter 4) but also from “a critical stance without ignoring economic forces” (p. 141), thereby relating to the works of Zukin (1992), Haila (1997), or Fainstein (2001). “Property has bond-like ... and ... equity-like characteristics” (p. 157), says the author, who introduces real estate as an asset class and takes the reader on a tour through a set of specific business tools such as, for instance, examining (global) investment patterns by recapitulating portfolio theory or assessing returns, yields, and depreciations of office properties.

6The book’s final part, encompassing chapters 7 to 9, discusses central aspects of the first two parts “to explore the interaction between global financial markets and real estate markets, the impact of that integration in the office markets of IFCs and the implication for risk, stability and urban policy” (p. 184). To each of these, one would expect to receive a substantiated response. Chapter 7, which deals with the causal effects of credit cycles, financial up- and downswings, and systemic risks through the financial industry’s exposure to property markets, is as compelling as chapter 8, which elaborates on financial ‘innovations’ on property investment vehicles and the increasingly blurred property ownership patterns. Reading it from a critical angle, it highlights the continuing commodification of property into a financial asset valued with a price, thus becoming wholly or partly tradable in an ever more financialised world.

7However, in chapter 9, and as a result of the discussed dynamics, the reader expects Lizieri’s opinion on “the implications for city planners and city governments” (p. 287), which he repeatedly advertised before (pp. 184, 259). Unfortunately, this chapter reads the weakest of the whole book. After an exhaustive repetition of the otherwise very helpful summaries of each of the eight past chapters, the author finally comes back to the dilemma urban planning is faced with. One can speculate whether the author merely lost interest in the topic but, alas, he finds just one – although portentous – sentence to comment on the issue: “In order to maintain financial competitiveness and to capture international market share, clustering needs to be encouraged – which also means permitting the real estate development that is necessary to upgrade the stock to ‘global standards’ and to accommodate growth” (p. 290). It is here that the book has given away large potential to reflect critically on the real estate economy from a social and urban political point of view, while also failing to present recommendations to urban politics for a more effective way of dealing with real estate investors. Facing the immense impacts on the built environment – profoundly altering all areas of urban life and the inhabitant’s scopes of action – this is downright unpardonable. How can we ensure a city’s own competitiveness with modern, flexible office space while at the same time agreeing on the ‘right to the city’ for everyone, if the office building increasingly becomes subject to speculation or ‘gambling’? It might be for this reason that critical scholars in social science have been tackling this thorny issue instead of exclusively producing descriptively inspired empirical data on the real estate markets. Even the economist Lizieri might acknowledge this despite his critical initial statement.

8Towers of Capital is written in a markedly clear und comprehensible style. Lizieri succeeds in breaking down the complex technical issues of financing, securitisation, risk and return, or volatility, and explaining each aspect clearly and precisely. Once done, he relates them to each other in order to eventually piece together the puzzle. Concise summaries at the end of each sub-chapter serve as helpful orientation to aid the reader’s possible jumping between chapters. The continuing recourses and references as well as the clear thread of the book make it an attractive read, not only for designated experts, but also for students and graduates who want to grapple with the subject.

9Harvey (1978) may have provided the theoretical superstructure and conceptual directives on capital switching; Lizieri delivers some of the crucial technical details for comprehending the increasingly sophisticated debt securitization and its transmissions towards the real estate economy. Besides the in-depth knowledge presented, the reading also gives insights into the logics and motivations of the involved actors in the real estate and financial business. The book’s epilogue also contains an extensive list of varied and important links for a worthwhile future empirical and conceptual examination. In any case, Towers of Capital deserves a wide (yet critical) reception, especially in the field of urban social science.

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Zukin S. 1992. The city as a landscape of power: London and New York as global financial capitals in Budd L, Whimster S. (eds) Global Finance and Urban Living. A Study of Metropolitan Change. London, Routledge: 195-223.

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Electronic reference

Sabine Dörry, « When the financial markets start coughing, office markets quickly catch a cold », Articulo - Journal of Urban Research [Online], Book Reviews, 2011, Online since 03 November 2011, connection on 29 March 2017. URL :

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About the author

Sabine Dörry

Sabine Dörry holds a position as Research Fellow at the Department of Geography at the Centre for Population, Poverty and Public Policy Studies (CEPS/INSTEAD) in Luxembourg. From 2004 to 2010, she lectured economic geography at the Goethe-University of Frankfurt am Main where she also received her PhD from. Her current research interests lie in the political economy of financial and real estate office markets in financial centres as well as in the field of global development, in particular the global impact of multinational enterprises in the ‘global south’. Email:

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