BEIJING — "Empty," says Jack Rodman, an expert in distressed real estate, as he points from the window of his 40th-floor office toward a silver-skinned prism rising out of the Beijing skyline.
"Beautiful building, but not a single tenant."
So goes the refrain as his finger skips from building to building, each flashier than the next, and few of them more than barely occupied.
Beijing went through a building boom in advance of the 2008 Summer Olympics that filled a staid Communist capital with angular architectural feats that grace the covers of glossy design magazines.
Now, six months after the games ended, the city continues to dazzle by night, with neon and floodlights dancing across the skyline. By day, though, it is obvious that many are "see-through" buildings, to use the term coined during the Texas real estate bust of the 1980s.
By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, an amount larger than all the office space in Manhattan. And that doesn't include huge projects developed by the Chinese government. He says 100 million square feet of office space alone is vacant — a 14-year supply if it filled up at the same rate as in the best years, 2004 through 2006, when about 7 million square feet a year was leased.
"The scale of development was unprecedented anywhere in the world," said Rodman, a Los Angeles native who lives now in Beijing, running a firm called Global Distressed Solutions. "It defied logic. It just doesn't make sense."
Construction cranes jut into the skyline, but increasingly they are fixed in place, awaiting fresh financing before work resumes.
Boarded fences advertise coming attractions — "an iconic landmark" or "international wonderland" — that are in varying states of completion. A retail strip in one development advertised as "La Vibrant shopping street" is entirely empty.
Migrant workers stand in front of several construction projects, voicing their grievances.
"Our boss ran away with the money, and he is nowhere to be found," said Li Zirong, a migrant worker from Shaanxi province, who was a supervisor on a stunning building with windows shaped like portholes.
What makes this boom-and-bust cycle different from those in the West is there is no private ownership of land in China, making local governments de facto partners in the real estate industry by earning huge fees from leasing and transferring land. In effect, everything is built like the large urban renewal projects in the United States.
Huang Yasheng, an economist at the Massachusetts Institute of Technology, traces the blame to the Chinese Communist Party and its reluctance to allow a true market economy.
"The lack of land reform fed into the real estate bubble, and now it's coming back to haunt them," said Huang, author of Capitalism With Chinese Characteristics, published last year. "There should have been more checks and balances on the ability of the government to acquire land."
The Chinese government spent $43 billion for the Olympics, nearly three times as much as any other host city. But many of the venues proved too big, too expensive, more photogenic than practical for ongoing use.
The main Bird's Nest stadium has only one event scheduled for 2009 — a performance of the opera Turandot on Aug. 8, the one-year anniversary of the Olympics opening ceremony.
All around the Olympic complex, cavernous empty buildings, such as the main media center for the Games, await office tenants.
"They wanted to build the 'world's biggest this' and the 'world's biggest that,' but these buildings have almost zero long-term economic benefit," Huang said.
Moreover, the Olympic development projects led to an estimated 1.5 million Beijing residents being evicted from their homes, according to the Geneva-based Center for Housing Rights and Evictions. Louis Kuijs, a senior economist at the World Bank in Beijing, said that a lack of government supervision of the real estate industry tempted developers to build only for the luxury market and to ignore the mass market.
"If you think demand is endless for anything you build and you have just 200 square meters of land, you will build high-end apartments to make the highest profit," Kuijs said.
To its credit, the Chinese government recognized in 2007 that the real estate market was headed toward a bubble, economists say. In an attempt to make real estate more affordable, restrictions were introduced on ownership of second homes and on foreigners who bought homes here. But the measures came too late, accelerating the crash.