The Internet building boom of the '90s that never really happened
Last week, Amazon - 'Earth's Biggest Bookstore' - announced that it had made a profit for the first time since its website was launched in 1995. This seeming miracle received a mixed reception. 'New economy' commentators, still licking wounds inflicted by the collapse of technology stocks two years ago, began to whisper that they had been right all along. But 'old economy' downsiders were having none of it. They mocked yet another false dawn and pointed out that it has taken no less than £2.1 billion in accumulated losses to bring the company to this state of grace.
But the reaction to Amazon's feat that has been slowest in arriving - and for that matter has never been properly articulated - is that of the designers and builders of the high-speed construction projects that were such a feature of the dot com start-up days. For as virtually every Internet enterprise soon found out (especially those that were copycat mail order houses at heart), it needed a dozen warehouses, a call centre and a 'mission critical' computer fortress just to stay in the game.
In his new history of the Internet boom - Dot Con: the greatest story ever sold (Penguin) - John Cassidy cites some examples of what this meant in terms of fast building, one of them the story of a California online food delivery service called Webvan. This outfit started out by commissioning a 30,000m 2computerised packing and distribution centre capable of handling 8,000 orders a day, only to discover that it was receiving just 300 orders a day. Unabashed, Webvan promptly commissioned a further 26 warehouses.
As Cassidy says, this sort of thing was happening all over the world, but most spectacularly in America, from the mid '90s right up to the stock market crash of April 2000. But then, ignoring the sum of his own examples, he goes on to discount the huge square footage demand of the dot coms by citing construction as an industry 'largely unaffected by the Internet' - a judgement that cannot possibly be correct.
Lack of data is the problem here. For instance, although we know about £4 billion was spent in the US on promoting dot com enterprises before the fall, the money was not spent on the Web itself but on TV, magazine and newspaper advertising for Internet company services. We do not know whether this figure includes or relates to the sums spent on feasibility studies, refurbishment, change of use, design and build, and designing and Internetrelated building work in general.
My own guess - based on visits to three large New York architecture firms in January 2000, all of them up to their necks in fast-track projects for dot coms - is that the money spent on premises could have equalled or even exceeded £4 billion promotional budget during the same period.
Certainly a massive amount of property purchasing, subdividing and refurbishment was taking place in Manhattan at that time, some of which I drew attention to in this column.
So was there an Internet building boom in the '90s? If we take 1998 to 2000 as the crucial phase of the Internet bubble, and assume that virtually every well-found firm of architects in America, if not the world, either wanted to be or was involved in it in some shape or form, then surely there should have been a tremendous blip in fee income and construction spending to prove it.
The only other explanation is that the whole phenomenon was a creation of the black market in professional services. A huge quantity of the commissioned work was either not carried out or not recorded, or never paid for because the dot com itself had gone out of business.