January 25, 2020
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China is building two new hospitals in response to virus — should only take a few weeks

This morning I got caught up on what’s happening with the coronavirus that emerged in Wuhan, China, but that is now spreading quickly across mainland China. It’s unsettling. As of Saturday, there were over 1,287 confirmed cases in mainland China and 41 deaths. Right now, the belief is that the virus emerged from a seafood and meat market in Wuhan.

The Wuhan virus belongs to a family of viruses known as coronaviruses, which includes the severe acute respiratory syndrome (SARS) that broke out in 2003 and killed 44 people in Canada alone. Typically, these viruses have jumped from animals (such as bats and pigs) to humans. The WSJ has a good summary of what is currently known about this coronavirus strain.

All of this has overwhelmed hospitals in Wuhan and the videos accounts are heartbreaking to watch. The government has responded by vowing to build two new hospitals in order to fight the outbreak. But get this: the projected completion times are 10 and 15 days, respectively. The second hospital, to be called Leishenshan Hospital, is expected to house about 1,300 beds.

I can’t even get a government signature on a single legal document within 10 to 15 days, and so it’s unfathomable to imagine building an entire hospital within that same period of time. Some of the media is calling this “infrastructure propaganda.” i.e. Look over here at all we’re doing for you. But there’s clearly a need and, if ever there was a time to move with a sense of urgency, now would be it.

Photo by 海超 刘 on Unsplash

January 24, 2020
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The "job" of a McDonald's milkshake

Management guru Clayton M. Christensen died this week. Sadly, he was only 67 (leukaemia). A professor at Harvard Business School, Christensen was best known for probably two things: His work on disruptive innovation and his teachings on how to live a more fulfilling life. If you’ve read anything on innovation and disruption, I am sure you’ve come across the work of Christensen. He had a way of explaining things by reframing them. Here is a short video about the “job” of a McDonald’s milkshake. And here is another one where he explains the cycle of disruptive innovations, sustaining innovations, and efficiency innovations. Both videos are worth watching.

January 23, 2020
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Canal houses and rental barracks

Feargus O’Sullivan’s CityLab series on European housing typologies started in London, but has since gone on to cover Berlin’s mid-rise tenements — called Mietskasernen — and Amsterdam’s canal houses. The series is exactly the sort of thing that I like to geek out about. In fact, I can see a book on this topic staring at me from my bookshelf.

If you end up taking the time to read the articles, you’ll be reminded of a couple of things about the way cities work. One, the way we use buildings changes over time. Two, the kind of architecture we pursue is always a reflection of the socioeconomic milieu at that particular moment in time. And three, the way we perceive buildings also changes over time.

In the case of Amsterdam’s canal houses, their original function was live/work. They were residences, but they were also warehouses. Amsterdam’s maritime dominance meant that it was more profitable to store things, instead of just house people. (Sometimes as much as half of the house was dedicated to storage.) Trade patterns had moved from the Mediterranean up to the North Atlantic, and that worked out pretty well for the Dutch in the 17th century.

In the case of Berlin, their typical mid-rise “rental barracks” went from reviled to coveted as the buildings aged, elevators made the penthouses desirable, and people started to appreciate some of their idiosyncrasies. It’s an example of what I was getting at when I spoke to the CBC for this article about Toronto’s skyscraper boom. Some things, including buildings, take time. They need to settle in.

January 22, 2020
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Revenue minus expenses

One of the most important rules in personal finance is that you should live within your means. Sure you might be stretching to invest or start a business but, generally speaking, people who specialize in this sort of thing (which is not me) will tell you that it’s probably a good idea to spend less than you make.

The same is, of course, true in business. Businesses generally try to make more money than they spend. Similar to what might happen in personal finance, there are instances where a company might decide to forgo current cash flow for future cash flow. i.e. Invest in future growth. But at some point, not making any money needs to stop and the company will need to post a profit.

All of this probably sounds dreadfully obvious, but I often think of this very simple principle whenever I hear someone talking about something that should be done, but isn’t being done. Developers should be using triple glazed windows in all of their projects. The government needs to build a new subway line from here to over here. And the list goes on.

There’s no question that triple glazed windows will perform better than double glazed windows. And there’s no question that a subway right outside of my single family home would be pretty darn convenient for my personal needs. But all of these things, unfortunately, cost money. They are expenses. And unless the revenues are there to support them, they, funny enough, tend not to happen.

The same is true in personal finance. I should have a yacht in the Mediterranean. Why? Because having a yacht in the Mediterranean is typically better than not having a yacht in the Mediterranean. Sadly, the top line of my income statement tells me to, instead, focus my attention on the Toronto Island Ferry Docks.

Update: One of our engineers has advised me that triple glazing is not always better from a noise control standpoint. Laminated and heavier glass typically performs better from this perspective.

January 21, 2020
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A cycling mecca in northeast Spain

Today I learned that Girona in northeast Spain is a mecca for cycling. Bike enthusiasts like it because the climate is mild; the roads are well maintained; the lifestyle is relaxed; and there’s easy access to the European Grand Tours in Spain, France, and Italy. Apparently Lance Armstrong bought an apartment there in 2001. Though there were other pro cyclists who had come before him.

Interestingly enough, all of this is allegedly having an impact on the real estate market. According to the WSJ, there has been a surge in the tourist licenses required to operate a short-term rental in the city. Ten years ago, the city had only issued 10 of them. But today, more than 700 have been issued. And as of the end of 2019, residential sale prices had increased about 15% year-over-year.

I’m not sure how much of this is a result of cycling tourism, Airbnb, Spain’s overall housing market recovery, or other factors. But it certainly sounds like a nice place to go for a bike ride.

January 20, 2020
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The State of Mobile 2020

Analytics firm, App Annie, has just published its annual The State of Mobile report. As you might expect, our phones continue to consume more of our time, attention, and money. Last year, there were over 204 billion app downloads across the world. Global mobile advertising hit $190 billion and, by the end of this year, it is forecasted to reach $240 billion. By 2023, the mobile industry is expected to contribute some $4.8 trillion to global GDP.

Compared to 2 years ago, the world is spending, on average, 35% more time on their phones. See above chart. Mobile-first countries such as Indonesia and Brazil spend even more time on mobile as they skipped over the PC era that was seen in more mature markets. But globally, all of us are doing more on our phones — everything from managing our investments to consuming media (TikTok had an explosive 2019).

Financial app usage increased significantly last year. Above are the top “breakout finance apps” of the year. PC Financial (the financial services brand of Loblaw) saw the greatest year-over-year growth in downloads but, since it only launched last year, it was starting from a base of 0. Fintech apps, which grew even faster than traditional banking apps, demonstrate that the big banks probably need to step up their mobile game.

Young people do, of course, spend more time on mobile. Generation Z (those born between 1997 to 2012) had 60% more sessions per user in top apps than older demographics. But as of the end of last year, Generation Z is believed to have surpassed Millennials as the largest generational cohort in the world at about 32% of the population. So this wave is going to continue to come.

If you’d like to download a fully copy of App Annie’s mobile report, click here. You’ll need to enter your email address. But there’s a lot of interesting data in the report. You can almost ignore that it’s specifically about mobile and think of it as an overview of where the world is heading.

Charts: App Annie

January 19, 2020
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Maeklong Railway Market — plan view

Many of you have probably visited or seen videos of the Maeklong Railway Market in Bangkok. (I’ve done the latter, not the former.) It is one of the largest seafood markets in Thailand and it is literally housed on the railway’s tracks. Every time a train passes through, the entire market needs to be pulled up and relocated. Even the awnings that cover the market need to be collapsed. The videos I’ve seen have all been taken from grade. But the below video (via Vala Afshar on Twitter), showing the market in plan view (from what was likely a drone), is arguably even more impactful. There isn’t a foot of wasted space.

January 18, 2020
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Tacos, snowstorms, and laneway suites

Few things go as well together as tacos and snowstorms. And so that’s exactly what I did for lunch today given the awesome — I love snow — storm that we’re having in Toronto this weekend. The garnish you’re seeing below is grilled cactus. Dave, the owner of Playa Cabana Taqueria, grows it on location and uses it for special dishes like this one here. If you haven’t been, I would highly recommend it. They’re located at 21 St. Clair Avenue East.

In addition to tacos, I also spent the morning with Gabriel Fain Architects working on our upcoming laneway suite collaboration. Some of you may remember that our previous laneway project was refused at the Committee of Adjustment back in 2017. Well now that laneway suites are permissible as-of-right, it’s time to get going. We are not planning to seek any variances from what is currently allowed.

But if you’re thinking about building your own laneway suite, there are still a number of issues that you might run into depending on your property. Servicing, proximity to a fire hydrant, access, and trees are maybe some of the most common. I know that the city is working to resolve / streamline some of these complications, as the objective is truly to build laneway suites across the city.

As Gabriel and I work through our project this year, my plan is to write about it here on the blog. And hopefully when the project is complete, the posts will serve as a kind of guide for homeowners. These suites are really setup to be built by individual homeowners, as opposed to by developers. If you don’t already email subscribe to this blog and are interested in learning more, sign up here.

In the meantime, if you have any questions about laneway suites, there are a number of experts in the city, including Gabriel Fain Architects and the folks over at Lanescape.

January 17, 2020
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A fundamental reshaping of finance

BlackRock CEO, Larry Fink, published his annual letter to CEOs this week and the title — which I am reusing here — should give you an indication of the tone. The focus is squarely on climate change. Larry argues that, sooner than perhaps most people think, climate change is going to cause a “significant reallocation of capital.”

Below are a few excerpts from his letter. If you remember the first post that I published this year, you may remember that Larry is not alone in this prediction. Already 2020 is shaping up to be a year where more of us seem to be turning our attention to climate change. I would encourage you to read the full letter over here.

Will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds? What will happen to the 30-year mortgage – a key building block of finance – if lenders can’t estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas? What happens to inflation, and in turn interest rates, if the cost of food climbs from drought and flooding? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts?

These questions are driving a profound reassessment of risk and asset values. And because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself. In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.

Over the 40 years of my career in finance, I have witnessed a number of financial crises and challenges – the inflation spikes of the 1970s and early 1980s, the Asian currency crisis in 1997, the dot-com bubble, and the global financial crisis. Even when these episodes lasted for many years, they were all, in the broad scheme of things, short-term in nature. Climate change is different. Even if only a fraction of the projected impacts is realized, this is a much more structural, long-term crisis. Companies, investors, and governments must prepare for a significant reallocation of capital.

Photo by Chris Barbalis on Unsplash

January 16, 2020
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One Thousand Museum, Miami

Candace Taylor published an article today in the WSJ about the late Zaha Hadid’s One Thousand Museum tower in downtown Miami. The title: “Zaha Hadid’s Miami Tower Is an Architectural Feat. Is It Designed to Sell?”

It’s an interesting case study, particularly for those of us in the industry. With only 84 units across 62 storeys, it is certainly “ultraluxury.” There’s also a helipad on the roof. Here is an excerpt from the article to give you a sense of the unit sizes:

Louis Birdman, one of the project’s developers, said prices, which range from just under $5 million to $25 million, are negotiable. Each floor has only one or two units, ranging in size from about 4,600 square feet to 10,400 square feet and each has at least four bedrooms. “Given what’s going on in the market now, I think all of us developers are competing for a similar buyer, so there’s obviously flexibility on price,” he said.

As you can probably glean from the above, the ultraluxury market has softened in Miami. But Candace is right: One Thousand Museum is an architectural masterpiece. If you’re in the market for a new four bedroom home in downtown Miami, now may be right time.