Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.
Happy New Year from Miami. (This post is bring written on my phone.)
A number of people have asked me if I will be making any resolutions this year. I’m not really a fan of making resolutions, per se. If you really want to do something — such as, oh I don’t know, go to the gym more often — I think you should just go and do it and not kid yourself that January 1 is the appropriate day in which to start.
That said, this time of year can be useful for annual planning. It’s easy to get preoccupied with executing throughout the year. Execution is everything. But it’s also valuable to use this “idle time” to think about your own personal and professional roadmap. What have I been doing? Where do I want to go? And should I make tweaks to the former to optimize for the latter?
I have been doing exactly that over this last week and I have made a number of changes to where I plan to invest my time, energy, and money in 2020. So I am excited for the year (and decade) ahead. Maybe some of you have been doing the same and feel similarly.
As always, thank you for reading over the last year. Next year will be year seven of this daily blog. It’s hard to imagine that it’s been that long already. I made a decision to start writing publicly and it clearly stuck. For what it’s worth, that decision didn’t happen on the first of January.
I just finished reading a few articles (here’s one and here’s another by Cory Doctorow) on something called “adversarial interoperability.” This is relevant because it is being put forward as the thing that’s needed to solve big tech — as opposed to, say, just trying to break up big tech into small tech, which is what some policy makers think we should do.
Interoperability is, quite simply, the ability for different products and/or services to work together. It’s the USB charger in your hotel room nightstand that empowers you to charge your phone. (Relevant post: Project connected home.) But, of course, there are different types of interoperability, ranging from cooperative to adversarial.
Adversarial interoperability is when two products and/or services work together to the extreme chagrin of one of the companies. Usually that company is blatantly trying to stop it from happening so as to further strengthen their market dominance.
The argument being put forward is that this adversarial relationship is fundamental to tech and fundamental to innovation. It allows new ideas to emerge. And so the real problem at hand is that big tech has gotten so big that it has managed to largely quash this varietal of interoperability. The result is less innovation and the persistence of big tech.
For a proper reading list on this topic, click here.
Elon Musk recently posted this Twitter survey asking if we, the people, would like “super safe, Earthquake-proof tunnels under [our] cities to solve traffic.” It was leading in that the “no” response was, “No, I like traffic.” And it was initially vague in that it wasn’t clear how these tunnels would be used. Though, most of us could probably guess. Elon later added in the thread that these road tunnels would be for zero emission vehicles only and they would be limited to EVs (from all auto companies, not just Tesla). Finally, Elon stated that these tunnels are not intended to replace other solutions, such as light rail, rather to supplement them.
At the time of writing this post, nearly 1.5 million people had responded to the survey and about 67% of them said “definitely” to Earthquake-proof tunnels. Elon’s reaction: “Stop whining, subway Stalinists, the people have spoken.” Notwithstanding the majority, this is a divisive topic and the reactions are mixed. City planner Brent Toderian responded by saying that this “solution” would merely result in more cars, more driving, and more emissions. Steve Jurvetson, on the other hand, argued that this would be the cheapest way to add lanes and prepare for the inevitable EV-only future. (Steve sits on Tesla’s board and recently launched a venture fund that, among other things, invests in sustainable mobility.)
The crux of this divide is a view about how cities should work. And it often becomes like dogma. Is it optimal for us to all be driving around in individual vehicles — EV or not? Will autonomous vehicles actually help solve the traffic problem? Or is building on the backbone of mass transit the only way to properly design a big and efficient city? Whether it’s lip service or not, Elon seems to acknowledge that both cars and transit are important, and that both can work together to supplement each other.
What is clear to me is that cities, at the scale of say Tokyo, wouldn’t function nearly as efficiently if it weren’t for their extensive fixed rail networks. At the same time, there are many cities (or portions of cities) that do not have the prerequisite population and employment densities to support this same level of transit investment. And that has created a strong pull away from transit (and active transport such as cycling) toward private vehicles. Sprawling cities signal to people that they should probably be driving. This is one of the reasons why land use should never be separated from mobility discussions.
How autonomous vehicles change all of this remains to be seen. Though I do think it will make cars less private and more public transit-like. Studies show that most of us are pretty good at coming up with incremental improvements to the things we already know and understand. i.e. This is how I would make this car better. But we’re far worse at coming up with and predicting tectonic shifts in the landscape. And autonomy is probably one of those shifts. But as long as our built form remains heterogeneous, I am inclined to believe that a mixture of mobility solutions will be needed. Maybe that means car tunnels. Or maybe it doesn’t.
Below is an interesting chart from the WSJ showing total home equity cashed out in the United States by quarter. What is clear is that the US is nowhere near its pre-2008 peak in terms of total dollars. However, if you look at the percentage of homeowners who refinanced their home in 2018 and took out cash at a higher interest rate, it was nearly 60% of all refis. This is up in the pre-2008 territory and it’s about 3x more than the average from 2009 to 2017.
Now, you could argue that this is a fairly rationale outcome after a long period of economic expansion and home price appreciation. And interest rates were, on average, even lower in the 2012 to 2016 period. But, the WSJ posits that this could be a signal that people simply need the cash — which is why the majority are willing to accept a higher interest rate. Here is another chart from a different WSJ article:
Housing debt (mortgage balances) has come way down since 2008, but non-housing debt has come way up and now exceeds that of the former. Non-housing consumer debt rose by about $1 trillion in real dollars from 2013 to 2019, principally driven by student loans and car loans. Noteworthy is the fact that student loans are rising fairly linearly (along with dramatically), whereas car loans and credit card debt seem to follow the overall economy.
When people are feeling richer (and confident about their economic prospects) they go out and buy things, like cars.
A recent study by the MIT Senseable City Lab has used cellphone data to map both social and physical segregation within Singapore. To start, they used residential sale prices as a proxy for socioeconomic status. They then used call and text records (presumably it was all anonymous) from 1.8 million cellphone users in Singapore (2011) to map who interacted with who. Pictured above is one of those mappings.
What they discovered was evidence of a “rich club effect.” In other words, the richer the person the less likely they were to interact with people outside of their socioeconomic band. The study calls this their communication segregation index.
A similar phenomenon was noted as people moved around Singapore. (This is the study’s physical segregation index.) People tend to spend time in spaces alongside people with similar socioeconomic attributes. However, they did notice that this tends to wane during the day as people move around the city — presumably for work and other such things.
I think it would be interesting to get a bit more granular about the findings in order to try and see, among other things, if certain public spaces are more successful than others at encouraging a broader socioeconomic mix. And it’s probably only a matter of time before we start using tools like this to plan our cities. For more on the study, click here.
This past fall, Goldman Sachs published an important report about “making cities resilient to climate change.” In it, they remind us that the scientific consensus is that the world has already warmed from the pre-industrial era (and will likely continue to do so) and that a great many of us live near water (and will likely be impacted going forward).
About 40% of the world’s population lives within 100 kilometers of a coast, and about 10% of the world’s population lives in a coastal settlement that is less than 10m above sea level. Above is a list of some of those cities, along with their average elevation in meters. The cities with single digit elevations include Bangkok, Miami, Alexandria, and Amsterdam.
Goldman’s prediction is that this need for “urban adaption” could lead to one of the largest infrastructure build-outs in history. And that cities all around the world should already be thinking about how they will finance and equitably execute on greater resilience (assuming they aren’t already).
Click here to download a full copy of the report. The diagrams showing the average change in global mean surface temperatures against the pre-industrial period are something you should all look at it. The 2015-2019 change is pictured above.
I think it’s time to make it official: Brutalism is fashionable again. Okay, kind of. According to this WSJ article, the appreciation for this style of architecture remains nowhere near universal, but the renaissance is certainly continuing. Some Brutalist structures are and have been torn down; while others are being repurposed.
One recent example is the Balfron Tower in East London (pictured above). Designed by the Hungarian-born architect Ernő Goldfinger and completed in the 1960s as social housing, the tower is currently undergoing a £40 million renovation that will convert it to market-rate housing. Apartments start at £365,000 (USD 472,054) for a 450 square foot one bedroom.
One notable feature are the “streets in the sky” that separate the building’s circulation (elevator core) from the actual suites. It’s a peculiar way to build and most never consider it today, but it’s very much a hallmark of the Brutalist movement. The idea was to express the building’s various functions — vertical circulation being one of them.
The frenetic run-up to Christmas has come to an end, and I’m looking forward to relaxing and taking it easy with family and friends. I hope that all of you are able to do the same, however you spend the holidays. This is the one time of the year when the email firehose completely shuts off and it’s a lot easier to do exactly that. I think that’s important for all of us.
This past year I found it particularly difficult to disconnect. And 2020 is on deck to be an even bigger year. But I wouldn’t have it any other way. I am, however, going to take this time to slow down, read, write, travel, and likely drink a bunch of wine. As always, you’ll find me here on the blog every morning. Merry Christmas, everyone.
In 2017, the US restaurant industry generated about $560 billion in annual revenue. By comparison, the movie industry generates some $30 billion a year. Food, and eating out, is a big business.
A recent paper by Joel Waldgogel of the University of Minnesota has tried to estimate the “implicit cuisine trade” associated with this industry. To do this, he used restaurant data from TripAdvisor and sales figures from Euromonitor.
Domestic consumption of a foreign cuisine was considered an “import.” And foreign consumption of a domestic cuisine was considered an “export.” Here’s what he discovered (graph from the Economist):
Italy is, by far, the biggest net “exporter.” And the US is the biggest net “importer.” If you exclude fast food, the US “deficit” balloons to approximately $140 billion.
I guess everybody does really love Italian food. For the full paper, click here.
Last week, SHARE NOW — which was previously known as Car2Go — announced that it will be exiting the North American market entirely come February 29, 2020, and that it will also cease operations in London, Brussels, and Florence. A couple of reasons were cited, including the “volatile state of the global mobility landscape,” but that really translates into low adoption:
Further, despite our best efforts and investments in Brussels, London and Florence over the years, we are unable to continue operations in a manner that’s sustainable for our business due to low adoption rates.
Moving forward, SHARE NOW will focus on the remaining 18 European cities. We, along with our shareholders, believe these markets show the clearest potential for profitable growth and mobility innovation.
There was a period of time when I used to use Car2Go here in Toronto. My network did as well. But that quickly stopped with the rise of Uber and Lyft. I mean, why bother finding a Car2Go and then parking it, when there’s a much lower friction option? I would imagine that’s how most people feel. (Maybe there’s a care share advantage for longer trips.)
At the same time, companies such as Uber and Lyft have, as you know, not performed well as public companies. The market is nervous about their path to profitability. In my view, they’re largely an undifferentiated offering right now, and it’s pretty easy to switch across them. So yeah, I guess the global mobility landscape is pretty volatile.
