Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
On January 1st of this year, I wrote a post called, "My 2021 predictions." It was part of a new practice that I have adopted where I try to forecast the year (I will be wrong) and then evaluate how I did at the end of it (the focus of today's post). This year was, of course, a tricky year with lots of uncertainty. But here's where my head was at in January and here's what ultimately happened.
Life will feel a lot more normal by spring/summer.
This more or less happened. Cases, at least here in Ontario, were way down by the summer. Those who wanted to be fully vaccinated had the option to be. Cities reopened and summer felt pretty good after a long winter of lockdowns. As soon as it was possible to do so, we reopened our office and many/most people came back. I ended up being in the office this year more than I wasn't. Of course, I had no idea that Omicron was going to be a thing back in January.
Working from home/the office.
I think the jury remains out on this one. It's still too early to draw conclusions. I have been in the office full-time for most of this year, but I recognize that that hasn't been the case for everyone. I know from the super scientific "Jimmy the Greek Reopening Index" that I developed that office utilization rates are not yet back. When I wrote about this topic back in October, the US average was thought to be just below 40%. Still, I remain bullish on office.
An explosion of global travel.
Well, Airbnb's stock isn't maybe as sky high as I suggested in my predictions post. But it is still up over 19% YTD:
Marriott is also up nearly 27% YTD:
The reality is that travel was/is rebounding. I managed to take two weeks off at the end of the summer, which is something I hadn't done in at least several years. But Omicron has certainly impacted the recovery:
Urban/downtown real estate will strongly rebound.
I would argue that we saw this play out in the residential sector. Here in Toronto, Q3-2021 saw condo rents in the core increase 11.4% quarter-over-quarter. This was a fairly significant snapback. It was the largest increase in the region, outpacing both the inner suburbs and the outer suburbs. On the for-sale side, we saw evidence of the condo market returning as early as Q1. We were also able to successfully launch One Delisle and are now preparing to start construction.
Trends accelerating.
In some cases, what we saw was a reaction to short-term dislocation. Peloton's stock is down about 73% YTD at the time of writing this. In other cases, what we saw was just a "pulling forward." (Link to post by Fred Wilson.) The pandemic led to greater consumption of certain products and services, but now those companies could be headed for a period of slower growth. At the same time, there's evidence that certain things, like buying more groceries online, may actually be sticking.
Return of restaurants.
What seems pretty clear is that people are quicker to return to bars & restaurants than they are to return to the office. As we know, getting together in person is fundamental to urban life. Here's a chart from OpenTable:
However, this is not to say that many restaurants didn't have a tough go during this uncertain time.
Public transit ridership will return to pre-pandemic levels by the fall.
I was dead wrong and way too optimistic about this one. Office utilization rates remain lower than expected and so people aren't commuting in nearly the same way. Those who are, seem to be driving more. As of August, Canada's urban transit networks were operating, on average, at just over 40% of where they were pre-pandemic (August 2019). This is obviously a serious problem for operating shortfalls.
Migration from high tax states to (warmer) low tax states.
This is an established trend in the US and so it was certainly not a bold prediction. There are many other factors at play here beyond simply the pandemic. However, as I mentioned in my original post, what is perhaps more interesting right now is the heightened tension between centralization (urbanity) and decentralization. I'll see what data I can uncover in the coming weeks, but we likely need to get to the other side of this pandemic before drawing any firm conclusions.
In reviewing this year's predictions it is clear that I was perhaps overly optimistic (which is far better than being overly pessimistic) and that missed a lot of important stuff. Some of it was unknowable, such as a new variant, and some of it I just missed, which is bound to happen. I could also be more precise and bolder in my predictions, and so I will endeavor to do that in my upcoming predictions for 2022. Stay tuned.
If you're not already an email subscriber to this blog, consider making that happen over here. And for those of you who have been reading all year, thank you. I truly appreciate it.
Photo by Jamie Curd on Unsplash
The New Consumer, in collaboration with Coefficient Capital, just published its latest Consumer Trends report, which you can download for free over here (registration required). There's a lot in the report to flip through, but I thought I would share these two slides:
Generation Z and Millennials now make up ~40% of the US population and they are soon entering their prime consumer spending years. What's noteworthy about these charts, but perhaps not surprising, is the extent in which self-expression and a sense of community have shifted from offline to online.
Very few Boomers, at least according to this report, feel like themselves online. But nearly half of Gen Z feel most like themselves online. What it means to be part of a "community" has also shifted dramatically, with more if it happening online or at least partially online.
All of this ties into what happened earlier in the week with Nike announcing the acquisition of RTFKT Studios. As I mentioned in this post, the so-called metaverse doesn't necessarily have to mean VR goggles and living in video games. It can simply mean placing value on the parts of our lives that are now digital. The above two charts suggest that many are already doing this.
Of course, what all of this means for our physical lives is an important question. Josh Stephens recently argued, over at Planetizen, that the metaverse is going to be really bad for cities. The more we focus on seductive virtual worlds, the less we will focus on our physical spaces. I get this logic.
But again, I think it depends on how you define the metaverse. And I think VR headsets are a pretty narrow definition. I am both a lover of technology and a lover of cities. And throughout this pandemic I have been fairly consistent in writing about the resiliency of cities. Nothing in this post changes that for me.
https://www.instagram.com/p/CXb-yDcJUeY/
This week it was announced that Nike has acquired RTFKT Studios (pronounced "artifact") for an undisclosed amount. When I read the news (official Nike announcement here), I immediately thought to myself, "Yeah, of course!"
Some of you may remember that I wrote about RTFKT back in April. They are perhaps best known for their digital sneaker NFTs (on the Ethereum blockchain). And so this is an exceedingly obvious and strategic buy for Nike.
But more importantly, I think this is great validation for the crypto/NFT space and further evidence that our digital and physical worlds are continuing to collide in some new and very interesting ways.
What this ultimately means for life in 10 or 20 years is anybody's guess, but sneakers are the tip of the iceberg. And this doesn't necessarily mean that we're all destined to live in some sort of metaverse video game.
Another way to look at this whole metaverse thing is to consider it not as an actual place or space, but instead as a moment in time (Shaan Puri makes this argument here). Put differently, the metaverse is simply a point in time where we begin to bestow tremendous value on our digital life and our digital assets.
Instagram is one example of this. Profiles have become integral to people's identifies. We use them to vet restaurants. We use them to vet travel destinations. And we use them to vet potential dating partners, among many other things.
So while sneaker NFTs might be a new thing, there's already lots of evidence that digital goods can have just as much value -- and potentially even more value -- than physical goods. I am sure that Nike recognizes this and it's part of why they bought RTFKT.
On January 1st of this year, I wrote a post called, "My 2021 predictions." It was part of a new practice that I have adopted where I try to forecast the year (I will be wrong) and then evaluate how I did at the end of it (the focus of today's post). This year was, of course, a tricky year with lots of uncertainty. But here's where my head was at in January and here's what ultimately happened.
Life will feel a lot more normal by spring/summer.
This more or less happened. Cases, at least here in Ontario, were way down by the summer. Those who wanted to be fully vaccinated had the option to be. Cities reopened and summer felt pretty good after a long winter of lockdowns. As soon as it was possible to do so, we reopened our office and many/most people came back. I ended up being in the office this year more than I wasn't. Of course, I had no idea that Omicron was going to be a thing back in January.
Working from home/the office.
I think the jury remains out on this one. It's still too early to draw conclusions. I have been in the office full-time for most of this year, but I recognize that that hasn't been the case for everyone. I know from the super scientific "Jimmy the Greek Reopening Index" that I developed that office utilization rates are not yet back. When I wrote about this topic back in October, the US average was thought to be just below 40%. Still, I remain bullish on office.
An explosion of global travel.
Well, Airbnb's stock isn't maybe as sky high as I suggested in my predictions post. But it is still up over 19% YTD:
Marriott is also up nearly 27% YTD:
The reality is that travel was/is rebounding. I managed to take two weeks off at the end of the summer, which is something I hadn't done in at least several years. But Omicron has certainly impacted the recovery:
Urban/downtown real estate will strongly rebound.
I would argue that we saw this play out in the residential sector. Here in Toronto, Q3-2021 saw condo rents in the core increase 11.4% quarter-over-quarter. This was a fairly significant snapback. It was the largest increase in the region, outpacing both the inner suburbs and the outer suburbs. On the for-sale side, we saw evidence of the condo market returning as early as Q1. We were also able to successfully launch One Delisle and are now preparing to start construction.
Trends accelerating.
In some cases, what we saw was a reaction to short-term dislocation. Peloton's stock is down about 73% YTD at the time of writing this. In other cases, what we saw was just a "pulling forward." (Link to post by Fred Wilson.) The pandemic led to greater consumption of certain products and services, but now those companies could be headed for a period of slower growth. At the same time, there's evidence that certain things, like buying more groceries online, may actually be sticking.
Return of restaurants.
What seems pretty clear is that people are quicker to return to bars & restaurants than they are to return to the office. As we know, getting together in person is fundamental to urban life. Here's a chart from OpenTable:
However, this is not to say that many restaurants didn't have a tough go during this uncertain time.
Public transit ridership will return to pre-pandemic levels by the fall.
I was dead wrong and way too optimistic about this one. Office utilization rates remain lower than expected and so people aren't commuting in nearly the same way. Those who are, seem to be driving more. As of August, Canada's urban transit networks were operating, on average, at just over 40% of where they were pre-pandemic (August 2019). This is obviously a serious problem for operating shortfalls.
Migration from high tax states to (warmer) low tax states.
This is an established trend in the US and so it was certainly not a bold prediction. There are many other factors at play here beyond simply the pandemic. However, as I mentioned in my original post, what is perhaps more interesting right now is the heightened tension between centralization (urbanity) and decentralization. I'll see what data I can uncover in the coming weeks, but we likely need to get to the other side of this pandemic before drawing any firm conclusions.
In reviewing this year's predictions it is clear that I was perhaps overly optimistic (which is far better than being overly pessimistic) and that missed a lot of important stuff. Some of it was unknowable, such as a new variant, and some of it I just missed, which is bound to happen. I could also be more precise and bolder in my predictions, and so I will endeavor to do that in my upcoming predictions for 2022. Stay tuned.
If you're not already an email subscriber to this blog, consider making that happen over here. And for those of you who have been reading all year, thank you. I truly appreciate it.
Photo by Jamie Curd on Unsplash
The New Consumer, in collaboration with Coefficient Capital, just published its latest Consumer Trends report, which you can download for free over here (registration required). There's a lot in the report to flip through, but I thought I would share these two slides:
Generation Z and Millennials now make up ~40% of the US population and they are soon entering their prime consumer spending years. What's noteworthy about these charts, but perhaps not surprising, is the extent in which self-expression and a sense of community have shifted from offline to online.
Very few Boomers, at least according to this report, feel like themselves online. But nearly half of Gen Z feel most like themselves online. What it means to be part of a "community" has also shifted dramatically, with more if it happening online or at least partially online.
All of this ties into what happened earlier in the week with Nike announcing the acquisition of RTFKT Studios. As I mentioned in this post, the so-called metaverse doesn't necessarily have to mean VR goggles and living in video games. It can simply mean placing value on the parts of our lives that are now digital. The above two charts suggest that many are already doing this.
Of course, what all of this means for our physical lives is an important question. Josh Stephens recently argued, over at Planetizen, that the metaverse is going to be really bad for cities. The more we focus on seductive virtual worlds, the less we will focus on our physical spaces. I get this logic.
But again, I think it depends on how you define the metaverse. And I think VR headsets are a pretty narrow definition. I am both a lover of technology and a lover of cities. And throughout this pandemic I have been fairly consistent in writing about the resiliency of cities. Nothing in this post changes that for me.
https://www.instagram.com/p/CXb-yDcJUeY/
This week it was announced that Nike has acquired RTFKT Studios (pronounced "artifact") for an undisclosed amount. When I read the news (official Nike announcement here), I immediately thought to myself, "Yeah, of course!"
Some of you may remember that I wrote about RTFKT back in April. They are perhaps best known for their digital sneaker NFTs (on the Ethereum blockchain). And so this is an exceedingly obvious and strategic buy for Nike.
But more importantly, I think this is great validation for the crypto/NFT space and further evidence that our digital and physical worlds are continuing to collide in some new and very interesting ways.
What this ultimately means for life in 10 or 20 years is anybody's guess, but sneakers are the tip of the iceberg. And this doesn't necessarily mean that we're all destined to live in some sort of metaverse video game.
Another way to look at this whole metaverse thing is to consider it not as an actual place or space, but instead as a moment in time (Shaan Puri makes this argument here). Put differently, the metaverse is simply a point in time where we begin to bestow tremendous value on our digital life and our digital assets.
Instagram is one example of this. Profiles have become integral to people's identifies. We use them to vet restaurants. We use them to vet travel destinations. And we use them to vet potential dating partners, among many other things.
So while sneaker NFTs might be a new thing, there's already lots of evidence that digital goods can have just as much value -- and potentially even more value -- than physical goods. I am sure that Nike recognizes this and it's part of why they bought RTFKT.
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