The Globe and Mail published this headline today: "Developers building more small condos, despite people clamoring for more space." It's behind a paywall and so some of you may not have read it. But the data looks something like this. Of all the new condo project launches that happened this year in Toronto, studios and one-bedroom suites accounted for 61% of all new inventory, according to Urbanation. This is a higher percentage than what the market saw in 2019 and 2018, and this is despite the fact that many/most people are still working from home and would probably appreciate a bit more space.
The short answer as to why this is happening is affordability. For years I have been clamoring for a dual aspect oceanfront penthouse on Miami Beach, but that time hasn't come for me yet. Things cost money. And the downward pressure on unit sizes is a direct result of developers trying to ensure that their inventory is within the reach reach of buyers (there's a sweet spot somewhere in the range of $500-700k right now). Developers are heavily incentivized to build what sells and rents, both quickly and at the highest price. That tends to be smaller units, especially early on.
Where this goes in the future is anybody's guess. But with the dramatic price increases that we have seen on the low-rise side of the market, I suspect that we'll see a subsequent surge in demand for condos -- maybe even larger condos.
According to a recent Wall Street Journal review of property and corporate records, Travis Kalanick's ghost kitchen startup, called CloudKitchens, has spent over $130 million over the past two years buying more than 40 properties in about two dozen cities.
Travis is co-founder and the former CEO of Uber and this latest startup provides commercial kitchens to restauranteurs who are looking for a low-cost way to launch delivery-only food concepts.
In some ways, it can be compared to coworking spaces for delivery-only restaurants. Instead of renting a full restaurant space, you lease 200-300 square feet of real estate at a lower cost address. CloudKitchens then handles all of the distribution and fulfillment, effectively lowering the barriers to entry for food startups.
Some of the properties that they have been buying include a vacant restaurant space in Miami Beach for $9.2 million (May 2020) and an industrial property in Queens, New York for $6.6 million (March 2020). They've also bought in cities like Portland and Las Vegas.
As you might imagine, now is a pretty good time to be buying some of these properties. And if you think about it, there are some real cost advantages to what they are doing, not to mention some co-working-style arbitrage on the real estate.
The company is apparently going to great lengths to conceal what and where they are buying. But what is perhaps more interesting is their asset-heavy approach. They're buying lots of real estate, which is inline with what companies like Opendoor are doing, but is distinct from Uber's asset-light approach.
It is also different from what many other ghost kitchen startups are doing. It seems that most are leasing their spaces. There has to be a reason for this difference.
This December 4 (2019) -- the day before Art Basel starts -- the Rubell family will open a new 100,000 square foot museum in Miami's Allapattah district. (For years people have been calling Allapattah the new Wynwood.)
A former industrial space on a 2.5 acre lot, the building was renovated by New York-based Selldorf Architects. Just over half of the building has been allocated to exhibition space and about 65% of this will be for permanent/longer-term collections.
The Rubell family started collecting contemporary art in 1965. At the time, they were living in New York City. In 1990 they moved to Miami and in 1993 they opened up the "Rubell Family Collection" in Wynwood, which was a depressed neighborhood up until probably the early 2000s.
With over 7,200 works, it is now one of the largest privately owned and publicly accessible contemporary art collections in the world. If you live in Miami or you happen to find yourself there this winter, you may want to check out the new Rubell Museum.
Rendering: Selldorf Architects