Category: Real Estate

• Coastline villages

  

  I recently collected two NFTs from aerial photographer Vitor Esteves. I purchased one of Menton, France and one of Las Negras, Spain (pictured above). Both are from his 1/1 Coastline Villages collection on Sloika. I know that NFTs aren’t nearly as popular as they were last year, but that is exactly why now is a great time to be collecting. Talented artists continue to create, but ETH gas fees have come way down (a few dollars versus sometimes over a hundred at the peak) and there is now far less competition out there. It is no different than trying to buy great real estate when the rest of the market is sleeping.

  At some point, I’m going to need to pull the trigger on a good NFT display. I’ve been contemplating a Tokenframe, but I also think that most TVs are going to appropriate this function pretty soon. Some already have.

  2022.09.11

• Listed.fun (and something else)

  This is a fun little passion project by Airbnb-engineer Andrew Pariser and someone known as Potch. The way it works is that it shows you a picture of a recently sold property, and you have to guess what it sold for. You get a bunch of guesses, and after each one, you are given more information about the property and some feedback on how close you are. To win, you need to get within 1%.

  When I tried it out, my initial guess was way off (too high). Toronto has trained me well. I also wasn’t sure where Evansville, Indiana was, so that bit of information didn’t really help me. But the arrows telling me I was way too high, certainly did. The reality is that it’s pretty hard to guess the value of a home if you don’t know where it is, you can’t see interior photos, and you generally don’t have enough information.

  But what if you were from Evansville, Indiana and what if you did have enough information? I bet that the guestimates would actually be pretty accurate. This idea of crowd-sourcing market information and pulling wisdom from crowds has long interested me, because price discovery is a major pain point for real estate. Sure you can look at comparable sales and current listings, but that is not an exact science. Neither are algorithms.

  But what if there was a way to test the market and get pricing feedback before you actually list? Would you trust it more than Zillow’s algorithm? This is something that I’m working on testing right now through a passion project called Unlyst. Myself and a few others are working on a very simple product that will be released this fall. If you’d like to follow along, sign up here.

  2022.09.09

• A few observations about Salt Lake City

  Utah is beautiful. See here.

  People in SLC are really nice. Strangers greet you on the street. Motorists are also more polite and patient. I had no idea how to respond. I suspect it might have something to do with there being less traffic and, in turn, less frustration. But again, even if you ignore what happens on the road, people are nice.

  You will need a serious utility vehicle to navigate the topography of this region. Venturing into the surrounding canyons requires 4-wheel drive or chains during snowstorms. I was only there for a week and already I have visions of a classic Defender in my mind. Do they come in electric versions?

  The streets are too wide for proper enjoyment as a pedestrian. This is a challenging problem to fix, as I have mentioned before. That said — and this is going to be an unpopular opinion — the city felt void of any sort of real traffic. The distances travelled are great, but the highways actually flow freely. You also never really need to worry about parking.

  Electric scooters are popular in SLC. As is cycling — both for getting around and as a reason to wear tight-fitting bright clothes.

  SLC feels as if it is both under the radar and also rapidly emerging. My new favorite restaurant in SLC is a place called Post Office Place. We walked in without a reservation on a Friday night and they gladly took us. I couldn’t understand why the place wasn’t rammed. I mean, they have Marseille-style panisse on the menu!

  The Granary District is an area to watch. It is a former industrial area to the southwest of downtown. It is already home to breweries, food halls, and creative offices. But it needs some more time to properly fill in. We stayed at the Evo Hotel in Granary (highly recommend). The campus amenities include a rock climbing facility, an indoor skatepark, and plenty of places to work and Zoom.

  Most of the new infill housing appears to be mid-rise in scale and most of it is wood-frame construction on top of concrete.

  By my estimation (and by estimation I mean that I have a spreadsheet for this), the ski and snowboard communities surrounding SLC are some of the most accessible in North America. Land at SLC airport and you’re in the mountains in 20-30 minutes.

  Park City-Canyons is the most well-known ski destination. But if you’re a more aggressive skier — the kind that keeps your gloves together with duct tape and counts the number of ski days per season — you’ll want to head over to the Cottonwood canyons and places like Snowbird and Brighton.

  Snowbird remains one of my all-time favorite ski destinations for two reasons: the mountain itself and the brutalist architecture at the bottom of it. There’s none of that faux alpine crap over here — just exposed and unabashed concrete and wood. And who doesn’t love brutalism, right? (I haven’t been to Brighton yet but one of my local friends told me that it’s a great snowboarders mountain.)

  The Canyons Village at Park City is developing really nicely. As I understand it, it’s only about 30-40% built out at this stage. The Pendry Hotel just recently opened (announcement here) and I can tell you that the restaurants were generally busy every night of the week (summer experience). The project team did a wonderful job creating a place and a new anchor in the village.

  What did I miss in this list?

  2022.09.07

• Q2-2022 land prices in the Greater Toronto Area

  Bullpen Consulting just released its latest land insights reports for the Greater Toronto Area. For the period of Q2-2022, Ben Myers and the team identified 46 high-density residential land transactions with an average price of $95 per buildable square foot. This is down from $112 pbsf in Q1.

  In the core of the city (former City of Toronto), the average price for Q2-2022 was $135 pbsf. In North York it was $103 pbsf. And in Scarborough it was $50 pbsf. Overall land prices are down about 15% from last quarter (though it’s important to note that quarterly transactions can represent a relatively small sample size).

  We have spoken before about how land prices tend to be fairly sticky in the face of changing cost structures. But what we are seeing right now is a bit of a perfect storm:

  • Development charges (here in Toronto) are set to increase by 49%
  • Hard costs have seen double digit increases (with some inputs increasing by 30-40%)
  • Inclusionary zoning is on the horizon and will add another additional cost to new housing
  • And rising interest rates are both increasing project costs (higher interest charges) and slowing the macro economy

  All of this is naturally causing developers to be more cautious when it comes buying new land. And we are seeing that in the above pricing. But at the same time, this dip in pricing is not going to be enough to absorb all of the additional costs that new housing projects now face in today’s market.

  If you’d like to download a full copy of Bullpen’s report, click here.

  2022.09.02

• A discussion about Adam Neumann’s new residential apartment startup — Flow

  This an interesting discussion about Adam Neumann’s new startup Flow (which I recently wrote about here).

  More specifically though, the discussion is about venture capital firms backing “failed” entrepreneurs, and whether or not Flow can really be that much more valuable than your typical apartment REIT.

  In its simplest form, Flow might just end up being an apartment company with a strong national brand and a consistent resident experience. But maybe that’s all it needs to be.

  If the link doesn’t already do it for you, jump to the 7:19 mark to start with this discussion. After Flow, the podcast moves on to housing policy in the Bay Area, Houston, and Miami. So you may also want to stick around for that.

  Thank you Ocean Jangda for sending this over.

  2022.09.01

• A network of smart homes across the globe

  I was reading about Wander last night before bed. For those of you who aren’t familiar, they are a startup that is building a network of smart homes around the world so that people can live and work remotely. You rent these homes like you would a home on Airbnb, but the difference here is that Wander owns all of the homes and is working to create a very unique and consistent kind of experience. They also offer a membership that costs $200 per year and gives you benefits like discounts on bookings and early access to new properties. So far the company has raised $27 million to help build out this vision.

  This is all very interesting to me because I think it’s a great idea, and because 20 some years ago I wrote a business plan with a friend of mine that was almost identical to this. We were both still in undergrad and we had this hypothesis that a lot of people would love to find a way to live as citizens of the world. We obviously never did anything with that plan, but in looking back we were probably too early, even if we were right about people’s latent desires. Today, things feel very different. I think there’s little doubt that knowledge working has become more flexible. So I suspect we will see a lot more of these kinds of ideas going forward.

  2022.08.23

• Introducing 100 Lombard

  

  Earlier this week, Slate Asset Management and Forum Asset Management submitted a new development proposal for 100 Lombard Street in downtown Toronto.

  At the time of writing this post, the applications (zoning by-law amendment and site plan control) hadn’t yet hit the city’s website. So here’s some information about the project, including its big moves:

  • This is the first mixed-use residential project in Toronto designed by the Office for Metropolitan Architecture (OMA). The proposal includes residential, office, and retail spaces.
  • Architecture by OMA and WZMH Architects. Heritage by ERA Architects. Landscape and public realm by Claude Cormier + Associés. Planning by Urban Strategies. Structure by Stephenson Engineering.
  • The principal architectural idea is to create a vertical urban village through a series of “urban rooms” interspersed throughout the tower. These spaces would serve as amenities for the building and house a variety of different functions. See above rendering.
  • The proposal introduces three important public realm moves: (1) a new public plaza that pays homage to the site’s former neighbor to the east — Second City; (2) a new mid-block pedestrian connection running north-south from Richmond Street East to Lombard Street; and (3) an outdoor public art gallery featuring oversized art tableaus.
  • The site currently houses one designated heritage building (86 Lombard Street), and the design contemplates relocating and fully retaining this building on the eastern edge of the site. Once you see the drawings, you’ll fully understand why this was the most logical move.

  The entire project team is very excited to get this proposal out and into the world. And we hope that you will see it as being representative of our ongoing and lasting commitment to elevating architecture, sustainability, culture, and city building in Toronto.

  2022.08.17

• Adam Neumann raises $350 million to revolutionize the apartment market

  Today it was announced that venture firm a16z has made a $350 million investment in Adam Neumann’s new residential rental company called Flow (which is kind of ironic).

  The company is set to launch in 2023 and nobody on the outside seems to be entirely clear on how it plans to revolutionize the multi-family rental market, but supposedly this funding round values Flow at more than $1 billion and supposedly Neumann will be rolling in the 4,000 or so apartments that he has been buying up.

  In any event, here’s how a16z described the opportunity (I think the key sentence is probably the one about creating a system where renters become like owners):

  Only through a seismic shift in the way industry relationships are structured and the mechanisms through which value is delivered can we hope to address the underlying problems of the current system and build the solution. Doing this requires combining community-driven, experience-centric service with the latest technology in a way that has never been done before to create a system where renters receive the benefits of owners. This means rethinking the entire value chain, from the way buildings are purchased and owned to the way residents interact with their buildings to the way value is distributed among stakeholders. And given the fragmented nature of the ecosystem today, we can only hope to accomplish any of this by bringing every aspect of the living experience together.

  What I will say is that I think it’s great to see this amount of innovation-focused money flowing into the residential real estate space, which is, after all, the biggest asset class in the world and one that could certainly use some fresh ideas. Apparently it’s also the biggest funding round that a16z has ever done.

  But I also find a16z’s characterization of the problems a bit odd. Renting an apartment is described as this soulless and profoundly lonely experience where you’re so ashamed of where you live that you’re even hesitant to invite friends over. They also conflate house with home, as if to say that you can’t have the latter without the former.

  On second thought, maybe these are exactly the right problems to be solving. It is our biases that we need to do something about.

  2022.08.15

• Income vs. wealth in California’s housing market

  Here is a chart from MetroSight that compares housing tenure in California in 2000 and then between 2015-2019:

  

  Two things you might notice immediately are that the number of renter-occupied households has generally increased and that the number of owner-occupied households without a mortgage (i.e. they own their home free and clear) has also increased for every age category except for those 65 or older.

  MetroSight uses this data to argue that a new “wealth-related phenomenon is emerging” in California. Instead of the housing market being largely driven by income (that is, I make this much per year and I can afford this much house), it is being driven by accumulated wealth.

  The possible explanations for this are as follows:

  • The share of renter-occupied households is increasing because people increasingly can’t afford to buy
  • The share of owner-occupied houses with a mortgage is decreasing because less people can afford to buy given California’s price-to-income ratios
  • The share of owner-occupied houses without a mortgage is increasing because people are increasingly inheriting homes or getting gifted cash from their families

  Consider that the share of owner-occupied houses without a mortgage even increased for the 18-24 age category. Unless you’re the next Zuckerberg (who was a billionaire at age 23), this is pretty challenging to do without some kind of assistance, especially in a place like California.

  This outcome also provides a possible explanation for why the over 65 age category is the only segment that has seen a reduction in free and clear ownership. It is because they are transferring their wealth to the next generation so that they too can obtain homeownership.

  Chart: MetroSight

  2022.08.14

• Lobbies as pseudo-public spaces

  This is a good idea (taken from a recent FT article by Edwin Heathcote):

  The hotel lobby is already understood as a kind of public space, the corporate lobby should belong to that same world, a place open to the functions of the city, porous and welcoming. It is no accident that the vast lobbying industry has that name, lobbies are where encounters occur.

  Sometimes we do this. Maybe there’s a coffee shop or some other activations in your lobby. But more often than not, a “good” corporate lobby is about grandeur and security, which means that they do very little to animate the street.

  In the above article, Edwin reminds us that before the invention of the modern office building, the entire city functioned as a kind of dispersed workplace. Places like coffee shops and pubs were, of course, central to this.

  While this is still partially the case today — people continue to like coffee and beer — it is interesting to think about what more we could be asking of our office lobbies. And I do think it is more.

  2022.08.08