Category: Uncategorized

• [Book] Survival of the City

  

  I jus pre-ordered a copy of Edward Glaeser and David Cutler’s new book called, Survival of the City: Living and Thriving in an Age of Isolation. (I’m usually a hard copy kind of guy, but I decided to try this one out on Kindle / my iPad). The official release date is September 7, 2021, so if you’re reading this post in your inbox, the book is now available online.

  I’m not familiar with the writing of David Cutler (he’s a public health expert), but I am a follower of Edward Glaeser and have written about his work on a number of occasions. Glaeser’s last book, Triumph of the City, was a kind of celebration of the wonders of urbanism. After reading it, you couldn’t help but feel that cities are our best chance at creating healthy, sustainable, and wealthy communities.

  But in listening to Glaeser throughout this pandemic I have noticed that his commentary on the future of cities hasn’t been filled with unbridled optimism. You get the sense from him that cities are at a crossroads. This is not to say that city life will not persist, because it will. Cities are powerfully resilient. But not all cities are created equal. Some will continue to flourish in this new economy, but others will not.

  This is one of the arguments that they make in this new book and I’m looking forward to reading it once it lands in my Kindle app.

  2021.09.06

• US expects to deliver more than 330,000 new rental units this year

  Here’s some recent data from RENTCafe looking at the supply of new multifamily rental apartments in the US. About 334,000 rental units are expected to be completed and occupied this year, which is a decline from the 2018 peak of 357,000 units, though still a relatively high number. This year is expected to be the fifth consecutive year where supply is greater than 330,000 units. Below you can also see how this breaks down across the largest MSAs (metropolitan statistical areas).

  

  

  For this study, RENTCafe looked at new apartment construction data for buildings with 50 or more units (so no smaller infill projects). It covers 109 US metro areas. To determine whether a building is likely to be completed in 2021, they looked at confirmed certificate of occupancies and also used some sort of fancy algorithm to predict the likelihood that an under construction project will get one before the year is out.

  For more on their study, click here.

  2021.08.31

• At what point does one start appreciating new housing?

  When you look at some of the most iconic home designs from around the world — which Bloomberg CityLab has been doing — there are some trends that emerge. One of them has to do with desirability. Whether we’re talking about Stockholm or Montreal, a lot of the housing that is today cherished, started out as fairly utilitarian. There was a need for housing and so governments and developers stepped up to build, often as cost effectively as possible. The result was housing that a lot of people seemed to dislike. At least initially.

  Here are a few excerpts from a recent post by CityLab talking about Montreal’s famous walk-up apartments:

  Their shape was dictated by the dimensions of the lots sold by developers: Narrow at the front, they run as deep as 120 feet and open onto an alley, leaving enough space for backyards and sheds behind. Inside, the units are not particularly big, with duplex apartments, often rectangular in shape, typically from 750 square feet to 1,000 square feet. Triplex apartments are a little larger and sometimes configured in an L-shape, a trick that builders used to make the most of the lot’s depth while getting some side light. Rooms unfold on one or either side of a corridor, with the kitchen at the back.

  Despite their reputation for charm today, the plexes were long criticized for their overcrowding and lack of light. Working-class homes were sometimes known as “the poor man’s coffin,” says Noppen. 

  “These are very narrow, dark, long buildings, which above all, were overcrowded,” he says. Today the apartments may be sought after, as “part of a considerable gentrification movement, but that’s because, two, three people live inside — that used to be 15.”

  I think most people forget that the housing we love today was probably built by a developer and almost certainly done in the pursuit of profit. Which begs the question: What has to happen before people suddenly start appreciating? Eliminating overcrowding certainly helps. But is it also a question of time? Do we just need time for the housing to settle in and get absorbed into the market? Or do we simply tend to dislike that which is new and so we need something even newer to hate before we can appreciate the now old?

  2021.08.06

• Construction is right-skewed and fat tailed

  My friend Christopher Bibby sent me this article over the weekend. It’s by Brian Potter — who writes an excellent newsletter on Substack about construction things — and it’s about why it’s so hard to innovate in construction.

  To explain this, he starts by showing that the distribution of cost outcomes in construction projects tend to be both skewed toward the right and “fat tailed.”

  What does this mean? It means that construction projects have a tendency to run over a budget. And that they are much more likely to be over budget than under budget (right-skewed distribution). According to some data from the US Navy, the difference in likelihood is 10x.

  At the same time, there are also instances where projects don’t just run over budget, they run really over budget (fat tail). All of this is different from your normal distribution where you have a symmetrical curve and thin tails. I guess construction isn’t normal.

  One of the reasons for this abnormal distribution is the fact that construction suffers from what Brian calls “cascading failures.” This is kind of intuitive, but it is everything in construction: In order to complete Y, you need to complete X. If X is delayed, then everything is delayed.

  Because of these dynamics, changes to the construction process are perceived as incredibly risky. This has created a bias toward incremental rather than fundamental innovations.

  For the full article, click here. It’s worth a read.

  2021.08.03

• Unnecessarily confusing communication from the CDC

  I saw a headline yesterday that the CDC was now reporting that vaccinated people can spread COVID just as easily as unvaccinated people. I then thought to myself, “this is not a good headline if you’re trying to encourage people to get vaccinated.”

  What I guess this is saying is that vaccinated people who end up contracting COVID (“breakthrough” cases) have similar viral loads to people who are unvaccinated. So it makes sense that they would then be able to transmit the virus to others.

  But the more important point remains that vaccinated people are less likely to spread the virus to others because they are less likely to actually get it in the first place.

  Yes, the vaccines are not 100% effective. But supposedly the latest hospital data suggests that vaccines remain 87% effective at preventing hospitalization. This, of course, means that some vaccinated people will still get sick and that, yes, they might transmit it to others.

  But for the vast majority of people that shouldn’t be the case.

  Update: My point is that clear and consistent messaging is important.

  2021.07.31

• Construction is messy

  The typical way to build buildings is through a design-bid-build approach. The way this works is that you first design stuff and create drawings. You then ask people to price the stuff that you have drawn. And then you proceed to build what is on the drawings and what has been priced.

  There are a number of possible risks with this approach. For one, the design/drawing phase is sometimes/often done in isolation without a lot of feedback from the contractor and/or subcontractors. So you might be designing and drawing things that aren’t all that feasible or constructible. Pre-construction involvement helps address this.

  Another risk is that you’re buying what is on the drawings. So if the drawings suck or aren’t properly coordinated, then you are likely opening yourself up to a barrage of change orders and lots of additional costs.

  In theory, it all sounds fine. Here are my drawings and specifications. Give me a price. And then let’s build. But as many or most of you will know, it’s generally never that simple or easy. Though it will, of course, depend on the type and complexity of the project.

  Another consideration is the kind of contract you enter with your constructor. Is it a cost-plus contract, where the constructor simply charges a percentage on top of whatever the costs end up being, or is it some kind of lump sum or guaranteed maximum price (GMP) contract?

  While I was in architecture school I decided to take a class on construction delivery methods. The instructor was, in my mind, your quintessential construction person. He was built like a brick shithouse and he never minced words. He also had a voice that sounded like a subwoofer.

  I wouldn’t say I’m an expert, but I do remember him hammering home two points. One, GMP actually stands for guaranteed minimum price. This is forever imprinted in my mind. You’re never going to pay less and you’re almost certainly not going to pay the “maximum” number. You will end up getting change ordered and paying more.

  Two, lump sum and at-risk contracts create a very different relationship between owner/developer and constructor. In his words, it is adversarial.

  Because if I’m a constructor and I’ve promised a specific number, I’m likely going to do a few things. I am going to inflate the numbers to make sure my profit margin is protected throughout the project. And if my profit margin gets squeezed, which it likely will, I’m going to look for other ways to make money.

  Personally, I side towards cost-plus and construction management arrangements. I don’t want an adversarial relationship. I want a partnership where there’s as much alignment as possible around a common set of project goals. Let’s ride or die together.

  Similarly, when it comes to the actual procurement and delivery methods, I find that we are often using more integrated approaches as opposed to cut and dry design-bid-build approaches. You want the competitive pricing that comes with bidding, but you also want collaboration. It’s about striking that right balance.

  The construction process is a messy one. These are just some of my thoughts this morning. If any of you have any insights, I would, of course, welcome them in the comment section below.

  2021.07.24

• Risk and architecture

  Building things, as we all know, is a risky endeavor. I think of myself as an optimist, but the reality is that there are countless things that can go wrong. There’s approvals risk, political risk, market risk, construction risk, design risk, and many other kinds of risk, some/many of which will be entirely unforeseen. If you asked me two years ago, I wouldn’t have listed pandemic risk as being all that high up on the list.

  So one way to think about the process of building/developing is that it is an exercise in risk mitigation. This makes it sound a lot less sexy than “city building.” Given this, there can be a natural and understandable tendency to want to repeat what worked the last time around. Why make a change and introduce more risk into the system if you don’t have to, right? This is arguably one of the reasons why it is often said that the real state industry isn’t all that innovative. Too busy managing risk.

  To give a specific example, let’s say you’re really focused on managing design risk. In this case, you might make the decision to always work with the same architect. This way you can establish a set of typical approaches and a standard spec. You know how to work together and you know what you’re getting when it comes to working drawings. Rinse and repeat as best you can.

  There is also something to be said about a kind of product-driven or branded approach to development. In this case you want some consistency to help build a specific brand and experience. And just because you’re using the same firm, doesn’t necessarily mean you can’t innovate and be design forward. This is what great architects do. Think Foster + Partners and Apple. Their stores are powerful brand symbols but also wonderful and highly site specific.

  An alternative approach might be to continually use different (design) architects. And maybe partnering with an array of celebrated firms is part of your brand story. You introduce a certain degree of design risk because you’re now trying out and building new relationships, but you could perhaps argue that you’re mitigating other risks. Does using a brand name architect help to reduce market risk, for example? In some markets, it’s almost essential.

  I don’t think there’s a right or wrong approach here. Use the same firm, or don’t. Use international starchitects, or don’t. The point is simply that development is fraught with risks that need to be managed. Design is one of many. How you choose to do that depends on what you’re trying to do and what you’re after.

  2021.07.12

• Cross-sections of the Kowloon Walled City

  The Kowloon Walled City was once one of the most densely populated precincts in the world. And by some measures, it was. Prior to its demolition in 1993, the Walled City was believed to house some 50,000 people — mostly informally — and was known for problems of prostitution, gambling, and drug usage.

  But despite these problems, the Walled City is the kind of urban settlement that fascinates architects, planners, and other city builders. This is partially because it wasn’t centrally planned. There is no individual architect or specific team responsible for its design.

  It was, instead, a kind of self-organizing system — both from a built form standpoint and from, I’m sure, a socioeconomic standpoint. And so it is fascinating to see what results when you let that happen on its own.

  Here are a series of cross-sections of the Walled City that were meticulously drawn prior to its demolition. They obviously aren’t new, but it is the first time I am seeing them. It is interesting to see everything from mahjong parlors to strip clubs stacked on top of one another in such a confined space.

  This was the Kowloon Walled City.

  2021.07.06

• The Grouse Grind is no joke

  

  

  

  Our server at lunch today told us that the Grouse Grind hike should take us about 45 minutes. She also mentioned that she has seen some people attempt it in flip flops, but that she would strongly advise against that. That was sound footwear advice. But even sans flip-flops, it still took Bianca and I about an hour and a half.

  The Grouse Grind is no joke. It is 850 meters of nothing but steps and steep incline. But it is well worth it.

  I’ve heard that some people do “the Grind” for meetings and/or business development. In fact, Chip Wilson, founder of Lululemon, has said before that he uses it to vet potential partners. It’s a way for him to test cultural alignment. That makes a lot of sense when you consider what Lululemon is all about.

  This exact approach — you know, doing “the Grind” — may not make as much sense for other businesses and industries. But it doesn’t change the fact that culture is critical within organizations. And as far as I can tell, the most effective way to cultivate it and test for alignment is to be face-to-face.

  2021.07.05

• The road to full recovery

  

  

  

  Food was, not surprisingly, very resilient during this pandemic. In the case of Uber, food delivery became its biggest business (higher gross bookings than mobility). But mobility is coming back (first chart above) as our cities continue to reopen. In fact, Uber’s mobility business is probably a good proxy for our return to normal. Big and sudden drop in March 2020 and a longer climb back. You’ve seen this graphic before. We’re not fully back, yet, but we’re getting there. Based on this metric (mobility), it looks like we could get there by late summer or early fall in many cities.

  The above slides were taken from Uber’s Q1-2021 earnings report.

  2021.07.03