One of Alphabet's moonshot projects is an autonomous delivery drone service called Wing. As far as I can tell, they're only company offering this kind of service to the general public in North America -- though they are only operating in a few test locations in Virginia, Finland, and Australia.

Specifically:

• Canberra, Australia

• Logan, Australia

• Helsinki, Finland

• Christiansburg, United States

Not surprisingly, demand for Wing deliveries has surged during this pandemic. According to the Verge, the company made over 1,000 deliveries in the past two weeks, which represents a doubling of deliveries in the US and Australia. The most popular items seem to be essentials like toilet paper and coffee.

This is perhaps a good example of the argument that COVID-19 isn't going to change things per se, it will simply accelerate the adoption of things that were already in the process of happening. I was and am of the opinion that drones will become an integral part of delivery logistics. (Full disclosure: I own a bit of Alphabet and Drone Delivery Canada stock.)

There is still a lot that will need to happen. Alphabet/Wing is also working on an autonomous traffic management platform, because you obviously need something robust if you're going to scale this up. How you make this work in dense urban environments is also a whole other kettle of fish, though already people are starting to reconsider how rooftops are used.

For more on Wing, click here.

Image: Wing

So I was wrong. Amazon didn’t pick Toronto for HQ2. It instead picked Crystal City, Virginia (Washington) and Long Island City, NY (New York City). More on that, here, in the NY Times. Confession: My prognostication was at least partially about trying to create a self-fulfilling prophecy.

In any event, it’s interesting to consider the locations that they did pick – as well as the fact that they ended up picking multiple cities. This was not part of their RFP. Though, many have convincingly argued that this process was over before it even began. HQ2 was always going to end up on the east coast, near one of Bezos’ homes.

Nevertheless, urbanists such as Aaron Renn took the announcement as a direct repudiation of the American heartland. He believed that Amazon would be far more cost conscious in their decision making and ultimately elect for a lower cost locale in the middle of the country. Instead, the coastal hegemony won out. 

Joe Cortright of City Observatory correctly predicted that Amazon would, for a few reasons, parlay their HQ2 search into multiple smaller locations (HQ2, HQ3, and so on). One of the reasons for this is that it gives the company more leverage when it comes negotiating subsidies on a go-forward basis. If NYC doesn’t want our next round of hires, we’ll take them to Washington.

Looking at the locations, one of the first things I noticed is that both are just outside of their respective “downtowns” (across a body of water), as well as adjacent or on the way to an international airport. Crystal City is across the street from DCA and Long Island City is a 15 minute drive from LGA. Both are situated on top of higher order transit. Makes sense to me.

Now, who wants HQ4?

The New York Times has an interesting article up talking about the possible impacts of climate change on coastal real estate in the United States. In it they make the argument that sales velocity is declining in flood-prone areas. Here are two snippets:

Over the past five years, home sales in flood-prone areas grew about 25 percent less quickly than in counties that do not typically flood, according to county-by-county data from Attom Data Solutions, the parent company of RealtyTrac. Many coastal residents are rethinking their investments and heading for safer ground.

In the past year, home sales have increased 2.6 percent nationally, but have dropped about 7.6 percent in high-risk flood zones in Miami-Dade County, according to housing data. Many coastal cities are taking steps toward mitigation, digging runoff tunnels, elevating roads and building detention ponds.

I would like to see more data supporting this argument, but I can’t say I’m surprised. Flood risk is certainly something I would think about – particularly in high-risk areas such as South Florida. Florida has 6 of the 10 most vulnerable urban centers in the US.

The other piece that caught my attention is this:

Flood risks are easily overlooked because past flood damage often goes unreported and, as in Virginia, the burden of discovering it falls to the buyer. LexisNexis, a news and legal research company, can supply sellers a report with the history of flood claims on the property, but buyers usually do not know to ask for it. FEMA collects information on federal insurance claims for homes nationally, but the agency has been reluctant to make it public for privacy reasons.

It is yet another example of how opaque the real estate industry is. A lot of the information – assuming it’s even available – is fragmented across a number of different sources. If you’re playing hot potato, this obviously works to your benefit. But I don’t believe it’s the best thing for the overall market.