It stated that they have some 50 restaurants, 40 hotels, and 20 residential projects (i.e. branded residences) either open or in development around the world. One of the first of these branded residences was here in Toronto. And as of July 2024, which was a major liquidity event for the company, it was valued at US$1.3 billion.
According to group CEO Trevor Horwell, their approach always starts with a restaurant: "It's an upside-down business model where the restaurant is the social engine. If we believe a Nobu restaurant can become a genuine social hub for locals, then the hotel and residences can follow."
I like this business model because as we talked about a year ago on the blog, "everything is branded." Knight Frank out of the UK estimates that the number of branded residences around the world is going to go from 611 this year to around 1,020 by 2030. So it seems destined to become a bigger part of our business.
But the other reason I'm drawn to it is because it's a good business to be in. If you own a brand that has value, you can do licensing deals all around the world — which is what Nobu is doing — and not take on the same equity risk that developers typically take on. It's capital-light.
However, the trade-off risk is that you're dependent on the continued attractiveness of your brand. If Robert De Niro ceases to remain involved and/or Nobu just loses some of its cachet over time, then the business won't do as well. But that's true of any hospitality-type business, or any brand for that matter.
Since at least 2008, scientists have warned that unchecked groundwater pumping for the city and for agriculture was rapidly draining [Iran’s] aquifers. The overuse did not just deplete underground reserves—it destroyed them, as the land compressed and sank irreversibly. One recent study found that Iran’s central plateau, where most of the country’s aquifers are located, is sinking by more than 35 centimeters each year. As a result, the aquifers lose about 1.7 billion cubic meters of water annually as the ground is permanently crushed, leaving no space for underground water storage to recover, says Darío Solano, a geoscientist at the National Autonomous University of Mexico, who was not involved with the study.
Some of the largest cities in the world, including São Paulo, Mexico City, Cape Town, Bangalore, and Tehran, are today facing critical water shortages. In the case of Tehran, the situation is so dire that Iranian president Masoud Pezeshkian has publicly said that the country now has no choice but to move its capital from Tehran to the southern part of the country:
Amid a deepening ecological crisis and acute water shortage, Tehran can no longer remain the capital of Iran, the country’s president has said.
The situation in Tehran is the result of “a perfect storm of climate change and corruption,” says Michael Rubin, a political analyst at the American Enterprise Institute.
“We no longer have a choice,” said Iranian president Masoud Pezeshkian during a speech on Thursday.
This will be expensive, and it won’t solve all of the country’s problems, but forcing a bunch of people out of the city will help to relieve some of the localized pressures. Tehran has a population of nearly 10 million, and the metro region is estimated at over 14 million, making it the second largest city in the Middle East.
Of course, there’s a city-building lesson in all of this: If you’re at this stage of capitulation, it means you’re too late. Water scarcity is about physical scarcity, but it’s generally also a failure of governance, infrastructure, and demand management. Proactive adaptation is always cheaper, easier, and safer than waiting until the last minute to adopt desperate measures.
On Friday, Craig Race Architecture hosted its annual holiday dinner at Barberian's Steak House. It was a great evening and I really appreciate the invite, especially considering that we're not yet clients. Thank you, Craig. I'm also not sure I had ever been to Barberian's before. That probably makes me a bad Torontonian.
Because of their work and because of the current market, the dinner has also become a kind of gathering for missing middle developers. I felt like the odd one out not having a sixplex + laneway suite built or under construction.
What's interesting about the current environment is that it's pushing developers — both big and small — towards missing middle housing. Smaller developers are doing it because the barriers to entry are lower, and meaningful progress has been made on improving the development economics (the no HST and development charges are crucial). And bigger developers are doing it because larger projects simply don't work right now, or the absorption risk is perceived as too great.
But here's the thing: as soon as the market turns, there's once again going to be a natural inclination to scale up. On Friday, I heard many developers say, "I'm dealing with the same amount of bullshit that I used to deal with on my larger projects."
For example, I was told of an instance where a client wanted to keep the facade of their house and build a sixplex behind it. The facade had heritage and sentimental value. But because the removal of HST on rental housing only applies to new construction, keeping the facade would have made it a renovation. And so they had no choice but to demolish everything. (Of course, developers will also play the opposite game and keep one wall so as to not be deemed new construction in other instances.)
What all of this stuff means is that as soon as the conditions allow for it, developers are going to want to increase their return on bullshit. In the meantime, though, this city has an industry chomping at the bit to build more missing middle housing. We should do everything we can to harness that.
It stated that they have some 50 restaurants, 40 hotels, and 20 residential projects (i.e. branded residences) either open or in development around the world. One of the first of these branded residences was here in Toronto. And as of July 2024, which was a major liquidity event for the company, it was valued at US$1.3 billion.
According to group CEO Trevor Horwell, their approach always starts with a restaurant: "It's an upside-down business model where the restaurant is the social engine. If we believe a Nobu restaurant can become a genuine social hub for locals, then the hotel and residences can follow."
I like this business model because as we talked about a year ago on the blog, "everything is branded." Knight Frank out of the UK estimates that the number of branded residences around the world is going to go from 611 this year to around 1,020 by 2030. So it seems destined to become a bigger part of our business.
But the other reason I'm drawn to it is because it's a good business to be in. If you own a brand that has value, you can do licensing deals all around the world — which is what Nobu is doing — and not take on the same equity risk that developers typically take on. It's capital-light.
However, the trade-off risk is that you're dependent on the continued attractiveness of your brand. If Robert De Niro ceases to remain involved and/or Nobu just loses some of its cachet over time, then the business won't do as well. But that's true of any hospitality-type business, or any brand for that matter.
Since at least 2008, scientists have warned that unchecked groundwater pumping for the city and for agriculture was rapidly draining [Iran’s] aquifers. The overuse did not just deplete underground reserves—it destroyed them, as the land compressed and sank irreversibly. One recent study found that Iran’s central plateau, where most of the country’s aquifers are located, is sinking by more than 35 centimeters each year. As a result, the aquifers lose about 1.7 billion cubic meters of water annually as the ground is permanently crushed, leaving no space for underground water storage to recover, says Darío Solano, a geoscientist at the National Autonomous University of Mexico, who was not involved with the study.
Some of the largest cities in the world, including São Paulo, Mexico City, Cape Town, Bangalore, and Tehran, are today facing critical water shortages. In the case of Tehran, the situation is so dire that Iranian president Masoud Pezeshkian has publicly said that the country now has no choice but to move its capital from Tehran to the southern part of the country:
Amid a deepening ecological crisis and acute water shortage, Tehran can no longer remain the capital of Iran, the country’s president has said.
The situation in Tehran is the result of “a perfect storm of climate change and corruption,” says Michael Rubin, a political analyst at the American Enterprise Institute.
“We no longer have a choice,” said Iranian president Masoud Pezeshkian during a speech on Thursday.
This will be expensive, and it won’t solve all of the country’s problems, but forcing a bunch of people out of the city will help to relieve some of the localized pressures. Tehran has a population of nearly 10 million, and the metro region is estimated at over 14 million, making it the second largest city in the Middle East.
Of course, there’s a city-building lesson in all of this: If you’re at this stage of capitulation, it means you’re too late. Water scarcity is about physical scarcity, but it’s generally also a failure of governance, infrastructure, and demand management. Proactive adaptation is always cheaper, easier, and safer than waiting until the last minute to adopt desperate measures.
On Friday, Craig Race Architecture hosted its annual holiday dinner at Barberian's Steak House. It was a great evening and I really appreciate the invite, especially considering that we're not yet clients. Thank you, Craig. I'm also not sure I had ever been to Barberian's before. That probably makes me a bad Torontonian.
Because of their work and because of the current market, the dinner has also become a kind of gathering for missing middle developers. I felt like the odd one out not having a sixplex + laneway suite built or under construction.
What's interesting about the current environment is that it's pushing developers — both big and small — towards missing middle housing. Smaller developers are doing it because the barriers to entry are lower, and meaningful progress has been made on improving the development economics (the no HST and development charges are crucial). And bigger developers are doing it because larger projects simply don't work right now, or the absorption risk is perceived as too great.
But here's the thing: as soon as the market turns, there's once again going to be a natural inclination to scale up. On Friday, I heard many developers say, "I'm dealing with the same amount of bullshit that I used to deal with on my larger projects."
For example, I was told of an instance where a client wanted to keep the facade of their house and build a sixplex behind it. The facade had heritage and sentimental value. But because the removal of HST on rental housing only applies to new construction, keeping the facade would have made it a renovation. And so they had no choice but to demolish everything. (Of course, developers will also play the opposite game and keep one wall so as to not be deemed new construction in other instances.)
What all of this stuff means is that as soon as the conditions allow for it, developers are going to want to increase their return on bullshit. In the meantime, though, this city has an industry chomping at the bit to build more missing middle housing. We should do everything we can to harness that.
Cover photo by Behnam Norouzi on Unsplash
Cover photo by Behnam Norouzi on Unsplash
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