My friend Christopher Bibby — who is a real estate agent here in Toronto — is in the Globe and Mail today talking about how Toronto-area buyers have returned to downtown. The article is by Carolyn Ireland and in it Bibby cites two of his recent deals: A large 2 bedroom suite at 168 King Street East that just sold for $1.2 million and an even larger penthouse at 388 Richmond Street West that just sold for $2.4 million.
These are two examples of buyers who want to live in the city. Of course, there are countless others who are making moves right now. As Bibby points out in the article, the mood has certainly shifted from what we were seeing last year in the condo space. Condo buyers today are even starting to comb through expired listings in the hopes of finding off-market deals.
I view this kind of real estate activity as a leading indicator for what’s to come in the the city. Rental activity is naturally going to lag until people starting returning to offices en masse and downtown life fully resumes. It’s more of a short-term “buying” decision. But as a condo purchaser, it’s easy (and probably better) to look through the short term.
I think that’s what people are doing right now and they’re saying to themselves, “yeah, I want to be in the city.” I know that’s how I feel.
The last year has been challenging for the hospitality industry. But at the same time, it was a good year to renovate. The W South Beach recently unveiled a $30 million renovation project that includes all 357 rooms. Designed by local studio Urban Robot Associates, the project directive was an interesting one. The team was asked to reimagine the hotel for the “new Miami.” A Miami that is more grown up and cultured, but that, of course, still has a bit of an edge. With all of the attention that Miami and Florida are getting right now, this project feels timely and indicative of something broader underway. Indeed, it’s hard not to acknowledge that Miami is having a moment right now. This also happens to be one of the last hotels that I stayed at prior to last March’s lockdown. So I have a clear “before” in my mind. It’s fun to see how much it has changed over the last year while I was mostly sitting at home. (Shameless plug: I also love the pale wood herringbone floors, which, coincidentally, will also be on offer at One Delisle.)
For years, the data has been clear. Many Americans are moving from expensive cities, like Los Angeles, to less expensive metropolitan areas like Dallas-Fort Worth.
But Wendell Cox’s recent article over at New Geography is a good reminder that these data sets can be limited. The US Census Bureau currently tracks domestic migration at the county level only. This can be a bit of a problem as counties vary dramatically in terms of geography and population.
The New York metropolitan area, for example, is comprised of 25 different counties averaging about 750,000 residents. The Los Angeles metropolitan area, on the other hand, is compromised of two counties averaging about 6.6 million residents.
These sorts of nuances become important when you’re trying to figure out things like whether people are moving to/from urban cores or the suburbs. Case in point: The San Diego metro area is compromised of a single county. When people move there, the data says nothing about how urban or suburban they might be.
Dallas-Fort Worth is a lot easier to read. Since 2010, it has had the largest net domestic migration of any metro area in the US: +443,000 residents. But county data reveals that it is entirely suburban. The core (Dallas County) actually lost 57,000 people from 2010 to 2019. And this is not unique to the Dallas-Fort Worth area.
Feargus O’Sullivan is back with another Bloomberg CityLab article about “the iconic home designs that define our global cities.” In this recent article he focuses on the Barnrikehus of Stockholm (and also talks about Sweden’s housing market in general). Originally built in the 1930s, the slab-like midrise buildings were largely intended to address two pressing problems: 1) the need for affordable housing and 2) Sweden’s incredibly low birthrate (supposedly the lowest in Europe at the time).
The Barnrikehus template was deployed on the edges of Stockholm and other Swedish cities. The designs were/are fairly simple. Very little ornament (this is Scandinavia). Four or five storeys usually. And no more than about 12 meters deep. This allowed for better natural ventilation, which was important for stymying the spread of tuberculosis. The rents were also heavily subsidized and declined even further with every child in the family. In other words: the more kids you had, the less rent you had to pay.
The suites were fairly compact, with many around the 430 square foot mark. This kind of space might have housed a family of six according to O’Sullivan. But compared to the other available housing options at the time, this was a significant improvement. Perhaps not surprisingly, these “child-rich houses” (which is how the name translates) developed the same kind of social housing stigma that was prevalent in many other countries and cities around the world.
But that perception changed over time and, today, these rent-controlled apartments are apparently highly sought after. (Here’s a listing to give you a taste of what they’re like.) Originally on the fringe of cities like Stockholm, they are now very well located and offer a high standard of living. (You also can’t go wrong with white walls and pale woods.) To learn more about the evolution of Stockholm’s depression-era housing, click here.
Earlier this week, Amazon announced that it plans to return to an “office-centric culture” as its baseline. Its rationale was that being in an office allows the company to better “invent, collaborate, and learn together.” All of this was laid out in an announcement that was distributed to its teams globally. On the other end of the spectrum, Twitter continues to double down on working from home. The company, which is currently hiring, is even trying to target talent that may be disgruntled by the fact that their current company is planning for them to return to the office. Two very different approaches. So which one is right?
This is, of course, a great debate right now and the right answer probably depends on a myriad of different factors, some of which are likely specific to the company. Dror Poleg has been trying to think through this problem with something he calls the talent equation (because it’s all about talent). It works like this: level of in-person interaction x overall size of talent pool = innovation and financial success. The basis behind this equation is pretty simple. In-person interaction is great for business. This much we know. But you also need the right talent interacting. Allowing remote work is one way of expanding the size of your talent pool. But again, you do this at the expense of in-person interaction.
In-person interaction is what makes cities the great organisms that they are. And I believe firmly in this side of the equation over the long-term. Even right now I find that when I go into the office, my call and Zoom volumes go down dramatically and I have more time to think, collaborate, and do, you know, actual work. This is because many interactions don’t require a Zoom meeting when you’re in the office. You stop by someone’s desk. You ask a thing (usually pretty quickly). And then you go off and action that thing. But I also acknowledge that for some companies, access to the right talent — and lots of it — may be a real challenge, particularly in smaller cities.
Like Amazon, I am a supporter of office-centric work cultures. But I do think that Poleg’s talent equation is a useful way to think about this debate right now.
I came across the above photo this morning. If you can’t see it, click here. It’s a photo of the Koblick House in Los Angeles designed by Richard Neutra and Gregory Ain for art professor Harry Koblick. Built into the hills of Silver Lake in 1937, the house is a three-storey duplex with about 1,620 square feet according to some sources. (I couldn’t find any plans or drawings, but I’d really like to see the section.) The upper unit has 2 bedrooms and 1 bath. And the lower unit has 1 bedroom and 1 bath.
Richard Neutra was a prolific modernist and designed numerous “international style” buildings, like the Koblick House. His work was included in the seminal 1932 MoMA (New York) exhibition on modern architecture, which was an important moment for modernism in the United States. It helped to import the international style from Europe at a time when exhibitions did things like that. It is perhaps easy to forget that ideas didn’t spread as quickly around the world back then.
I love the simplicity of this house. The double car garage that services the two units. The side stair that leads to the front door. And the two large terraces that probably look out over some kind of landscape. Over 80 years later and it still feels contemporary. Perhaps some of you will be equally inspired by this archive photo.
As a follow-up to my recent post about the rise of the second home, here is a chart (via the WSJ) showing second home and investor mortgage applications as a share of all applications in the US. In February of this year (2021), second home and investment properties accounted for 14.1% of all applications. This is a record number going back to January 2010.
What’s also interesting about this chart is that, but for COVID, it shows a general decline over the last decade. I’m not sure what the split is between vacation and investment properties, but can we conclude that pre-COVID Americans were becoming less interested or perhaps less able to own a second home? And could the reason be that instead of owning a second home, more people simply started relocating permanently?
There is also an obvious seasonality to these applications. Each of the above valleys tend to correspond to the spring and summer months. It’s almost as if every fall/winter we start thinking to ourselves, “Right, winter. Let’s look for a place somewhere else.” Is it that, or are there other forces at work here?
This is an interesting article by ArchDaily, looking at the “evolution of the house plan in Europe” between 1760 and 1939. The article focuses on London, Paris, Amsterdam, and Moscow and includes floor plans, photographs, as well as well-known illustrations like the one shown above. Created by Bertall in 1845, the drawing shows a section through a Parisian house and is called The Five Floors of the Parisian World.
What it shows is the declining opulence that used to exist in Paris’ apartment blocks as you moved upward. If you were rich, you lived on the second floor, right above the ground floor lobby. The ceilings were higher on this floor and maybe had a balcony overlooking the street. If you lived on the third floor it meant that you were a less rich. And if you lived in the top floor attic, you were poor. That is what this comic is showing.
Now, all of this changed over time as new technologies, namely the elevator, were brought to multi-family buildings. All of a sudden it became convenient to live higher up and all of a sudden people wanted better views and to get further away from the chaos of the street. What I’m curious about, though, is how posterity dealt with the lower ceiling heights on these upper floors.
Amazon is sometimes criticized for its private labels. The way this generally works is that Amazon uses the data that it collects from its platform to see what customers are buying. It then goes out and makes its own version of these products and sells them in competition with the other products in its marketplace. The reason why Amazon (and others) do this is because the margins are generally better on private labels, even though they are often positioned to the end customer as being a value-oriented alternative. That is, they’re cheaper.
Some people think that Amazon shouldn’t be doing this, particularly as its third party marketplace continues to grow. This side of its marketplace deals with inventory that Amazon doesn’t own. It is the stuff of third party sellers who come to the platform to access Amazon’s customer base and reach, and to possibly use its fulfillment services. This marketplace now makes up about 60% of Amazon’s sales volume and so it has become a dominant part of its business. It’s a way to grow without having to spend money on additional inventory.
Is it, then, acceptable for Amazon to mine this data, replicate products, and compete with its own customers? The truth is that this isn’t all that new. As Benedict Evans points out in this recent post, retailers have been doing this for more than a century. The above table taken from a 1932 report on “chain store private brands” shows that about 80% of stores in the US at this time were selling private label brands. Furthermore, it represented about a quarter of their overall sales. Is this time any different?
These are two photos taken from the roof of our Capital Point project (office strata) in Burnaby, BC. They represent the views from about 19 storeys up. In the first photo you can see downtown Vancouver and the mountains that surround it. And in the second photo you can see the Metrotown town center (second largest in the region) and the SkyTrain station that services it. It’s certainly hard to beat British Columbia on a beautiful sunny day.