Tag: covid-19

• Learning from the Spanish Flu

  

  “We learn from history that we do not learn from history.” -Georg Hegel

  Back in March, I was reading everything I could find about COVID-19 and about pandemics. Eventually that tapered off. But this week I decided that it was time to go back and learn a lot more about the 1918 Spanish Flu.

  I’ve just ordered John M. Barry’s 2004 book called The Great Influenza. Bill Gates wrote about it over the summer — after he reread it — and said that it will teach you almost everything you need to know about the influenza. He also said that it’s never been more relevant.

  Despite happening over 100 years ago, there are no doubt lessons that we can learn from this great influenza. The most important being that leadership and honesty, of course, matter a great deal during a time of crisis.

  Barry also argues that the 1918 influenza was responsible for altering the flow of history. He makes the claim (convincingly according to Bill) that it was a contributing factor in the rise of Hitler and the start of World War II.

  So I’m looking forward to receiving my copy later this week. If you’d like to purchase your own, you can do that over here. And if you’ve already read it, please let me know what you thought in the comment section below.

  2020.11.03

• Wuhan as tourist destination

  Seeing people out at bars and at amusements parks in this WSJ video about Wuhan, China is a little odd given that in this part of the world we are decisively in our second wave. But that is what is happening. In fact, the title of the video is, “Wuhan, Former Pandemic Center, Emerges as Tourist Hot Spot.”

  Over a recent public holiday, the city saw nearly 19 million tourists — the most of any Chinese city. And while tourist revenues are still thought to be down by some 30%, Chinese people are seemingly feeling confident enough to get back out and do things.

  Based on what the WSJ is reporting, this seems to be supported by a few things. International travel isn’t happening, so it’s becoming a boon for local tourism, which is not that dissimilar from what’s happening in other countries. (Domestic air travel is rebounding faster than international travel when you look at flight volumes across major airlines.)

  At the same time, Wuhan implemented what sounds like some pretty extensive testing, which is in turn supported by a national healthcare platform that presumably makes contact tracing easier. These things seem to have given people the confidence to go out again. And I don’t doubt that the same will eventually happen in the rest of the world.

  2020.10.17

• The resilient city and road pricing

  Joe Berridge’s recent opinion piece in the Globe and Mail is a good reminder — in the face of a whole lot of uncertainty — about the resiliency of our cities.

  Those previous decades saw a surge of people and jobs locating downtown, with consequent escalation in rents and prices of offices and housing. Why? Partly demographic, as the well-educated children of the baby boom reached adulthood, and partly lifestyle and work style. Young people go to big cities not just to work and live, but for sex, style, money and power. For ambition and anonymity. And for risk. All in the petri dish of downtown density. These drives have always been as powerful as their subsequent search for suburban security and community.

  The structure of the modern megalopolis is not an accident – the dramatic rise of tech employment, two-earner families, the decline of manufacturing, the later date of marriage, smaller households, lifestyle consumerism, teamwork cultures, serial re-education and training – none of these societal trends looks to be diminished by COVID-19. All of them seem to prefer high-density, high-interaction environments.

  For those of us in Toronto, it’s also important to remember just how quickly this city region was growing pre-COVID-19. That is unlikely to change on the other side of this.

  

  But Berridge does also point out some of the potential fallouts from this pandemic. The economics of urban transit, for example, could remain a problem for quite some time. This will strain public purses. (Car usage rebounded quickly, but transit ridership has not.)

  We are also likely to see increased traffic congestion as a result of people eschewing transit (and probably a bunch of other factors). Like Berridge, I am a supporter of road/congestion pricing, and have been writing about that on this blog for many years.

  The best things to tax/price are things that are generally viewed as bad and where demand is largely inelastic. That is, even if you increase the price, many or most people will probably still do it anyway. Think of things like smoking.

  Up until now, Toronto hasn’t had the moxie to make difficult (political) decisions like this one. Perhaps this pandemic will leave us no other choice.

  2020.10.04

• What is it that I believe?

  Back in 2008, I was living in the United States. And at that time, during the financial crisis, I remember people positing that the US wouldn’t be able to build another commercial office building for at least the next twenty years. That’s how bad things felt. People were panicking. But of course, that never happened. Yes, it took some time for real estate values to recover and for people to deleverage, but ultimately things did recover. New buildings were built and new ideas flourished.

  In fact, I’ll never forget what a close friend of mine said to me a few years after that moment in 2008. He said to me, “you know what Brandon, the crisis was probably one of the best things to happen to me. It meant that I couldn’t find a job and I was forced to start my own company. I probably wouldn’t have done that otherwise.”

  Today, we’re living through a different kind of crisis with its own set of uncertainties. Some, or perhaps many, seem to think it could lead to the demise of cities, similar to how our last crisis was supposed to lead to the demise of new office buildings (at least for a period of time). It’s easy to get caught up in narratives and headlines at times like this. And there are always ways to convince ourselves that this time might be different. Sure, we’ve had pandemics before, but previous generations didn’t have the tech that we have, right? Perhaps.

  The challenge is that we’re all trying to decode how much of what’s happening today is related to (1) short-term dislocation, (2) trends that were already happening and just got accelerated, or (3) durable and long-term structural changes. My own view is that the post-mortems will reveal more of (1) and (2), as opposed to (3). And that will mean that some of us have maybe been making long-term decisions (flee the city) based on short-term dislocation (a 1-2 year health crisis).

  Of course, I could be wrong. But it’s what I believe and what I have conviction around.

  Headlines are designed to target what Seth Godin and others refer to as our “lizard brain.” That being the primitive part of our brain that tells us when we’re, among other things, scared, hungry, fearful, and horny. What excites the lizard brain is not a headline saying that everything will probably be just fine. What excites the lizard brain is a headline saying that everything is utterly broken and a new paradigm is now upon us — pay attention or perish.

  It’s for this reason that I think it can be helpful to pause and ask yourself: “What is it that I truly believe?”

  2020.09.23

• Pandemic-era hand sanitizer

  The hand sanitizer that smells like bad tequila needs to go.

  — Brandon Donnelly (@donnelly_b) September 1, 2020

  I have been trying (albeit not very hard) to come up with the best way to describe the stinky hand sanitizer that is going around these days. Then today somebody in the office described it as bad tequila and I immediately thought, “yup, that’s exactly it. It’s bad tequila.” See above tweet.

  Turns out, there’s some science behind this stink. Here is an article by Gregory Han from the New York Times that was shared in response to my tweet. And here is the excerpt that explains where this stink comes from:

  “That off-putting smell—sometimes described as rotten garbage or tequila-like—is the natural byproduct of ethanol being made from corn, sugar cane, beets, and other organic sources,” explained Zlotnik. “[Ethyl alcohol] production is highly regulated. It stinks because these new brands—many made by distillers who’ve pivoted from producing drinking alcohol to meet public demand for hand sanitizer—are making and using denatured ethanol. This ethanol costs significantly less than ethanol filtered using activated carbon filtration, which would typically remove almost all contaminants and the malodor with it.”

  Those organic contaminants aren’t the only reason unfiltered and denatured ethanol smells downright foul. According to Zlotnik, denatured ethanol is also intentionally tainted with an unpalatable cocktail of chemicals (denaturants) such as methanol, acetone, methyl ethyl ketone, and denatonium to make it undrinkable. In other words: The base material is intentionally stinky.

  So now you can judge accordingly after you’ve cleansed your hands with rotten garbage tequila.

  On a somewhat related note, Jill Lepore has an interesting piece in this week’s New Yorker about the great indoors, and how quarantine has forced us to spend even more of our time indoors. (Though, that hasn’t been the case for me this summer.) Here’s a snippet:

  The Great Confinement varies by place and by wealth, and, historically, it’s new. “Over several millennia, humans have evolved from an outdoor species into an indoor one,” Allen and Macomber write. Citing E. O. Wilson, they explain, “We evolved in the African savannah’s wide-open expanses, intimate with nature and seeking protection under tree canopies,” and so “our genetic hardwiring, built over millennia, still craves that connection to nature.” To satisfy this craving, photographs of redwoods adorn hospital waiting rooms; you can pop into the Grand Canyon via Zoom. I used to think these dodges were better than nothing, but I’ve changed my mind. Zoom is usually not better than nothing.

  2020.09.01

• Home listings are up 96% in San Francisco

  A recent market report from Zillow has found that urban and suburban housing markets in the US haven’t actually diverged all that much as a result of this pandemic. Despite what you might be reading in the news, Zillow’s national listing data does not seem to suggest that an urban exodus might be underway. Suburban and rural home listings are seeing about the same attention (views) as they were last year. And the rates of appreciation seem to be holding. As of June, annual home value growth was 4.3% for urban areas and 4.1% for suburban areas.

  There are, however, some exceptions and local nuances. Rents in urban zip codes have fallen more compared to their suburban counterparts. This seems to make intuitive sense given that I would have expected demand to be less from young professionals, students, and immigrants. Many cities probably also saw a bunch of their short-term rental inventory flip over to the long-term rental market (how much, I don’t know). But my view is that this will prove to be a short-term phenomenon.

  

  There are also some markets that have performed quite differently. San Francisco is one of those cases. The city proper has seen home prices fall 4.9% and inventory (listings) increase by 96% year-over-year. This is a massive outlier. If I were to speculate as to why this is the case, it would be that (1) this was brewing even before COVID-19 and (2) the tech community is perhaps more convinced of this whole working from home thing. Why remain in expensive San Francisco? It’ll be interesting to see how this plays out. For a full copy of Zillow’s urban-suburban market report, click here.

  Image: Zillow

  2020.08.17

• Non-consensus thinking

  The venture capital industry likes to talk about the importance of investing in ideas that are and turn out to be both non-consensus and successful. The idea here is that if an idea or opportunity is already consensus, then there’s too much money flooding into that space and it becomes too difficult to make money. This is particularly true in venture capital where a select few companies usually end up generating most of the returns. This is a high risk business. Supposedly, even the best VCs end up having to write off a big portion of their deals.

  But I don’t think that this logic need only apply to venture capital. In real estate development, you are often faced with similar situations. For example, if an area is already consensus — that is, it is already considered to be highly desirable — then capital is going to naturally flow into it and land prices will be relatively high. These high land prices might be justified by the revenue side of your pro forma, or they might not be. I know many developers who avoid “core” locations simply because the land is too much and the margins are too little.

  On the other hand, if an area is non-consensus — that is, you’re not sure people will want to rent or buy new space in the area — then the land prices should reflect this. But here’s the thing. What you’re doing is trading, among other things, a lower land price for greater market risk. Because the non-consensus bet could turn out to be either successful or unsuccessful. People will either want to occupy space here or they won’t. And remember, by definition, it being non-consensus means that most people believe they won’t — or at least not at the prices you might need in order to make the math work.

  What all of this means is that if you’re right about something that most people think is wrong, then you have the opportunity to do quite well. (Though I am not suggesting that you need to follow this framework in all situations.) This is on my mind right now because it feels to me that there are certain consensus opinions emerging as a result of this pandemic. For example, opinions around the demise of office space and the demise of downtown living. If you’re a regular reader of this blog, you’ll know that I think these death-of-the-city predictions are largely bullshit.

  I could be wrong. Or I could be right.

  2020.08.14

• Canada’s COVID Alert app

  

  I installed and setup Health Canada’s COVID Alert app this morning.

  It’s really simple to do that. You don’t enter any personal information. You just select which province you’re in, agree to let it use your Bluetooth, and give it permission to share the random codes that you collect with its servers (more on this below). The app is then active and working. But to be clear, it doesn’t collect your location (it doesn’t use GPS or location services). It doesn’t collect the places or times that you are next to someone who also has the COVID Alert app. And it doesn’t know if you’re with someone who was previously diagnosed with COVID-19.

  Built on top of the private exposure framework that was collectively developed by Apple and Google, the app works by using Bluetooth to exchange “random codes” between nearby phones that have the app. These are anonymous and random codes that are used to track which phones have been next to which phones for any meaningful period of time. The app also uses Bluetooth signal strength to estimate proximity. So it knows how long your phone has been proximate to someone else’s (with the app) and how close they got to each other.

  That’s pretty much all that happens with the app unless you test positive for COVID-19. At that point, you will be given a one-time key along with your diagnosis. The onus is then on you to anonymously self-report on the app. Once you do that, anyone who was exposed — i.e. next to your phone in the last 14 days — will receive an alert on their phone via the app. And since the app doesn’t know any names or who anybody is, it’s of course all completely anonymous.

  It’s great to see all of this coming together. The private sector worked to build the underlying framework and now you have government building on top of it to deliver public health tools. I know that some or many of you will be concerned about privacy, but that appears to have been very well thought out. If you haven’t already downloaded the app, I would encourage you to check it out. It’s available for iOS and Android and can be downloaded over here.

  2020.08.01

• Urbanation releases Q2-2020 condo market survey results

  

  Urbanation released its Q2-2020 condo market survey results earlier this week. This data represents the first full quarter of sales to be entirely impacted by COVID-19. Not surprisingly, sales activity was way down. But pricing and construction starts actually increased. Here are some of the highlights:

  • New condo apartment sales totaled 1,385 units across the Greater Toronto Area. This represents an 85% year-over-year decline and the lowest sales activity since Q1-2009. Only six projects launched during this quarter.
  • Most of the projects that did launch were outside of the core of Toronto. So that skewed pricing downward. In the first quarter of 2020, the average selling price for new launches was $1,159 psf. In Q2, this number was $889 psf — again, reflecting a shift in geography.
  • But if you control for geography and compare year-over-year launch prices within the same submarkets, prices did in fact increase in Q2 compared to last year. At the same time, the average price for unsold units in Q2 increased by about 9% year-over-year to a record high of $1,087 psf. Unsold inventory also declined by about 19% from last year.
  • On the construction front, a total of 7,388 units started construction in Q2. This is a 45% increase from Q2-2019. A lot of this growth is coming from the suburbs, where presumably there are fewer supply constraints.
  • Given the resiliency that the market has been showing, Urbanation expects to see an increase in new project launches in Q3.

  Chart: Urbanation

  2020.07.29

• Personalities and places

  Here is an interesting study about personalities and places (Journal article here and study here). It is interesting because so many of us are working from home and away from our regular environments. But it is also interesting because a lot of us, here on this blog, are in the business of creating spaces. And these environments have an impact on all of us.

  The researchers for this study started by assessing the personalities of some 2,000 university students. The objective was to determine their baseline temperaments according to the “Big Five” personality traits: openness, conscientiousness, extroversion, agreeableness, and neuroticism. Once that was established, the students were sent out into the world with a location-based app on their phone.

  Four times a day, the participants were asked to enter their current location, as well as answer a few questions about their current state of mind. The big takeway from this study is twfold and is as follows: “People actively select their environments, and the environments they select can alter their psychological characteristics [both] in the moment and over time.”

  The first bit is perhaps not all that surprising. We all have different personality traits and we choose environments that suit what we like. Extroverts, for example, tend to spend less time at home and more time at restaurants, bars, clubs, and at friends’ places. (Presumably this means that quarantine was a lot harder for extroverts.)

  The second part of this finding suggests that once we have actively chosen where we want to be, that environment then impacts how we feel at that exact moment, as well as over a certain period of time. You’ll have to read the study for the nuances around this. But it is fascinating to me because it helps me explain why I feel different now that I’m mostly working from home.

  Beyond poor video call connections and the lack of in-person collaboration, there also seems to be the psychological impact of not being in a particular environment. Not having to commute is a nice feature, particularly for some, but it also means not being around colleagues and not being able to meet for that impromptu craft beer. Turns out those things matter for our mental state.

  2020.07.09