Tag: decentralization

• I really want to live over there

  One way to describe cities is to call them labor markets. Historically, people have chosen to live in cities because they have provided economic opportunities (among, of course, many other things). That’s why the data is very clear: wages are higher in larger cities.

  But what we have also seen over the last few years — and what is causing a lot of dislocation in real estate markets — is an untethering of work. More people are working from home and from locations that offer greater lifestyle benefits (or greater tax benefits).

  We spoke recently about what this divide between in-person and remote work might mean, but regardless of this outcome, I think there’s an important truth here: Lots of people would like to live somewhere else. (In my case, my daydreams take me to Paris.)

  And for the first time ever, really, it is possible for more people to do this and stay connected to work somewhere else. Earlier innovations, such as the streetcar or car, also compressed geographies and empowered people to travel greater distances. But now the catchment area has seemingly expanded to the world.

  I’m not saying anything particularly novel here, but I do think it’s important to point out that this desire exists in many of us. Because this tension between “I do work here” but “I really want to live over there” seems like it’s only increasing.

  2024.07.17

• Work, untethered

  On Monday morning, I flew on Delta from Salt Lake City to Toronto, which in this direction takes just over 3 hours. And it was my first time ever experiencing reasonably reliable wi-fi on a flight. Maybe this is already common for the people who fly in the front of planes, but for me, I’ve never had the wi-fi work so well.

  Usually it goes like this: I try and connect, everything is painfully slow, and so I get frustrated and move on. But this time around, I was able to check all of my emails, download fairly large PDFs, mark them up on my iPad, and write yesterday’s blog post. It was pretty great, and it allowed me to land in Toronto with far less anxiety around my work backlog.

  But it also got me thinking about what this means for travel and work. If you’re a regular reader of this blog, you’ll know that I greatly prefer working in an office with my team. I think proximity matters.

  At the same time, I recognize that technology is empowering new kinds of remote work, that we are all becoming more globally connected, and that, in the future, most of us are likely to travel more, rather than less. This will be for both work and for fun.

  While solid in-flight wi-fi may not seem like that big of a deal, in my mind it’s a game changer. People will become more mobile if they can sit on flights and actually be productive (and maybe Apple Vision Pro helps with this). It is another step in what feels like an ongoing untethering of work.

  2024.04.09

• Introducing the Meta City

  During the pandemic, there was a lot of erroneous talk about the death of cities. Much like when the consumer internet first came around, the thinking was that technology would make geography irrelevant. I was and am vehemently against this idea, but it’s hard to not feel like technology is doing something. But what exactly? According to Richard Florida, Vladislav Boutenko, Antoine Vetrano, and Sara Saloo, it is creating something called the Meta City:

  The various communities that make up the Meta City may be in different time zones and noncontiguous locations, but they function together as a coherent network with a distinct structure and logic. The Meta City combines physical and virtual agglomeration, in seeming defiance of the laws of physics, making it possible to occupy more than one space at the same time. As a result, urban areas within the Meta City network can share economic and social functions.

  The narrative is compelling. Cities have always responded to and been a product of new mobility technologies. Streetcars, subways, and the car have all reshaped the geography of our cities. Some would argue for the worse. What the Meta City proposes is that technology today is not a disruptor of cities, it is simply another mobility shift. Rather than make cities irrelevant, it actually makes them more important by expanding their reach:

  The pandemic-era shift to remote work is yet another technology stretching the boundaries of the city into a new and larger geographic unit. But instead of doing so physically, it does so by enabling virtual expansion. The share of American workers engaged in remote work tripled from roughly 6% in 2019 to almost 18% in 2021. Remote workers can access significant quality of life at far more affordable prices in smaller cities, suburbs, and rural areas.

  Some specific examples:

  Many of these rising places are critically connected to established cities. As we will see, Austin’s rise is best understood as a satellite of San Francisco’s long-established tech hub. Miami is enmeshed in New York City’s finance and real estate complex. The rise of the Meta City informs a counterintuitive logic: Leading superstar cities are seeing their role as economic hub expand, even as some talent and some industry disperse to satellite centers.

  Finally, here’s their ranking:

  

  If you believe this to be true, then it should be good news for the real estate located in the cities listed above. But it also means that we are now facing a new kind of hub-and-spoke model of urbanism. London and New York remain at the center, but tech is only strengthening their reach and influence. This is a new way of thinking about the flow of human capital around the world, and I’m sure it will have impacts on how we plan and build our cities.

  Image: Harvard Business Review

  2023.11.29

• 10 years of daily blogging

  This week marks the 10 year anniversary of this daily blog. In some ways it’s hard to believe that it’s been a decade and in other ways it’s hard to imagine a time when I didn’t write/post something every day. What a habit this has become.

  A lot has changed since 2013.

  Back then, I was still trying to find my way in real estate development. Instagram was only 3 years old. TikTok hadn’t been created yet. And the idea of writing a daily blog didn’t feel as antiquated as it does today. I probably should be vlogging at this point.

  But here’s what hasn’t changed:

  – I enjoy writing, and I think it’s personally beneficial — even if I don’t derive any direct benefits (such as money)

  – I like having my own little corner of the internet that I control — instead of relying exclusively on centralized platforms like Instagram or X

  Today this corner is brandondonnelly.com, but I suspect that brandondonnelly.eth will become just as important over the next decade. The world is heading toward more decentralization. And if/when that does happen, I’ll be sure to write about it on this daily blog.

  Thanks for reading everyone. As usual, I’ll see you tomorrow.

  2023.08.29

• Japan pays people to leave Tokyo

  We have spoken over the years — here, here, and here — about the centralizing and decentralizing forces that play out within our cities. Agglomeration economies, for example, are a centralizing force. There are real economic benefits to people and firms clustering together in cities.

  However, there are also many decentralizing forces. Traffic congestion is one. And of course, the pandemic also proved to be a powerful one for many cities.

  But the fact that we even have cities in the first place should tell you that the centralizing forces do tend to win out over the decentralizing ones. And a perfect example of this is Tokyo. Usually considered to be the largest metropolitan area in the world, Tokyo has about the population of Canada in one city region.

  And here, the centralizing forces are so great — even for families — that the government actually pays people to relocate to places outside of Tokyo’s 23 wards (and its immediately surrounding areas). Previously the maximum figure was ¥300,000 per child (~CA$3,056), but this has now been increased to ¥1 million per child (~CA$10,188).

  A key driver of this is surely Japan’s demographic problem (namely a shrinking and aging population base). But it doesn’t change the fact that lots of people appear drawn to the world’s largest city.

  2023.01.04

• Centralizing in cities

  This is not all that surprising:

  Monthly average prices in the GTA since Feb 2022:
  
  Durham🔻-19%
  Halton 🔻-15%
  Peel 🔻-11%
  Toronto 🟢 +1%
  York 🔻-13%

  — Daniel Foch (@daniel_foch) June 2, 2022

  It is not surprising for at least two reasons:

  • We knew that central banks would tighten the money supply at some point and that it would have a negative impact on asset prices.
  • Many of us believed that a lot of people were making a somewhat long-term decision (flee the city) because of something that would ultimately prove to be short-term dislocation (a ~2 year health crisis).

  So one of the things I think you can glean from Daniel’s tweet is that our best urban centers are resilient. Notwithstanding the fact that we have things like Zoom and previous pandemic-suffering generations did not, the core value propositions associated with centralizing in cities hasn’t gone away.

  2022.06.04

• Londoners bought a record number of homes outside of the city this year — or did they?

  

  The Financial Times published an article this week talking about the record number of homes that Londoners bought outside of the boundaries of the city this past year. The total was about 112,780 homes worth some £54.9 billion — again, it was a record in terms of total value.

  The argument is that this pandemic continues to fuel decentralization, flexible working arrangements, and greater demand for larger spaces. Housing preferences have permanently changed. And the suggested takeaway is that this dynamic might have “serious consequences for the city’s population and housing market.”

  But of course, I’m going to question whether this is really the case. The ~£55 billion number is clearly a new high according to the article. The previous record was £36.6 billion back in 2007. But that doesn’t give you the full picture because homes cost a lot more today than they did back then.

  If you look at the total number of homes purchased outside of the city by Londoners, the record still belongs to 2007 with approximately 113,640 homes. When I see this number it makes me pause.

  Because here we are living through a global pandemic and the largest work from home experiment in modern history, and yet the total number of homes purchased outside of the city this past year is still comparable to that of the last housing cycle.

  Did this moment in time really create an anomalous and irreversible shift in housing preferences?

  Photo by Fineas Anton on Unsplash

  2021.12.27

• Decentralization, centralization, and new frontiers

  In this recent post by Naval Ravikant, he argues that innovation seems to like two things: decentralization and a frontier. He starts by giving the examples of more decentralized states (i.e. smaller federal governments) and the Wild West. The American frontier was, as you know, wild. But it was also a place of great innovation.

  Naval then goes on to talk about the pendulum that tends to swing between centralization and decentralization. And in the world of technology, the last decade has been one of centralization (big companies). But this pendulum is much broader. Cities, as we have talked about before on this blog, are constantly in tension between centralizing and decentralizing forces.

  COVID was a powerful decentralizing force for cities. Everything was closed and we were all supposed to stay home. And so most/all of the benefits of centralizing in a city were suddenly, yet temporarily, turned off. Many people naturally decentralized. But when the dust finally settles, I highly doubt it will be as dramatic as most people initially thought.

  We know that cities and urban density encourage innovation. That’s why “unicorns” tend to overwhelmingly originate in big cities. But here’s the thing: this is a form of centralization. The fact that cities even exist in the first place tells us that their centralizing forces are winning out over the decentralizing ones.

  So how do we reconcile this with Naval’s argument that new frontiers and decentralization are actually what are needed for innovation? I agree wholeheartedly that one of the key innovations with crypto, for example, is that it is decentralized and permissionless. But what does this ultimately mean for cities and our built form?

  Does it encourage a similar sort of decentralization to happen? Or is the irony that decentralized technologies actually still thrive in centralized urban places? We may all be online buying NFTs, but we still want to get together in person to show them off and exchange ideas.

  2021.11.25

• Economic update with Benjamin Tal — get ready for the second half of this year

  Benjamin Tal — CIBC’s Deputy Chief Economist — is seemingly everywhere. And earlier today, he was delivering an annual economic update at an online event hosted by Brattys LLP (our condo lawyers) in partnership with CIBC. Below are a handful of slides that I found interesting and that I tweeted out during the event.

  

  All of our personal risk curves changed during this pandemic. When the first wave hit, we all had no idea how bad this was going to be and what to expect. And so we all stayed home and washed our hands and our groceries. That changed with each subsequent wave. And now we’re all ready and anxious to be done with this.

  

  Tal referred to this as one of the most unequal recessions we’ve ever seen. If you had a high paying job, you probably kept it. And after you stopped spending money on eating out, entertainment, travel, and watching the Leafs lose in person, you likely had a meaningfully higher savings rate. That has created some $100 billion of “excess cash” sitting on the sidelines.

  This cash wants to be spent and I think we’re going to see it flying out the door in the second half of this year. Much of it will also flow into services, which should help to prop up the hardest hit segments of the economy. So while there has been some real pain, many are expecting the economy to snap back pretty quickly. Get ready for some euphoria in the second half of this year.

  

  This last slide is particularly relevant to the kind of things we often talk about on this blog. It is essentially showing the increased demand for housing outside of the city during this pandemic (as of Q4 2020).

  A flatter line (Vancouver, Calgary) indicates that year-over-year price growth was less affected by “distance from the city center.” On the other hand, a steeper line (Toronto, Ottawa) indicates that price growth was stronger the more you moved outward from the core. In the case of Toronto, it was nearly 20% YoY when you got about 60-70 kilometers out of the city.

  But it’s important to keep in mind that the core of Toronto still grew at about 5% year-over-year. About the same as in Vancouver. And in the case of Ottawa, the number looks to be about 17.5% in the city center. These are meaningful numbers and not the kind of symptoms you would expect to see from downtowns in the middle of a death spiral.

  I would argue, as I have many times before, that this last chart is the result of short-term phenomena. I bet we’ll see a number of these pitches reverse by the time Q4 2021 arrives.

  2021.06.01

• The new AirTags and Apple’s global mesh network

  Apple recently released a new tracking device called AirTag. It is similar to the small Tile devices that have been in circulation for many years in that they help you find misplaced items like your keys or a bag. They locate your stuff and work like this. I pre-ordered a 4-pack of them last month but they aren’t scheduled to arrive until June. Maybe it’s because I got custom engravings on the back of them.

  Perhaps the most obvious use case for these new AirTags is to place one inside of your checked bag(s) when you travel. There’s nothing worse than an airline losing your luggage and you not knowing where it is. So I can see myself using one of these every time I travel. Hopefully that will be very soon.

  But the other really interesting thing about these devices is that they run on Apple’s “Find My” network, which is the same network that allows you to find your other iOS devices if you happen to misplace them. This is essentially a decentralized mesh network that is powered by all of Apple’s devices around the world, as opposed to some big telco network.

  According to Wikipedia, there is believed to be about 1 billion Apple devices around the world that are capable of transmitting anonymous signals. Your phone may be doing it right now. What this means is that these new AirTags are being located not by way of a cell network, but by way of some dude with an iPhone standing nearby to your AirTag.

  Why I find this so interesting is that the internet has way of decentralizing things and also cutting out intermediaries. We’ve seen that happen with travel agents and we are now seeing it take place with cryptocurrencies and blockchains. These new AirTags feels like a microcosm of that trend. They are running on a giant global network that has been created one device at a time.

  2021.05.08