Tag: real estate

• The value of lifestyle in attracting human capital

  When I was in Revelstoke, BC last year I met a number of people who had made the move out there from Toronto. When I asked if they missed living in a big city, pretty much everyone gave me the same answer: “No, I love it here.”

  This past week when I was in Park City, Utah, I similarly met a number of people who had made the move from New York and other large cities. And when I asked them the same question, I heard statements like: “I used to live in New York, but then I got a life and moved out here." 

  In these two examples, the obvious draw is the mountains. But it’s not like everyone just moved and became a ski bum. In fact, Inc Magazine recently published an article talking about Park City’s robust startup scene. People are figuring out how to combine hard work with the lifestyle they want.

  What I find interesting about this is that it runs counter to the trend of young people preferring big cities. Here’s a quote from NPR:

  “But affordable real estate and waterfront views don’t have millennials biting. They continue "a multigenerational pattern of young adults preferring more expensive urban areas over lower-cost rural ones because the lifestyles and opportunities in such places make the extra burden of cost worth it,” says Robert Lang, professor of urban growth and population dynamics at the University of Nevada, Las Vegas.”

  However, some small towns clearly have a unique lifestyle advantage: mountains. And that seems to be a strong enough draw that some people are simply figuring out how to create the economic opportunities for themselves.

  For me, this is yet another reminder that if you’re trying to attract the best human capital to your city or town, you need to think about lifestyle. And since young adults aged 18-34 are far more likely to move around than any other generation, you should also be thinking specifically about what this generation wants.

  Here’s a chart from CityLab that shows how precipitously migration falls off (in the U.S.) once people finish school and get settled in a job:

  

  Obviously, not every town or small city is blessed with mountains. But there are many lifestyle advantages that can be created. It’s for this reason that I keep talking about nightlife and Toronto’s laughable 2AM last call. Those are lifestyle things and we can do better.

  2016.02.08

• A mapping of single family home prices in Vancouver

  Bing Thom Architects recently published a blog post looking at the property values of single family homes in Vancouver. The data was taken from the City of Vancouver Open Data Catalogue and is based on British Columbia Assessment data.

  The precise timing of the data is likely a bit off, but here’s how the city looked in 2015:

  

  23% of single family homes in the city had an assessed value over $2 million.

  A year later, this number increased 32% of all single family homes:

  

  It’s interesting to see how divided the city is along Main Street. But the big takeaway – thanks to BTA – is that $2 million seems to be the new $1 million.

  2016.02.06

• 10 city building predictions for 2016

  

  https://500px.com/embed.js

  Few things are better than waking up in the mountains and seeing a notification on your phone that 9″ of fresh snow have fallen overnight, bringing the 48 hour snowfall total to 16″.

  This is what people in mountain towns live for. They ski in the morning and then head to work in the afternoon. I heard a number of people on the mountain today saying that they, “want to be in the office after lunch.” It’s a lifestyle thing.

  On that note, today I’d like to focus on 10 city building predictions for 2016. I’ve been assembling this list over the past few weeks and now that I have had my fill of Utah powder for the day, I’m dedicating the rest of the afternoon to writing.

  These are never easy to put together. But here are my thoughts:

  1. We will see increased migration to secondary cities – outside of the alpha global cities – which offer a higher quality of life, more affordable housing, and the ability to live a particular lifestyle. This includes cities like Austin (creative startup hub) and Denver (outdoor recreation).
  2. As more and more cities wake up to the importance of lifestyle in attracting top talent, I think we will see a lot of cities follow the lead of Amsterdam and create “night mayors” or some other equivalent. These cities will begin to see nightlife as a competitive urban advantage.
  3. Global cities will start experimenting with different land use and property tax reform strategies to try and deal with rising income inequality and eroding housing affordability.
  4. We will see a barbell of residential unit sizes. We’ll see more well-designed small units as a way to try and promote housing affordability and we’ll see larger urban infill units for families and baby boomers who want to live/remain in walkable urban communities.
  5. In line with above, I think we will see a further rethinking of urban spaces. Flexible spaces, unique program mixes, and a continued blurring of public/private spaces. One example of this is the trend towards small private spaces surrounded by generous public/communal spaces.
  6. The Toronto and Vancouver real estate markets will continue to chug along because of low interest rates, a weak Canadian dollar, and increased foreign investment. That said, I think we will see more restraint when it comes to over-the-top luxury product.
  7. We will finally see a disruptive technology product that starts to get people in the real estate industry thinking that change is on the way. This will not be a product that ports an offline experience online; it will a new way of thinking about the industry.
  8. This will be the year that cities stop fighting Uber (and other similar marketplaces). Cities (and lobbyists) will finally accept that this is a new reality and then work to figure out the best way to create policy around it. Edmonton, Alberta has already become the first Canadian city to regulate Uber.
  9. Road pricing will get the attention it deserves in North America. Things will start out slow, but we will finally get ourselves on a path which recognizes that we can’t build our way out of traffic congestion in most major cities.
  10. I will publish a book on becoming a real estate developer.

  Many city building trends and shifts seem to happen in a global way. But I think it’s worth noting that a lot of these predictions were likely written with my North American lens on, and in some cases my Toronto lens on.

  It’s not easy sitting down and thinking about what will happen in the future. But it’s a worthwhile exercise. It forces you to take a stance and then, when the future does come, you can see how well you did. I saw Fred Wilson do this on his blog and I thought it was a great idea.

  Now I would love to hear what you think about my predictions and what yours are for this year. Please let us know in the comment section below.

  2016.02.01

• Maximize your space with square foot hours

  I am more than happy to trade-off living space (that I don’t really need) for a better location. It means I get the benefit of driving less and enjoying the city more.

  But as more of us move to urban centers, we are finding ourselves having to do more with less space. Often this means creating flexible and multi-purpose spaces.

  One strategy for this that I really like – which I just learned about through 5 Kids 1 Condo – is the idea of square foot hours. Here’s how it works:

  “The concept behind ft²hours (square-foot hours) is to add a time-based measurement to how we assess and use our space. So if your 10′ x 12′ bedroom is used only eight hours a day (i.e., when you’re sleeping), your actual usage is 120 ft² divided by three (one-third of the day), which is just 40 ft²hours of used space.”

  In many ways, this happens intuitively. If you really want to maximize a space, you figure out how to use it more often throughout the day. But I like the idea of applying some math to it.

  Of course, this runs counter to the notion that some spaces should be reserved for specific uses. In the case of a bedroom, it’s sleeping and sex. This is so that your mind doesn’t start associating it with things like work, which might start to disrupt your quality of sleep. But perhaps that’s about to become an anachronism in the modern city.

  Without having the above formula in mind, I have thought along similar lines for my own apartment.

  When I think about where I spend most of my waking hours, it’s bouncing between the kitchen and the living room. And yet my kitchen isn’t up against the windows; it’s recessed towards the back. Instead, my bedroom – where the blinds are almost always drawn – got the windows. (Access to light is a code requirement.)

  If it were up to me, I would have flipped my bedroom and the kitchen. But typically in the real estate world, “recessed bedrooms” are considered less desirable. 

  I don’t think I’ve heard many people complain about a recessed kitchen, but maybe that will change once we start thinking more about things like square foot hours.

  2016.01.28

• The Business Blockchain Series

  I just backed this project on Kickstarter.

  https://www.kickstarter.com/projects/wmougayar/the-business-blockchain-books/widget/card.html?v=2

  I haven’t backed a lot of projects on Kickstarter, but I definitely enjoy the process of discovering a project that I’m interested in and then providing a small, seemingly insignificant, sum of money to help make it a reality.

  In this case, it’s a collection of two books by William Mougayar about Bitcoin, blockchains, cryptocurrency, and decentralization.

  These are all topics that I’ve touched on before on this blog, albeit with much less rigor than what I’m sure William will be applying to his books. I wrote this post about 2 years ago, when I first started wrapping my head around Bitcoin. And more recently, I wrote posts about how the blockchain could transform home buying and how Honduras is building a decentralized land registry system using the blockchain technology.

  So while at first glance it may seem like these books having nothing at all to do with city building and real estate, I am betting that they will over the long term, which is why I am doing my homework today.

  Here’s a snippet from William’s Kickstarter page:

  “The fundamental characteristics of blockchains are puzzling to consumers, corporations, governments, policy makers and regulators, because their implementation challenges centrally orchestrated trust, and enables a new kind of trust: one that is distributed, decentralized, from peer to peer, and not centrally managed by any single entity. Take any service, and add “without previous center-based authority”, and replace by “peer to peer, trust-based network”, and you will start to imagine the possibilities.”

  If all of this isn’t enough to pique your interest, then you should also know that William is from Toronto. Great things come out of this city 🙂

  2016.01.27

• The decline of US homeownership

  Charlie Gardner (aka the Old Urbanist) recently published an interesting pair of posts (here and here) about the decline of homeownership in the United States.

  What really stood out for me, though, was this chart (showing the percentage of household real estate equity):

  

  And this conclusion:

  “The implied conclusion here, that a dramatic expansion of debt has been necessary just to maintain the illusion of a stable homeownership rate (setting aside the explosion of debt in the 2000s necessary to support an increase in homeownership), puts an even more negative spin on the figures from the preceding post.  In short, a decline in homeownership has until the past few years been masked by shifting demographics and an increase in household debt.”

  What I would now be curious to see is the above chart in terms of household equity value. Because I wonder to what extent rapidly appreciating home prices (as a result of cheap credit) are having an offsetting affect on declining equity percentages.

  2016.01.26

• To connect rather than isolate

  

  When I was
  a kid growing up in the suburbs of Toronto, I never played in the backyard. I
  played in the streets. That’s where all the kids came together.

  We would
  play baseball in somebody’s driveway, using one of the garage door “squares” as
  the strike zone. We would play football on corner lots, where it was tackle on
  the grass and “two-hand touch” on the street. And we would wax our curbs so
  that we could skateboard them.

  None of these
  spaces were ever really intended for baseball, football, or skateboarding, but
  we kids repurposed them.

  As people,
  including families, continue to move into urban centers around the world, I
  have no doubt that the next generation of children will once again repurpose
  spaces for play. But that doesn’t mean that we don’t have work to do when it
  comes to properly preparing our communities for people of all shapes and sizes.

  One of the
  most interesting design challenges facing us today has to do with our towers.

  Architects
  have long been obsessed with the idea of vertical villages. Le Corbusier’s Unité
  d’habitation in Marseille had two shopping streets embedded within the tower
  that were intended to act as public spines. I don’t know how well they did, but
  it was a highly progressive idea for the time.

  Following
  on this idea, I was recently watching a
  TED talk with architect Ole Scheeren (thanks Mariane) and I was fascinated
  by his obsession with breaking down the raw verticality of towers.

  His belief
  was that, yes, cities are and will continue to become more dense through tall
  buildings, but that most towers isolate rather than connect people. His work strives to do the opposite.

  And this
  one of the big trends that I think we will see more of in our cites. We will see
  new forms of urban connectedness and a blurring of private, public, and
  semi-public spaces. Screw Euclidean zoning.

  On that
  note, I am reminded that I owe the ATC community a post on my predictions for
  2016. I hope to get that out shortly.

  Diagram via Büro Ole Scheeren

  2016.01.22

• Additional thoughts on land prices

  Daniel Hertz over at City Observatory just published a post talking about why land costs are so important when it comes to home prices. More specifically though, his post is intended to refute a claim that multifamily housing is always going to be more expensive than single family housing.

  The key concept here – which is critical to understanding urban real estate economics – is that home values are essentially made up of two things: the land and the improvements (i.e. the building). 

  When home prices rapidly appreciate, as has been the case in cities like Vancouver (see below) and Toronto, it’s not the building, but the land that’s really driving the price up. 

  And as you can see from the chart below (which Daniel shared in his post), it is possible for multifamily housing to be less expensive than single family housing. 

  

  So why was someone arguing that multifamily housing is more expensive?

  Well if you look at just construction costs, then this is generally true. Single family housing is typically wood frame construction, whereas multifamily housing is usually reinforced concrete or some other material that allows you to build up. In these latter cases, the price per square foot to build is going to be higher.

  But Daniel’s argument is that when you build multifamily housing, you also begin to amortize the cost of the land over more housing units. So you begin to use land more efficiently and that offsets the higher construction costs.

  However, two thoughts come to mind.

  First, the value of a piece of land is entirely dependent on what you can build on it. And the more you can build on it, the more the land is worth. So as densities increase, so do land prices.

  Second, a big part of why condominiums are so much more affordable is that they’re smaller. In 2014, the average condo size in Metro Vancouver was estimated to be 840 square feet. I couldn’t find the average size of a detached house in the city, but let’s assume for a second that it’s 2,500 sf. 

  If that were the case, then a detached house, despite being more expensive overall, would still be cheaper on a per square foot basis. You would be paying less for every square foot of livable space. True that doesn’t make the house more affordable, but I think it’s a bit unfair to compare apples (small condo) to oranges (large house).

  So what I would really like to see is a graph of all-in low-rise and high-rise per square foot prices over time and for various cities. Because I would be curious to see at what point – if ever – they intersect.

  2016.01.14

• How should cities manage their own awesomeness?

  Conor Maguire introduced me to an interesting site today called Airbnb vs. Berlin. The site does a deep dive into Berlin’s Airbnb market with the hope of answering the question: Is Airbnb contributing to a shortage in affordable housing?

  The site is very well done. It’s filled with lots of great market stats and diagrams such as this one here: 

  

  Of course, the impetus for a site like this is that cities all around the world, from San Francisco to Berlin, are grappling with rising home prices. If you happen to live in a successful, growing city, that’s probably what is happening.

  But when this happens, we seem to want to look for something or someone to blame. In San Francisco it’s the tech workers. They’re the ones driving up homes prices. In Vancouver, it’s the foreign Chinese buyers. And in Berlin, it’s those Airbnb users who are just out to make a profit. In all of these cases, we like to tell ourselves that if we could just get rid of “X”, everything would be much better. 

  But I think sometimes we forget that this is also the result of doing many things right.

  If Berlin wasn’t a brilliantly cool place to visit, then tourists wouldn’t come. And if tourists didn’t come, then Berlin wouldn’t have, by far, the largest Airbnb market in Germany. If Vancouver wasn’t one of the most enjoyable places in the world to live, you wouldn’t have the same attention from overseas buyers looking to snatch up properties. 

  So in a way, we should be asking ourselves: How do we, as a city, manage our own awesomeness?

  The other thing that Airbnb vs. Berlin reminded me of is the viewpoint that profits are some dirty little secret. I hear it all the time in the real estate development business. People will say: “That developer is just out to make money.” Of course she/he is! They operate a business. And like all for-profit businesses, one of the objectives – it may not be the only one – is to make money.

  I say all this not as a direct response to the website. They remained fairly neutral in their analysis. Instead, I raise it as an alternate viewpoint in the seemingly universal battle against “X.”

  In case you’re wondering about Berlin’s Airbnb market, the site estimates that there are roughly 11,701 Airbnb listings in the city out of a total of about 1.9 million flats. Of these listings, it is estimated that somewhere around 30% are by “professional users” who are only out to make a profit and are not participating in the “sharing economy” in its purest sense. That equates to about 0.18% of all Berlin flats.

  Based on this number, I’d say that Berlin’s cool factor probably has a lot more to do with the city’s rising rents than do the profit seeking Airbnb users.

  2016.01.13

• Urban infill case study: 1234 Howard Street in San Francisco

  Urban infill developments can be tough. The sites are often small and/or narrow and that creates a lot of design challenges. Access to light is a common problem.

  But constraints can also be beautiful, because they have a way of forcing creativity. 

  When I was in architecture school, I used to find it easier to work when I was given constraints and challenges. It gave me something to latch onto, as opposed to just starting with a blank canvas. A big part of design, at least for me, is about solving problems. So give me a problem to solve!

  One of the ways that architects and designers often deal with the access to light problem is by carving out lightwells or courtyards to bring light down into the building. This can be used when you have a deep site or when you’re building right up against the property line and you can’t have any windows.

  One project that I’ve always liked for this reason – as well as the fact that it’s beautifully designed – is 1234 Howard Street in San Francisco. It looks like this from above:

  

  The site is 50′ x 165′ and it spans an entire block. 

  In order to get lots of light into all of the units, the architects (Stanley Saitowitz | Natoma Architects) split the site up into 3 “bars”, each of which would be somewhere around 16′ x 165′. The middle “bar” was then dedicated to a courtyard that cuts through the entire building.

  

  The two flanking bars were then further subdivided into 2 units per bar, which translates into 4 units per floor x 4 floors. The ground floor is just common areas and parking.

  The advantage of this design strategy is that the apartments now have windows running the length of the courtyard, where as typically on narrow deep lots you would end up with “bowling alley” units and windows just on one end.

  The disadvantage of this design strategy is that you’re now just over 16′ away from seeing what your neighbor is eating for dinner, among other things. 

  But with the right window coverings, I’m sure we’d all survive in these apartments with their Bulthaup kitchens and Miele appliances.

  

  I love seeing creative solutions to tight urban sites. And one of the things that I worry about, with things like the Mid-Rise Performance Standards here in Toronto, is that we’re reducing or even eliminating the possibility for these kinds of creative solutions.

  I recognize that 1234 Howard is not the same as an avenue mid-rise site in Toronto with low-rise residential behind it. But the thought still crossed my mind as I was writing this piece.

  All photos via Stanley Saitowitz | Natoma Architects Inc.

  2016.01.08