Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1184

Matthew Townsend of Bloomberg recently published an interesting article talking about the dominance of Amazon.com (and online shopping in general); the shift towards experiences over stuff; and the languishing brick-and-mortar brands that keep saying it’s the macroeconomy, rather their product/approach, which is causing sales to slump.

Here are a 3 excerpts that stood out for me:

Lurking behind the cliché is a hard truth these executives are eager to avoid. “All this pleading that the consumer isn’t spending is an excuse, largely from management teams whose product is less relevant,” Kernan said. “The consumer is actually driving the U.S. economy, so it’s a little ridiculous when we hear the excuse of the macro environment is not good.”

Another hurdle that isn’t going away is the shift to increased spending on experiences such as travel and classes, which make for much better posts on Instagram, Facebook, and Snapchat. “Social media has really fostered a have-done environment, which is not what retailers sell,” Perkins said.

One characteristic of these struggling brick-and-mortar chains has been direct competition with Amazon. If they don’t go head-to-head with the online giant, they rely heavily on people visiting shopping centers anchored by retailers that do, such as ailing department-store chains Macy’s and Sears. One measure of store visits in the U.S. paints a dire picture, with only a dozen positive weeks over the past two years.

According to Bloomberg, 55% of online product searches start at Amazon.com. And while online sales in 2016 have only accounted for 11% of all (U.S.) retail revenue, it has represented 54% of all growth! That’s a big number, especially when you think about what that will mean over time.

Talking about the growth and threat of online shopping has become a boring truism. I know that. But are retail executives taking it seriously? The Bloomberg article gives you the sense that many are not – or at least they’re not publicly acknowledging it.

When I look around my place right now and think about where I bought each item – everything from the shoes at my door to the protein powder in my cupboard – it’s pretty amazing to think about how much I now buy online. And I’m sure that many of you are the same.

Groceries aside, I’m probably 85-90% online. What about you?

New York State Governor Andrew Cuomo recently signed a bill that will levy heavy fines (up to $7,500) on Airbnb hosts who do not abide by local housing regulations.

Hours after, Airbnb filed a federal lawsuit claiming “ irreparable harm .”

However, they also proposed a 5 point plan that they hope will make home-sharing work in New York City and then serve as a framework for new legislation.

Here are Airbnb’s 5 points (summarized by me):

1. One host, one home : Just like it sounds, this would limit people to renting a single home within the five boroughs.
   

2. Require registration : State would require short-term rental hosts to register. Airbnb would be authorized to register people on behalf of the state.
   

3. Make home-sharing work for all : Landlords would be able to set specific rules for short-term rentals in their buildings and then secure a portion of the revenue for maintenance and so on. (I would imagine that the same could be done by condo corporations.)
   

4. Good neighbor rules : Platforms would be required to have dedicated 24/7 hotlines should any neighbor complaints arise as a result of home-sharing.
   

5. Taxes to support affordable housing : Airbnb would collect and remit additional taxes on behalf of hosts, which could then be used for things such as affordable housing.
   

It’s interesting to think about Airbnb’s evolution. It started out as air mattress rentals on the floor and nobody thought it would ever work as a business. Now it’s a huge business and governments everywhere are trying to figure out an appropriate response. Hopefully a suitable middle ground will be found.

How do you feel about Airbnb’s proposed 5 point plan? With this framework, would you be comfortable with Airbnb in your building? I know that many of you are also hosts (some of you do it for a living), so I would be curious to hear your thoughts.

Urbanist Richard Florida has spoken a lot about a “ great inversion .” This is about poverty moving to the suburbs and the core of cities becoming a kind of “gated suburb.” (i.e. wealthy)

In response to this narrative, City Observatory recently published a post where they call this a new mythology. Joe Cortright argues that it is simply an exaggeration that sounds good in media headlines. And indeed, if you look at some accounts of poverty , the swings haven’t been that dramatic.

However, if you dig into this study by Luke Juday at the University of Virginia (cited in the City Observatory article), there have been some interesting changes. 

Below is a chart that shows the percentage of adults (over 25) with a bachelor’s degree (or higher) sorted by distance from the city center. This particular chart is a composite of 7 northeastern (US) cities. The brown line is 2012 and the orange line is 1990.

As you can see, there has been a huge spike in educated people living in city centers – at least in the northeast.

Here is that same chart for Atlanta:

New York:

In the case of New York, it looks like the entire city just became more educated.

Miami:

Educational attainment is often the single biggest determinant of income. So there is something to be said about highly educated people concentrating themselves in city centers. We may not want to call it an inversion of great proportions, but it’s a meaningful shift.