Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1323

This morning Fred Wilson linked to a Bloomberg article on his blog called, Maybe This Global Slowdown Is Different . There are a bunch of great charts throughout the piece and I’d like to share 3 of them here.

The first chart shows how per capita energy consumption has dropped remarkably in the United States since the 1990s, but how, not surprisingly, China’s rate is increasing.

The second chart shows car sales in the US. There was a big drop off during The Great Recession, and though sales have rebounded, they still haven’t reached their late 1990s peak. But that’s not to say that they won’t.

And the third chart shows the tremendous shift in the US over the last 65 years from the consumption of stuff to services.

This last one is fascinating. And it ties into the argument that the way value is created in our economy has shifted dramatically.

But I wonder if this change is really as sharp as it seems. 

If you look at what makes up “ services ”, you’ll see that housing (and utilities) and healthcare make up over 50% of what is considered to be personal spending on services. And if you look at housing and utilities spending since the 1960s in the US, it has increased dramatically. 

So how much of this shift from stuff-to-services is actually being driven by housing?

This past Sunday I spent part of the afternoon in Kensington Market (Toronto) for Pedestrian Sundays. 

If you’ve never been to a Pedestrian Sunday , you’re missing out. The entire neighborhood – which happens to be a National Historic Site of Canada – gets closed to cars, and filled with street vendors, musicians, bands playing on roofs (see above), and so on. It’s pretty wild. And it feels very Toronto to me.

It happens the last Sunday of the month from May to October. But every time I go I wonder why the area isn’t this way more often or even all the time. It’s a natural candidate. But after 12 seasons of Pedestrian Sundays, it still hasn’t happened. It’s only 6 days throughout the year. 

I remember being in a meeting early on in my career when I brought up the idea of a pedestrian mall in Toronto for a project I was working on. And I got completely shut down. I was told they don’t work here in our climate and that we should just forget about it. I was told to look at the failure of Ottawa’s Spark Street Mall .

But I’m still not convinced that’s the case. In fact, I feel even stronger at this point that it could and would work in Toronto. I’ve been to the Distillery District in the dead of winter for the Toronto Christmas Market and I could barely move because of all of the people. 

Acknowledging climate is important. But it shouldn’t become an excuse for not doing things.

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

This afternoon I was chatting with some friends about Toronto real estate (which is something that happens a lot in this city), and we started talking about “The Starbucks Effect.”

Basically, we were talking about how this neighborhood just got a Starbucks and how that neighborhood already has one. We were, like a lot of people, using Starbucks as a proxy for neighborhoods that are emerging and neighborhoods that have already arrived.

There’s been a lot of discussion about the correlation between home prices and the presence of a Starbucks. But the big question is what comes first: the home prices or the Starbucks?

Earlier this year, the CEO, Spencer Rascoff, and Chief Economist, Stan Humphries, of Zillow.com argued that the mere presence of a Starbucks can cause gentrification. 

They argued that Starbucks knows the next hot neighborhood before anyone else does and that they are “the fuel, not the follower.” And through their data they demonstrated that homes (in the US) near a Starbucks appreciated significantly faster than homes not near a Starbucks, or even homes near other coffee shops such as Dunkin’ Donuts.

But I – as well as others – wonder if this isn’t an oversimplification.

I certainly believe that Starbucks could help fuel home prices in a neighborhood. I think it gives people a comfort level that the neighborhood has arrived and that there are people in the area who are willing and able to spend money on discretionary items.

But I suspect that for Starbucks it’s a balancing act. They would never want to be late to an emerging neighborhood (and miss that prime corner property), but they also don’t want to be in the business of placing bets on neighborhoods with very few vital signs.

So I think it’s both. I think Starbucks is analyzing the data and watching home prices like a hawk (the follow) and when it reaches a certain point, they move. And that likely causes a further acceleration of neighborhood change (the fuel).

What do you think? I would love to learn more about their site selection process.