Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 286

If you've ever been to Rome, then you've probably been to the Trevi Fountain . It is, arguably, the most famous fountain in the world. And if you've ever been to the Trevi Fountain, then you've probably thrown change into it, over your left shoulder, and hoped for good things. Lots of people do this . I did it when I was there in 2007 as a grad student. And in 2016, the fountain collected nearly US$1.5 million in change , all of which was (and still is) donated to a Catholic charity. But I can't help but wonder if this number is declining at all. I mean, I couldn't tell you the last time I handled physical money, especially coins. Though maybe this is such an entrenched tradition that people seek out change for this very purpose. The desire to want to believe things that aren't true can be a strong one.

The late fashion designer, Virgil Abloh, had a design rule for himself called the "3% approach." Above is a slide from a presentation that he gave at Harvard back in 2013 where he listed it as item 3 of his "personal design language." The idea behind this 3% rule is simple: you really only need to change something by 3% in order to create something new.

Case in point:

Given this, it should come as no surprise that Abloh had cited artist Marcel Duchamp as being a source of inspiration. ( We've spoken about this before .) Duchamp is most famous for his "readymade" sculptures where he took existing objects -- like urinals -- and transformed them into art by signing them and curating them appropriately. This was obviously controversial, but it made Duchamp one of the most important artists of the 20th century.

Now, 3% seems like an oddly precise number. I don't know how, for instance, you quantify the amount of change on the above shoe. Is it surface area? In any event, that's beside the point. What's most fascinating for me about this approach is that it suggests that small changes are enough to, not just create novelty, but actually establish authorship . Meaning, the shoe on the right is no longer a Converse shoe. It is now an "OFF-WHITE" shoe. They authored it.

Like the work of Duchamp, this was and is controversial. Lots of companies have sued Off-White for trademark infringement. We know, for example, where the above black stripes came from and we know that Off-White's multi-directional arrow logo is borrowed from Glasgow Airport's logo c.1960. But that's clearly the point of readymade reworks. And it's clearly enough for people to want to pay a lot more for the shoe on the right.

Fascinating.

Do you think that this 3% approach applies (or could apply) to other things outside of fashion, like architecture and buildings? I think so.

We talk a lot about walkable urban communities on this blog, and I'll be the first to admit that this is my own bias. It's my preference. But at the same time, we can't ignore that, as of 2022, there were nearly 280 million registered personal and commercial vehicles in the United States. And that only about 8.3% of households do not have a vehicle . Most households drive in this part of the world.

The result is that lots of people want to regularly wash their car(s). According to Bloomberg , there are some 60,000 car washes across the US, and the overall sector has been growing at roughly 5% per year (I'm not sure over what time period). More thrilling, though, are the stats that the car wash market is expected to double by 2030 and that there were more car washes built in the last decade compared to all prior years combined.

The obvious reason for this is that there are a lot of drivers. But why right now? Apparently , there are other more specific reasons for the recent boom in car washes:

Now, washes can take just 90 seconds, labor costs have been automated down, and recurring revenue from memberships has eliminated weather risks. Plus, the  tax reforms enacted in 2017 by former president Donald Trump  allowed car wash owners to claim 100% depreciation on new equipment — a generous subsidy to further investment. While that incentive was written to shrink over time, the tax proposal  currently in Congress  would restore the 100% depreciation allowance.

This has the PE and real estate industries interested:

“If private equity thinks it’s sexy, they’re gonna throw money at it, right?” said Emil Khodorkovsky, founder and CEO of Forbix, a real estate firm that just acquired a car wash in Santa Monica, California. “It’s a basic business. It isn’t complicated finance. Certain actors are getting squeezed but this one still has a much higher-yielding return than an apartment building or a retail center.”

It's hard to think of a retail use that is more antithetical to walkable urban communities. Even most drive-through places have the ability to service things that aren't cars. It is also possible to go through a drive-through on a bicycle or other micro-mobility device. I have done this before and it was fun. But going through a car wash on a bicycle is probably a lot less fun.

Intuitively, as long as there are lots of cars, there will be lots of people who want car washes. At the same time, there may even be a more urban use case, here. If you happen to have a garage and a driveway, there is always the possibility that you could wash your own car. But if you live in a walkable urban center and you park your car in a stacker accessed via an elevator , it's probably a lot harder for you to do that.

In this case, there's a subscription for that.