Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 315

We have spoken before about how hotel brands don't typically own their real estate. But the same is also true of many other businesses. And one common reason for this is that it ties up a lot capital that could be otherwise deployed in the core business. If, for example, you're in the business of producing exclusive handbags, it usually makes sense to spend your excess cash on making better handbags. And if you find that you're actually making more money on real estate, then it could be a sign that you're in the wrong business.

There are, however, instances where owning your own real estate may make the most sense. Maybe you have an irreplaceable location that you want to secure for the long term. And so there's real strategic value. Or maybe you keep having annoying legal fights with your landlord and you just want to get back to focusing on luxury handbags. There are other motivating factors to consider here, but these two seem to be behind Prada's recent acquisition of 724 Fifth Avenue in New York.

Prada has had a flagship 5-storey retail store at this location since 1997 (and most recently was paying US$22 million in rent). In December, they announced that they had acquired the entire 12-storey building for US$425 million. (That works out to be about $5,395 psf on the gross building area!) And then shortly after, they announced that they had acquired next door -- a hard corner -- for another US$410 million (total US$835 million).

All of this makes the deal one of the largest in New York last year. But was it a good deal? I would need some more information to answer from a quantitative real estate perspective. But if I'm Prada, I know that I need to be on Fifth Avenue for the foreseeable future. And now I get access to a hard corner and I no longer have to deal with my landlord. These are clearly strategic things. Last year was also a pretty good time to be buying retail/office buildings with all cash, which is what Prada did .

This is a powerful perspective :

We evolved to be wary of change. Our attention is limited, new things can be a threat and the status quo feels comfortable.

As a result, we spend a lot of time and energy being afraid (and arguing about) the upcoming changes in our lives, but almost no time at all thinking about the things we’re used to.

As an example of this tension, check out this "exit interview " with Toronto's former chief city planner, Gregg Lintern. The underlying theme is change and why it's desperately needed.

But of course, that's not easy.

The interviewer, Victoria Gibson, mentions this survey stat: nearly half (47%) of all Torontonians think the city is building too little housing, and yet only about a quarter (27%) think their area could handle more.

We need this, but not here. Probably because we're used to the way things are.

But if you read the interview, you'll see that the answer, or at least one answer, is to make the conversation personal, and ultimately think critically about, you know, the things we're used to.

Change starts with not giving the benefit of the doubt to the status quo.

I've said this before, but the car I currently have will certainly be the last internal combustion engine vehicle that I own. I truthfully even felt a bit weird buying it 6 years ago, but at the time, there weren't that many options other than a Tesla. And I didn't want a Tesla.

Today, there are lots of EV options, and the numbers are starting to show that. When the final figures come in, it is estimated that the US will have sold 15.5 million new cars last year . And of these, about 1.44 million units are expected to have been electric .

This means that we are just under 1 out of every 10 new cars sold in the US. The trend line is also working in the right direction. 1.44 million new EV units is roughly the total number of EVs sold between 2016 and 2021 in the US. 

So things are accelerating. And presumably there are other people like me waiting on the sidelines. I am deliberately roughed in for an EV charging station in my new parking spot and, if/when it comes time to purchase a new car, that's exactly what will get installed.

(I added "if" because, depending on how mobility evolves over the next 5-10 years, there's a chance I may no longer want to own a car.)