Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 318

For those of you who celebrate, I wish you a Merry Christmas.

This year has been a hectic year for many; certainly for those of us in real estate. I've heard a lot of people tell me that they've "never worked so hard only to feel like they have accomplished so little."

Looking back at what I wrote on the first day of this year , I was wrong about many of my 2023 predictions. I thought the interest rate hikes would be over by the first quarter of the year and that the spring would bring greater optimism for new development projects.

This was partially true -- we did see some buoyancy around spring -- but then further increases over the summer really quashed the pre-construction condominium market and overall developer sentiment for basically the rest of the year.

I also thought that we would see distress within the industry in the first half of the year. That didn't quite play out, as far as I can tell, and I now think that 2024 will be the year for this.

All of this said, I do feel that 2023 was a highly productive year. I'm proud of what I accomplished both personally and professionally. And this holiday season, I'm looking forward to slowing things down, spending time with family and friends, and catching up on some life management.

Hopefully you are all able to do something similar. Merry Christmas, everyone.

I first wrote about Bird, the electric scooter company, back in March 2018 . At the time, they had just raised $115 million and their pitch was that they were going to solve the last-mile mobility problem. This is a real problem, and so lots of urbanist-type people, including myself, were excited. I then rode my first shared scooter in 2019 in Lisbon, and I had a ton of fun. I wrote : "Now I know what all the fuss is about."

But it wasn't all puppy dogs and ice cream. People started getting annoyed by the clutter that dockless scooters were creating in our cities (see above photo). Safety also became a great concern, and so they started getting viewed as a nuisance. Toronto never allowed them (despite my insistent blog posts) and Paris -- which had arguably become the scooter capital of the world -- banned them in early 2023 .

Now there's this: Bird announced this week that it has filed for bankruptcy. The once unicorn, which had its stock halted back in September because its market cap fell below $15 million for too long, needs cash. According to FT , they have about $3.25 million the bank, but they have an immediate need for $16.8 million to meet some "financial obligations" in January.

This is maybe not unexpected. But I think the important question is: Is this an existential moment for micro-mobility and shared scooters (i.e. this is a fundamentally bad business), or is it more of a case that money used to be mostly kind of free, and now it's not? Either way, I think there's no question that the latter is going to cause further distress throughout 2024.

But the question remains: Can shared scooters be a sustainable business?

My day job is not to be a scooter analyst. But I do think that a number of things are true:

• Riders seem to really like using electric scooters and so top-line demand continues to grow.

• There are many headwinds for this business ranging from winter usage to politics.

• Barring regulation, there appears to be low barriers to entry .

• Lime has already claimed to be the first micromobility company to post a full profitable year .

These first and last points are important ones. I believe it's always going to be easier to get people onto electric scooters and bikes than onto regular bikes; people will generally always choose what is easiest. At the same time, here is a company that has allegedly figured out how to offer this service profitably. Assuming these two things remain true, I think we'll continue to find scooters in our cities.

Photo by  Gemma Evans  on  Unsplash

The prevailing view on short-term rentals right now seems to be this :

That is, it's viewed as a zero-sum game between residents and tourists. There are only so many homes within a city, and so if any of them are to turn into short-term rentals, then it is a direct reduction in the supply of available long-term homes. This can also happen very quickly given the asset-light nature of Airbnb and the fact that these spaces aren't usually purpose-built.

It is for this reason that many cities have enacted strict short-term rental laws that basically only allow you to rent out your principal residence when you're not around or if you happen to have extra space. In the case of New York , you have to be physically present when the dwelling is being rented, and so the use case is exclusively "I have extra space for you."

Either way, the basic idea is to stop people from removing homes from the long-term market. I do, however, find it curious that reductions in housing supply seem to be generally viewed as bad, but that increases in housing supply are often met with skepticism . Doesn't housing supply work in both directions? Why aren't more people clamouring for new homes to be built?

Where my head is at on this issue is that I don't see it as a zero-sum game. I believe that there should be rules and regulations around short-term rentals, but that they shouldn't stamp out all use cases other than "here's an air mattress in my living room." At the same time, I think we should be viewing this as an opportunity. Clearly we need more homes, more hotels, and more short-term rentals.

It's only zero-sum if we make it that way.