Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 701

I am reading Malcolm Gladwell's latest book right now, called Talking to Strangers: What We Should Know about the People We Don't Know , and I am intrigued by the chapter on Sylvia Plath's unfortunate suicide and the concept of "coupling." The idea behind coupling, which stands in contrast to displacement, is that when someone makes the very sad decision to commit suicide, it can often be coupled to a particular place or context.

Malcolm starts by giving the example of "town gas." Prior to it being phased out in the 1960s and 1970s, most homes in Britain relied on a form of gas that contained carbon monoxide. And sadly, it became the most popular way for people to kill themselves. When Sylvia Plath took her own life in 1962, the death-by-carbon-monoxide-poisoning stat was 44.2% of all suicides in England and Wales.

The concept of displacement, on the other hand, surmises that if somebody wants to kill themselves, they will eventually find another way. But Malcolm convincingly argues that that is not necessarily or very often the case. As town gas was phased out of British homes, the number of suicides also declined in lockstep. Turns out that many of the previous suicides had been coupled to that particular tool.

Why this is potentially valuable to this blog audience is that this same coupling phenomenon can happen within our cities and to particular places. Malcolm gives the example of the Golden Gate Bridge in San Francisco, which has been the site of many suicides since it was first erected in 1937. The same, of course, can be the said about many subway systems around the world.

But again, there's evidence to suggest that if you can save somebody on the Golden Gate Bridge (a suicide barrier was erected in 2018) or on a subway system by installing safety doors, there's a good chance that many of those people will never actually find another way to commit suicide. In other words, you can save a bunch of lives by having the right provisions in place and not assuming that something is a foregone conclusion.

Photo by Chris Leipelt on Unsplash

According to a recent Wall Street Journal review of property and corporate records, Travis Kalanick's ghost kitchen startup, called CloudKitchens , has spent over $130 million over the past two years buying more than 40 properties in about two dozen cities.

Travis is co-founder and the former CEO of Uber and this latest startup provides commercial kitchens to restauranteurs who are looking for a low-cost way to launch delivery-only food concepts.

In some ways, it can be compared to coworking spaces for delivery-only restaurants. Instead of renting a full restaurant space, you lease 200-300 square feet of real estate at a lower cost address. CloudKitchens then handles all of the distribution and fulfillment, effectively lowering the barriers to entry for food startups.

Some of the properties that they have been buying include a vacant restaurant space in Miami Beach for $9.2 million (May 2020) and an industrial property in Queens, New York for $6.6 million (March 2020). They've also bought in cities like Portland and Las Vegas.

As you might imagine, now is a pretty good time to be buying some of these properties. And if you think about it, there are some real cost advantages to what they are doing, not to mention some co-working-style arbitrage on the real estate.

The company is apparently going to great lengths to conceal what and where they are buying. But what is perhaps more interesting is their asset-heavy approach. They're buying lots of real estate, which is inline with what companies like Opendoor are doing, but is distinct from Uber's asset-light approach.

It is also different from what many other ghost kitchen startups are doing. It seems that most are leasing their spaces. There has to be a reason for this difference.

This is a chart from Knight Frank showing the average value of "super-prime" residential real estate transactions in 12 global markets between March and June 2020, and versus the same period last year.

Knight Frank classifies super-prime real estate as having a value greater than US$10 million and ultra-prime real estate as having a value greater than US$25 million.

In this particular chart, London takes the top spot with an average super-prime transaction value of US$38 million. This is a big jump compared to 2019 where the average value was US$16.9 million.

Typically it is Hong Kong that takes the top spot in this ranking, but this year it fell to third. Still, Hong Kong had the highest number of transactions with 60 super-prime sales taking place in the first half of 2020. This is down from 155 in the first half of 2019.

Overall, Knight Frank recorded 281 super-prime transactions across these 12 cities in the first half of this year. This is, not surprisingly, a decline compared to last year, which saw 594 transactions over this same time period.

But all things being considered and given some of these price increases, the super-prime market is certainly holding its own.

Chart: Knight Frank