Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 888

Fred Wilson made an interesting remark in his recent post about the current "IPO bonanza" that is taking place in the tech space. He is, of course, talking about the recent IPO of Lyft, the recent S-1 filings from Pinterest and others, and the expected filings from Uber, Airbnb, and so on.

After listing the benefits of going public, he went on to say that this bonanza will surely also mean that it is going to become even more unaffordable in the Bay Area. Part of this is perhaps self-serving, since he operates a VC firm out of NYC. (Take your money and move to NYC.)

But the data suggests that there is truth to this.

When Twitter when public in 2013, it was estimated that it created some 1,600 millionaires . This is great for the local startup ecosystem as many of these beneficiaries could go on to found their own companies and create a whole new batch of jobs. The money gets recycled.

But what does it do to the local housing market -- especially a supply-constrained one like that of the Bay Area where it is difficult to build?

In 2018, Barney Hartman-Glaser, Mark Thibodeau, and Jiro Yoshida penned a paper called, Cash to Spend: IPO Wealth and House Price s. In it, they looked at the impact of IPOs on local home prices in California from 1993 through to 2017.

What they found, among other things, was a "positive and significant association between local house price changes and firms going public." The price increases were also found to be the greatest the closer you get to the headquarters of the firm that just went public.

If you'd like to download a copy of the paper, you can do that here .

This evening I was at my alma mater, the Rotman School , for a conversation between Roger Martin (the former dean of the school) and Canadian-Jamaican billionaire, Michael Lee-Chin . Michael is one of the most disciplined, consistent, and charismatic people I have never met. (The soothing Jamaican accent probably doesn't hurt.)

One of his points this evening was about compounding. Not just compound interest, which is what many of you are probably thinking, but compounding in life. The thing about compounding is that the real benefits come later on. That's why personal finance people will tell you that the key to financial freedom is to start saving and investing early on.

The problem with this is that, well, the real benefits come later on. And it can be frustrating when the rewards don't seem to match the efforts. That's why grit is so important and why some have suggested that it is a far better predictor of future success than things like IQ or a GPA score. There's no substitute for hard work.

In the development business, projects tend to take a long time. We started working on Junction House back in 2016 and here we are now in 2019 planning for construction. So I thought this evening was a good reminder that there's lots of value in long-term goals and that more of us (including companies) should be thinking along these lines.

Debating the merits -- or shortcomings, depending on which camp you're in -- of all-glass buildings isn't new. But there seems to be a bit of a resurgence happening right now because of the recent opening of Hudson Yards in New York.

There's an important environmental consideration here: Glass is, as a rule, a poor insulator. But often the other concern with all-glass buildings is their sameness. Witold Rybczynski recently wrote about this on his blog in a post called The Transparency Trap :

Le Corbusier described (modernist) architecture as “the masterly, correct and magnificent play of volumes brought together in light.” Corbusier used glass but he never designed all-glass buildings. Neither did Mies; he added superfluous I-beams to his facades (which also had substantial spandrels). The problem with transparent glass is that it doesn’t hold a shadow, and without a shadow there can be no “play of volumes.” Since minimalist modernist architecture doesn’t offer decoration or ornament, that doesn’t leave much to look at.

Witold isn't usually appreciative of that which is new and I often find myself disagreeing with this critiques. But I like his metaphor of "holding a shadow." Light and shadow are, of course, fundamental to architecture.

Photo by  LinedPhoto  on  Unsplash