One Big Thing
For years, people wanted to live in places where it is the most difficult to build, driving prices in those regions up. Now, with remote and hybrid work a possibility, buyers are aiming their sights towards larger properties in the exurbs and builders are struggling to keep up. NY Times
What I think that a lot of people still underestimate about this trend is its potential to create positive feedback loops. As more affluent people move to exurban locations, it becomes more viable for the types of service businesses that they enjoyed in cities (restaurants, bars, boutiques, etc) to make it in the exurbs. Once those amenities start popping up, those locations become more desirable still to city holdouts.
One of the key arguments that city proponents make is that the superior urban amenities will always draw people there. Of course, this is correct but it ignores the fact that amenities and services are not static and new businesses become more viable as more people with disposable income move into an area. One of the primary reasons that people miss big wave trends is that they tend to underestimate feedback loops. I suspect that the exurbanization trend is here to stay for quite a while.
What I’m Reading
Middle Ground: The pandemic illuminated how the future of retail is likely to be more omnichannel (e-commerce sales by traditional retailers) than online only. Morningstar
Backlash: Vacation rental fees being charged by platforms like Airbnb are prompting a backlash and making hotels look more attractive. Marketwatch It’s interesting to note that a similar thing is going on with ride share rates as platforms struggle to find drivers. With reopening upon us, I’m actually starting to wonder if taxi medallions, which can now be purchased for as low as $75,000 in highly restricted NYC (they were over $1MM not that long ago) are now an attractive distressed play.
Covered: COVID has changed the way that real estate contracts are written, with force majeure clauses that include new provisions including pandemics rapidly becoming commonplace. Commercial Observer
Up in the Air: Leisure travel is making a big comeback as the pandemic recedes in the US and the economy reopens. However, the future of business travel is still far from certain. NBC News
Chart of the Day
Remarkable how this completely decoupled after the Great Recession.
Source: Truist Securities
WTF
Let it All Hang Out: A drunk boater was arrested for flashing several women because Florida. NBC 2
Totally Normal: A lifelong McDonald’s fan in Virginia has turned her home into a shrine to the fast-food chain, complete with its iconic golden arches and Happy Meal toys. NY Post
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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