Friday, March 27, 2015

Why Is It Always Texas – Part 2

Prime Real Estate
An article in The Atlantic got me thinking (again) about why Texas is such a draw.  Both Houston and Dallas added more than 100,000 people during the 2013-2014 timeframe and not far behind in growth was Austin. After this past winter in the eastern Midwest and the Eastern seaboard it is a very good bet that this trend will continue. Throw in the insane politics of many of these areas and the best investment during the next few years may be in moving companies.

There was a time when California held this honor of being the prime destination of Easterners (as a kid in the sixties I remember the Beach Boys, Little Duce Coups, Haight-Ashbury, Jefferson Airplane, California Dreaming, all that stuff). Now they are fleeing. No water, a democratic political machine everything political, no smoking yet marijuana yes campaigns, did I say no water, 100 billion dollar trains to nowhere, taxes through the roof, rents the highest in the world, home prices along the sacred 50 mile Pacific edge totally unaffordable (can’t wait to sell and get that equity – which is a whole other market strategy), and did I mention no water. Yes, California may have absolutely fantastic weather but it hardly makes up for the idiots that now run this state. It was remarkably different when we moved here in the early seventies – very different.

But, back to Texas. Americans, as we get older like warmer weather, just ask my back. I assume that there are many in Boston that are glad the aerobic exercise of snow shoveling has lost its allure and fondly think of warmer climes – at least with a January temperatures over “frost-bite.” Time magazine published an article by Tyler Cowen in late 2013 that sums up many of the reasons why Texas is the thing and America’s future (for good or bad).

While there are a lot of issues such as automation and the impacts on the middle-class that are driving people to Texas, it is jobs and inexpensive housing that are the greatest draws. Housing is less expensive in Texas and not by a small amount of money. On average you can buy a lot more house for a lot less money than in California, New York and almost anywhere in the Northeast. A home in the San Francisco Bay area is impossible for under $600,000 and the same in New York. The same house on a larger lot in a nice community in the Houston area is $200,000. That leaves a lot of money for other things. And it’s not due to lower incomes, in all stats after living expenses, the average middle-class Texan is wealthier than their social equals in New York and Coastal California. Did I mention Texas also has no income tax.

Texas is the complete opposite of California. From economics, politics, governmental expectations, income taxes, and a much smaller government, they are dramatically different.

One reason I suspect that people are heading to Texas is because it is NOT like where they live now. Americans (at one time) wanted independence and freedom more than anything. They were told to head west, they fled the confines of the cities and all the ills found there, they wanted safety and they wanted to be fundamentally left alone. Nanny laws were anathemas, but we sucked it up. We rationalized everything, accepted everything—after all we are flexible and optimistic. But, there are still some who want to be left alone and many of them are heading to Texas.

Stay Tuned . . . . . . . 

Thursday, March 19, 2015

Little Boxes Stacked Neatly in Piles

Mission Rock, San Francisco
If there is one thing the world is not short of these days is shipping containers. I even wrote a thriller about them a few years back. They are the most ubiquitous “thing” of the late twentieth and twenty-first centuries. Originally it was an idea of Malcom McLean to use standardized boxes to carry goods from one port to another (first ship was his Ideal X) 

The idea wasn’t exactly new but it was McLean and his personal drive that made it change the world. Everything that has to deal with international cargo changed that day—April 26, 1956—when the Ideal X sailed from New York to Houston, everything. Ship designs grew to incredible sizes and demands. Whole railroad systems were redesigned to handle the containers (they would be stacked higher if existing railroad tunnels were taller). Los Angeles built a below grade railroad “river” from Long Beach out of the LA basin. Freeways are now being widened to handle the influx at ports and at gateways around port cities (Altamont Pass in eastern SF/Oakland Bay Area). Shipping channels are dug deeper every ten years to accommodate these massive ships. Even the Panama Canal is being widened to allow for better east-west trade by the bigger ships (with very significant changes to international trade as a result). There are 5-6 millions of these boxes moving around the world at any one time (probably more). As many as 10,000 fall in to the oceans every year (yes, the rumors of running shoes on the beaches of Oregon are true).

So, what about architecture? These boxes are designed to be stacked up to 12 high on board a container ship (with appropriate rail supports), on land they are usually maxed out a 7 boxes high. These boxes normally come in three basic sizes, but the variations seem to be endless. The basic unit is 8-foot wide by 8’-6” high and 20 feet long. They can also be 40 feet long and 56 feet long (and a world of other sizes as well). They are steel frames with corrugated panel sides. They are dry, refrigerated, some air tight and sealed, others barely hold themselves together after few years of use. Guesses are there are maybe 17 million plus around the world on ships, rails, stacked in piles, and in backyards. Who would have thought of all this in 1956?

Now back to architecture. Wikipedia lists at least 40 things you can do with these structures, everything from housing foundations to Starbucks stores.   Their use is only limited by imagination—even cost of rehab is not an issue. Remember, we are saving the planet. Back in the 1960s Moshe Safdie designed his famous Habitat 67 in Montreal; while that was all precast bocks of concrete, one can easily see the transition to shipping containers. 
Habitat 67 - Montreal
The latest idea is what the San Francisco Giants are doing in the Mission Rock area of the city – a pop-up shipping container village with restaurants, bars, and shops in one of the city’s most exciting revitalized neighborhoods. And it is also directly across McCovy Cove from AT&T Ballpark (the home to our World Series champs). It is also an opportunity to tune up the city for the Giants long-term development project on this same piece of land.

Last week I wrote about shopping malls, here is an example of a temporary mall built after the tragic Christchurch, New Zealand earthquake in 2011.
Christchurch, New Zealand
Temporary Mall, Christchurch, New Zealand
This is not the first nor will it be the last container town. I imagine in some third world cities there are whole villages of these boxes. Even refugee camps (this one in Turkey for Syrians). 
Konteynir Refugee Camp, Turkey
They are trying to survive; we are just trying to be chic.

Stay tuned . . . . . . . .

Wednesday, March 11, 2015

The Re-Malling of America

A couple of very interesting developments over the last few weeks may significantly shake up the retail mall industry in the United States. The first of these is the hostile bid by Simons Property Group of Indianapolis, Indiana to take over The Macerich Company of Santa Monica, California. Between them they own and operate over 425 malls and retail centers in the United States and foreign countries. (Macerich – 95 properties and Simons – 325+ properties, source Wikipedia). I would venture to guess that 90% of Americans are less than one hour away from one of their respective centers. The second and even more fascinating is that the Edmonton, Alberta based Triple Five Group that owns the Edmonton Mall and the Mall of America is proposing a 4 billion dollar super, humongous, enormous, colossal entertainment and retail “mall” near Miami.

I have been directly involved in one form or another in the mall design business since the days of Alfred Taubman in the 1970s. Then some of the most exciting changes to the retail industry were underway. And many of these changes wrought terrible things on towns, peripheral suburban communities, and even downtown traditional retail centers. This is not the place to get into the history of malls in America (and elsewhere), but it is the place to look at how the forces of the marketplace consumer seem to be one step ahead of the retailers and mall owners. We went from small town America, to mid-sized suburban shopping centers, to enclosed weatherproof malls and super-malls, to massive retail centers with a mix of enclosed and open pedestrian areas, to remodeling the traditional downtown, to massive failures due to high debt by some of the largest mall owners (example: General Growth Properties), and now to the restructuring of both the mall concept itself and the companies themselves.

The biggest change seems to be in the venues themselves. Most enclosed malls were isolated at their start, primarily due to location (freeways) and cheap land costs. These were the 70s and 80s, now these malls are surrounded by residential development as well as ancillary retail and office complexes. Some have even sparked “new towns” around them. These malls are redeveloping to now include housing and office uses.

Some are beginning to emulate the entertainment aspects of some of the larger malls. While questionable, if there are enough customers many things are possible.

Why would Simons want Macerich, I have my own ideas? Simons has been very aggressive in trying to increase its square footage. Five years ago during General Growth’s serious financial problems, Simons tried unsuccessfully to take over the company, eventually they walked away. Simon has properties in Europe and Canada and have aggressively expanded into the premium outlet market. Macerich, while having some outstanding properties (Santa Monica and Walnut Creek, California), is also a developer/owner of mid-sized sub-regional centers across the United States. These properties would complement Simon’s collection. Whether Macerich can fight off Simon as well as General Growth did remains to be seen. The concern is that the customer will suffer if these acquisitions go forward is of little concern. The customer is, and has, shown itself to be fickle and will go where there is the best value, venue, and variety to shop. Failure to provide this is not an option. My guess, it is the long-term leases of many of the high-end retailers located within the Macerich centers (Nordstrom, Niemen Marcus, etc.). GO HERE  

But, Triple Five’s direction is totally different. GO HERE  To used an over-worn phrase, the are trying to Disneyfy the retail experience. Their new Miami complex will include a ski slope, a water park, a sea-lion show (not in favor of these myself), miniature golf, bowling, as well as everything from the usual restaurants, hotels, and condominiums. There is even a rumor there will be retail stores and shops. Wow and double wow, the fun and games of the retail giants of Minnesota and Edmonton Central Plains of North America are coming to South Beach. Many of these enticements have been tried before, especially during the late seventies with circus type retail malls and themed venues (skating, park-like spaces, and roller coasters). Most failed or were junked.

I have also found that these centers can never create a new market. They can only steal customers from other markets; this is what caused many of the suburban problems in the 1980s when the enclosed mall did so much damage to the traditional downtowns of smaller communities. These things are very expensive, I will wait to see if they can find the funding.

And lastly the big can get bigger. It was announced that the “new” General Growth (after its literal resurrection for the dead three years ago), is expanding its flagship mall in Honolulu.  GO HERE  Its Ala Moana Center (the world’s largest open-air mall) is expanding by another 660,000 square feet. They also sold a significant interest in the mall to an Australian retirement fund, AustralianSuper. While Ala Moana is not performing to industry standards, GGP is obviously seeing a different future than what many analysts’ see. The world is flooded with money at the moment trying to find a home; many are betting that the American REIT industry is one of the best places to be. I wish them luck.

Stay Tuned . . . . . . . .

Tuesday, February 17, 2015

Random Thoughts on Caffeine and Sustainability

Location, Location, and Starbucks
At the end of last month a news report floated across the multiple levels of the news industry, “When a Starbucks Moves Into a Neighborhood, Values Rise.” Fascinating to say the least, scary to say the most. Simply put the further away from a Starbucks coffee shop the lower your home’s value (Click Here)

Back in my urban planning days designing retail centers and neighborhood strip malls for my developer clients, the mantra was: “Get me a Starbucks!” Without a doubt the most important (and busy) person in retail was and is the regional forward planner for Starbucks. Having a Starbucks in your retail center was like a super sized magnet attractive all manner of retailers and businesses. It could and would literally make your deal. I wonder how many developers took their tentative lease agreement to the bank; it was probably as good as a negotiable bond.

This also led to a number of books on the effects of the appearance of coffee shops in the urban fabric. Called “third places,” they have become social centers, meeting places, Craigslist drops, offices, writer’s nooks, and places to safely escape. The other two places were home and work.

So now Starbucks is helping to drive the housing industry, which of course validates all that wonky urban design theory flashed about fifteen years ago about needing to put mini-retail centers in residential neighborhoods. Many tried and many failed due primarily to the lack of decent business plans, cheap rents, and of course customers. I guess all they really needed was a Starbucks.
(Full disclosure: I do own Starbucks stock, I have visited a Starbucks in the last 24 hours, and I am writing this with a cup of Keurig pod coffee, Starbucks ‘House Blend’ in a very nice cup to my right).

Words, Words, Words
During the last few years so many new words have been dropped on society one begins to wonder about their real meaning. The current list includes (but not limited to): sustainability (corollary ‘Green Growth’), organic, green (‘Green Chic’), carbon footprint (and its corollaries ‘cookprint’ and Carbon Neutral), locavore, green roofs, and of course Greenhouse Effect.

And to my way of thinking much of this is environmental self aggrandizing marketing and baloney. The all-encompassing term is sustainability. The simple practice of insuring what we humans do is not terminal for us and/or the planet. All the other terms seems to graduate from this basic term, a term  that will have a hundred definitions if you ask a hundred people. A lack of definition allows for the mongrelization of the word and complete loss of meaning, and that is where we are now with all these terms. One can grow quite paranoid and itchy if they try to live up to the requirements of being a locavore (eating food produced locally – of course determined by someone else), and worrying about their carbon footprint while driving to a Whole Foods in a Prius imported from Japan. But they can be comforted knowing that the plastic in the Prius is:
In constructing the Prius, Toyota used a new range of plant-derived ecological bioplastics, made out of cellulose derived from wood or grass instead of petroleum. The two principal crops used are kenaf and ramie. Kenaf is a member of the hibiscus family, a relative to cotton and okra; ramie, commonly known as China grass, is a member of the nettle family and one of the strongest natural fibres, with a density and absorbency comparable to flax. Toyota says this is a particularly timely breakthrough for plant-based eco-plastics because 2009 is the United Nations’ International Year of Natural Fibres, which spotlights kenaf and ramie among others. (Wikipedia)

Now doesn’t that just make you all warm and fuzzy? And how is this sustainable when the products are shipped thousands of miles to the end user, who still puts gasoline in the damn thing. As with most elements in this social/political discussion it is about appearances - not reality. There is a term used by the environmental industry (make no mistake it is an industry) that defines those using these buzzwords for their own evil capitalistic ends as “greenwashing.” One can quite easily use the term define the federal grant needy environmental movement as greenwashed itself.

And by the way most of the fuel (coffee and tea) that runs modern civilization comes from Brazil, Vietnam (2nd largest grower), Columbia and Central America, and Indonesia. Now how sustainable is that?

One more bit of silliness. It was reported that some environmentalists were concerned that Boston would willfully pollute the harbor and Charles River by dumping its snow directly into the surrounding ocean. Maybe it can barged to California where we need it and besides what’s going to happen when it melts anyway. Just saying.

Stay tuned . . . . . . . .