1 00:00:10,080 --> 00:00:14,520 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:14,600 --> 00:00:18,800 Speaker 1: I'm Joe Wis Tracy. You know, we did a recent 3 00:00:18,880 --> 00:00:22,439 Speaker 1: episode on rent and whether the price of rent is 4 00:00:22,480 --> 00:00:25,000 Speaker 1: ever going to go down? And I asked the question, like, 5 00:00:25,160 --> 00:00:27,880 Speaker 1: why don't they ever build new apartment buildings for families? 6 00:00:28,080 --> 00:00:32,120 Speaker 1: Totally un self interested questions from now from here on out, 7 00:00:32,520 --> 00:00:35,800 Speaker 1: Now that our years of just doing supply chain episodes 8 00:00:35,880 --> 00:00:37,640 Speaker 1: are going to come to an end, let's just do 9 00:00:37,680 --> 00:00:40,760 Speaker 1: episodes about our own personal ground, our own personal frustration 10 00:00:40,760 --> 00:00:42,880 Speaker 1: of the economy. All right, where are all the dog 11 00:00:42,920 --> 00:00:46,879 Speaker 1: amenities for apartments? That's my question. That's the thing. Like, 12 00:00:47,320 --> 00:00:50,479 Speaker 1: there's plenty of buildings with dog amentities. And as a 13 00:00:50,640 --> 00:00:53,440 Speaker 1: you know, I have two kids, and sometimes we look 14 00:00:53,479 --> 00:00:56,160 Speaker 1: at like new apartments and they're like, I want like 15 00:00:56,200 --> 00:01:01,200 Speaker 1: a building with dog amentities and billiard rooms in gyms 16 00:01:01,600 --> 00:01:04,880 Speaker 1: and dorman and all that stuff. But they don't make 17 00:01:04,920 --> 00:01:08,319 Speaker 1: those buildings for like the actual units. And my kids 18 00:01:08,319 --> 00:01:11,320 Speaker 1: don't play pool. Well, you got to teach them, no. 19 00:01:11,400 --> 00:01:13,360 Speaker 1: But I think you're right. It seems like a lot 20 00:01:13,400 --> 00:01:17,240 Speaker 1: of apartment buildings are geared towards young professionals. For the 21 00:01:17,280 --> 00:01:21,200 Speaker 1: most part. It's studios, it's one bedrooms. Here in New York, 22 00:01:21,319 --> 00:01:24,280 Speaker 1: it tends to be larger apartments that have been cut 23 00:01:24,360 --> 00:01:26,440 Speaker 1: up at one point in time, and you end up 24 00:01:26,480 --> 00:01:30,480 Speaker 1: with these really weird floor plans where like the bathroom 25 00:01:30,600 --> 00:01:33,840 Speaker 1: is right next to the kitchen. Yeah, and it's it's 26 00:01:33,920 --> 00:01:36,560 Speaker 1: not a very pleasant experience for anyone. But I think 27 00:01:36,560 --> 00:01:40,160 Speaker 1: there is there is this overarching question of why are 28 00:01:40,280 --> 00:01:44,160 Speaker 1: these decisions being made in the way that they're being made, right, Like, 29 00:01:44,200 --> 00:01:46,560 Speaker 1: there must be some reason, And the people who are 30 00:01:46,600 --> 00:01:49,760 Speaker 1: building these buildings, you know, obviously they have, you know, 31 00:01:49,800 --> 00:01:53,120 Speaker 1: presumably some good business reasons, but I don't know what 32 00:01:53,200 --> 00:01:56,200 Speaker 1: they are, and I find it frustrating, And I guess 33 00:01:56,200 --> 00:01:57,880 Speaker 1: I'd like it to change, but I don't know, like 34 00:01:57,920 --> 00:02:00,360 Speaker 1: if any like developers are going to like change their 35 00:02:00,400 --> 00:02:03,160 Speaker 1: business models. For me, I think the expectation is, like, 36 00:02:03,160 --> 00:02:04,960 Speaker 1: I just got to move out to the suburbs. My 37 00:02:05,080 --> 00:02:08,080 Speaker 1: kids are really tired of sharing a punk bit. Okay. 38 00:02:08,480 --> 00:02:10,760 Speaker 1: What I will say also is I think this is 39 00:02:10,800 --> 00:02:16,840 Speaker 1: a peculiarly American problem because having lived in many other places, 40 00:02:17,080 --> 00:02:20,560 Speaker 1: apartments are well designed, even in Hong Kong, where the 41 00:02:20,600 --> 00:02:24,240 Speaker 1: average size of apartments tends to be incredibly small. They 42 00:02:24,240 --> 00:02:27,840 Speaker 1: are designed for that tiny square footage, and so they 43 00:02:27,880 --> 00:02:31,280 Speaker 1: tend to be quite functional even for families, and certainly 44 00:02:31,320 --> 00:02:34,600 Speaker 1: in Europe there's much more of a culture of renting 45 00:02:34,800 --> 00:02:39,320 Speaker 1: versus ownership, so that you do have families who spend 46 00:02:39,360 --> 00:02:42,720 Speaker 1: decades in the same apartment building. I think you're totally 47 00:02:42,800 --> 00:02:45,200 Speaker 1: right here. The basic idea is that if you live 48 00:02:45,200 --> 00:02:48,680 Speaker 1: in the city in an apartment, you're young, you're single, 49 00:02:48,800 --> 00:02:50,600 Speaker 1: and then if you have kids at some point, then 50 00:02:50,600 --> 00:02:52,880 Speaker 1: you move out to the suburbs, and the housing stock 51 00:02:53,040 --> 00:02:56,480 Speaker 1: is not made for people who would say like to 52 00:02:56,560 --> 00:02:58,800 Speaker 1: stay in the city and maybe be a renter in 53 00:02:58,800 --> 00:03:01,400 Speaker 1: one unit or one building for twenty years. Yeah. I 54 00:03:01,400 --> 00:03:04,240 Speaker 1: think that's exactly right. All right, So what explains the 55 00:03:04,360 --> 00:03:06,800 Speaker 1: state of affairs? Is there any reason to change it? 56 00:03:06,840 --> 00:03:09,600 Speaker 1: We're going to be speaking to two guests I think 57 00:03:09,639 --> 00:03:12,680 Speaker 1: they were both heard our last episode and then spend 58 00:03:13,040 --> 00:03:15,400 Speaker 1: a couple of days sort of debating it on Twitter, 59 00:03:15,800 --> 00:03:17,760 Speaker 1: and so it's like, well, why debate on Twitter when 60 00:03:17,760 --> 00:03:19,280 Speaker 1: you can come in. So we're going to come talk 61 00:03:19,320 --> 00:03:21,760 Speaker 1: to us. Yeah, just come talk talk to us. Rather 62 00:03:21,800 --> 00:03:24,560 Speaker 1: than wasting get all in tweets. We are going to 63 00:03:24,600 --> 00:03:27,919 Speaker 1: be speaking with Stephen Smith. He is the executive director 64 00:03:27,960 --> 00:03:30,720 Speaker 1: at the Center for Building in North America, I think 65 00:03:30,720 --> 00:03:33,200 Speaker 1: tank around construction policy. And we're also going to be 66 00:03:33,240 --> 00:03:36,520 Speaker 1: speaking with Bobby Fian. He is a real estate developer 67 00:03:36,560 --> 00:03:38,760 Speaker 1: and he there's all about apartment floor plans and the 68 00:03:38,880 --> 00:03:43,880 Speaker 1: thinking behind the business reasons behind these decisions. So, Bobby 69 00:03:43,880 --> 00:03:46,920 Speaker 1: and Stephen, thank you so much for joining us. Very 70 00:03:46,920 --> 00:03:49,280 Speaker 1: glad to be here. Yeah, thanks for having me so, Steven, 71 00:03:49,320 --> 00:03:51,960 Speaker 1: I'll start with you, but really, are we right? Like, 72 00:03:52,040 --> 00:03:55,720 Speaker 1: let's start with is the premise that we're talking about 73 00:03:55,760 --> 00:03:59,200 Speaker 1: that a lot of these new developments really aren't geared 74 00:03:59,680 --> 00:04:04,920 Speaker 1: towards families? Is that correct? Yeah? I mean the typical 75 00:04:04,920 --> 00:04:07,120 Speaker 1: new apartment building in the United States, the developer will 76 00:04:07,120 --> 00:04:09,160 Speaker 1: try to cram in as many studios in one bedrooms 77 00:04:09,160 --> 00:04:11,800 Speaker 1: as they can. You know, I think it's mostly driven 78 00:04:11,840 --> 00:04:14,080 Speaker 1: by policy. You have a lot of there's a lot 79 00:04:14,080 --> 00:04:17,039 Speaker 1: of planning policy that tries to encourage more family sized units, 80 00:04:17,040 --> 00:04:22,360 Speaker 1: but they're really pushing against some more fundamental regulations that 81 00:04:22,440 --> 00:04:25,680 Speaker 1: make it quite difficult to build family sized apartments in 82 00:04:25,720 --> 00:04:28,400 Speaker 1: any sort of affordable way in not just the US, 83 00:04:28,400 --> 00:04:31,520 Speaker 1: but also Canada, North America. Stephen can I ask you 84 00:04:31,520 --> 00:04:34,039 Speaker 1: a quick follow up before we bring in Bobby, But 85 00:04:34,200 --> 00:04:36,960 Speaker 1: why does it matter? Do we need to have families 86 00:04:37,080 --> 00:04:39,960 Speaker 1: in apartments? Why can't everyone just move out to the suburbs. 87 00:04:40,040 --> 00:04:42,080 Speaker 1: I mean that, you know, that's the that's the safety valve. 88 00:04:42,120 --> 00:04:43,880 Speaker 1: As you know in America, you can just move out 89 00:04:43,920 --> 00:04:45,840 Speaker 1: to the suburbs, and we make it quite easy to 90 00:04:45,880 --> 00:04:49,560 Speaker 1: build family sized houses. So I mean, you know, does 91 00:04:49,560 --> 00:04:51,159 Speaker 1: it matter? I guess you know, if you want our 92 00:04:51,200 --> 00:04:53,120 Speaker 1: cities to thrive, if you want, you know, people to 93 00:04:53,160 --> 00:04:55,480 Speaker 1: be able to raise families in them, you know, for 94 00:04:55,839 --> 00:05:00,000 Speaker 1: environmental reasons or you know, even for some social reasons. Yeah, 95 00:05:00,000 --> 00:05:02,200 Speaker 1: I would say it matters. I don't want to live 96 00:05:02,240 --> 00:05:04,040 Speaker 1: in I don't want to live in the suburbs. I 97 00:05:04,080 --> 00:05:06,200 Speaker 1: didn't either. I like living in Manhette. I don't want 98 00:05:06,240 --> 00:05:08,000 Speaker 1: Joe to have to live in suburbs. Point. Thank you, 99 00:05:08,640 --> 00:05:11,000 Speaker 1: thank you for recognizing that. All right, Bobby, all right, 100 00:05:11,080 --> 00:05:13,799 Speaker 1: let's bring you in. So you come from it from 101 00:05:13,880 --> 00:05:17,719 Speaker 1: the business perspective, What is like the sort of like 102 00:05:17,800 --> 00:05:21,919 Speaker 1: big picture math in your view of someone builds a 103 00:05:21,920 --> 00:05:24,520 Speaker 1: new apartment, they have an opportunity, they get the approvals 104 00:05:24,520 --> 00:05:26,960 Speaker 1: to put down apartments on a plot of land. Why 105 00:05:27,080 --> 00:05:30,880 Speaker 1: is it better to target young professionals and the types 106 00:05:30,920 --> 00:05:33,880 Speaker 1: that don't need that space for children. Well, it is 107 00:05:33,960 --> 00:05:39,960 Speaker 1: simple math in that smaller units generate higher rent per 108 00:05:40,000 --> 00:05:44,200 Speaker 1: square foot, and that is the primary driver of returns 109 00:05:44,279 --> 00:05:46,880 Speaker 1: for ground up apartments in the way that we finance 110 00:05:46,920 --> 00:05:48,800 Speaker 1: them here in the United States, which is, you know, 111 00:05:49,080 --> 00:05:52,480 Speaker 1: through private market capitalism, unlike other parts of the world. 112 00:05:52,800 --> 00:05:57,360 Speaker 1: So in those places, someone will look at the building 113 00:05:57,560 --> 00:06:00,560 Speaker 1: in their spreadsheet and they'll look at or comps from 114 00:06:00,560 --> 00:06:03,119 Speaker 1: the market, and the primary way that they compare units 115 00:06:03,160 --> 00:06:05,760 Speaker 1: to other units that they say, here's the rent, here's 116 00:06:05,800 --> 00:06:09,000 Speaker 1: the size, here's the number of bedrooms. I want to 117 00:06:09,040 --> 00:06:12,000 Speaker 1: try and make it slightly smaller. So like it's like 118 00:06:12,040 --> 00:06:15,640 Speaker 1: the power of diminishing marginal turns like in reverse, right, 119 00:06:15,960 --> 00:06:18,840 Speaker 1: a five hundred ninety nine square foot one bedroom will 120 00:06:18,880 --> 00:06:20,839 Speaker 1: get basically the same right in a six hundred square 121 00:06:20,839 --> 00:06:24,240 Speaker 1: feet So that dynamic ends up pushing all units to 122 00:06:24,320 --> 00:06:28,919 Speaker 1: being smaller. That's the basic math for why realistic developers 123 00:06:28,920 --> 00:06:31,360 Speaker 1: are incentivized to try and put as many of those 124 00:06:31,400 --> 00:06:33,719 Speaker 1: types of units they can into the building as possible. 125 00:06:34,120 --> 00:06:37,159 Speaker 1: There's a host of other things that I'd say have 126 00:06:37,279 --> 00:06:41,559 Speaker 1: to do with the different timeline of incentives, but that's 127 00:06:41,600 --> 00:06:46,160 Speaker 1: the largest driver. So walk us through as a real 128 00:06:46,279 --> 00:06:49,520 Speaker 1: estate developer. You know, when you are considering a potential 129 00:06:49,560 --> 00:06:52,719 Speaker 1: investment or a potential new project, what are the things 130 00:06:52,760 --> 00:06:55,480 Speaker 1: on your spreadsheet that you're looking at? How are you 131 00:06:55,560 --> 00:06:59,039 Speaker 1: making those calculations? While I like to think that I 132 00:06:59,080 --> 00:07:01,080 Speaker 1: make them a little bit differ than other people, but 133 00:07:01,160 --> 00:07:05,160 Speaker 1: I would say in general, what I and other people 134 00:07:05,160 --> 00:07:09,920 Speaker 1: are looking at is the trends in the market to 135 00:07:10,080 --> 00:07:13,800 Speaker 1: see which unit types are getting the highest rents. Those 136 00:07:14,120 --> 00:07:17,600 Speaker 1: obviously are going to be within the class a new 137 00:07:17,640 --> 00:07:20,760 Speaker 1: construction sub market, so you're not going to compare yourself 138 00:07:20,800 --> 00:07:24,960 Speaker 1: to a pre war building unless it's been heavily upgraded. 139 00:07:25,360 --> 00:07:29,680 Speaker 1: And well, i'd say it really is ends up being 140 00:07:29,680 --> 00:07:31,640 Speaker 1: that simple. If there's a large problem that we have 141 00:07:31,680 --> 00:07:33,960 Speaker 1: within real estate, which I hope to like advance in 142 00:07:33,960 --> 00:07:35,920 Speaker 1: the future, and I hope like our industry advances, it's 143 00:07:35,960 --> 00:07:40,200 Speaker 1: that the real estate data is very simplistic. Rents are 144 00:07:40,280 --> 00:07:45,560 Speaker 1: extremely opaque, and things get i'd say reduced down to 145 00:07:45,680 --> 00:07:48,040 Speaker 1: different unit types. There's a lot of different i'd say, 146 00:07:48,040 --> 00:07:51,040 Speaker 1: like data on new housing inventory that gets added individual 147 00:07:51,040 --> 00:07:53,680 Speaker 1: markets and that's almost never broken down into type, and 148 00:07:53,800 --> 00:07:56,840 Speaker 1: even when it's broken down into type, it's definitely never 149 00:07:56,880 --> 00:08:00,280 Speaker 1: broken down into is this three bedroom, four family or 150 00:08:00,360 --> 00:08:03,680 Speaker 1: is it essentially three one bedroom suites? Those kinds of 151 00:08:03,760 --> 00:08:08,000 Speaker 1: nuances are always lost in data. Yeah, that's something that 152 00:08:08,080 --> 00:08:10,680 Speaker 1: came up in our kind of in our last episode 153 00:08:10,800 --> 00:08:13,320 Speaker 1: on rent, which is that you know, we talk about 154 00:08:13,320 --> 00:08:16,400 Speaker 1: like multifamily, et cetera, but like it's kind of meaningless. 155 00:08:16,400 --> 00:08:18,680 Speaker 1: What city are they in, how many you know whatever? 156 00:08:18,720 --> 00:08:21,880 Speaker 1: It is like that sort of drill down is like, 157 00:08:21,960 --> 00:08:23,880 Speaker 1: you know, desert. It's not all fungible, it's not all 158 00:08:23,920 --> 00:08:26,800 Speaker 1: the same. I just realized we should probably talk about 159 00:08:26,800 --> 00:08:30,440 Speaker 1: what we mean by apartments meant for families, Like what 160 00:08:30,680 --> 00:08:34,400 Speaker 1: exactly is it that families would like to see here? 161 00:08:35,480 --> 00:08:37,959 Speaker 1: I mean, I would say fundamentally, what families want is 162 00:08:38,000 --> 00:08:40,760 Speaker 1: a lot of bedrooms. And you know, Joe, like when 163 00:08:40,760 --> 00:08:43,400 Speaker 1: you think about like what would you like, you'd probably like, 164 00:08:43,679 --> 00:08:46,080 Speaker 1: most of all, you'd like just one extra bedroom. You 165 00:08:46,080 --> 00:08:48,120 Speaker 1: don't need an extra walking closet, you probably don't need 166 00:08:48,160 --> 00:08:51,240 Speaker 1: an extra bathroom. You just want one extra bedroom. So fundamentally, 167 00:08:51,280 --> 00:08:53,880 Speaker 1: I think, you know, a family sized apartment might be 168 00:08:53,920 --> 00:08:56,200 Speaker 1: a three bedroom, one and a half bath, maybe a 169 00:08:56,200 --> 00:08:59,080 Speaker 1: three bedroom, two bath, but the second and third bedrooms 170 00:08:59,080 --> 00:09:00,760 Speaker 1: they don't need walking clos that they don't need on 171 00:09:00,800 --> 00:09:03,360 Speaker 1: suite bathrooms. And that's what you get in the US. 172 00:09:03,480 --> 00:09:05,720 Speaker 1: And that's maybe it's not by design, but it is 173 00:09:05,800 --> 00:09:08,880 Speaker 1: in some sense mandatory based on the building and zoning codes. 174 00:09:09,960 --> 00:09:12,440 Speaker 1: I think we should have this. It should really just 175 00:09:12,480 --> 00:09:14,480 Speaker 1: be Tracy hosting this and I should just be like 176 00:09:14,480 --> 00:09:17,600 Speaker 1: the third guest. That's I have all these complaints. But clearly, Stephen, 177 00:09:17,679 --> 00:09:21,600 Speaker 1: like you must view this question somewhat differently than Bobby, 178 00:09:21,720 --> 00:09:27,160 Speaker 1: to identify zoning and codes as being a driver rather 179 00:09:27,240 --> 00:09:31,320 Speaker 1: than this simple unit math. Yeah, I mean I would 180 00:09:31,320 --> 00:09:33,920 Speaker 1: say in the United States to add an X. You know, 181 00:09:34,280 --> 00:09:38,520 Speaker 1: let's say, let's imagine your typical new construction apartment. There's 182 00:09:38,520 --> 00:09:41,440 Speaker 1: a long hallway in the middle of the building, and 183 00:09:41,440 --> 00:09:44,600 Speaker 1: then perpendicularly a rate off of it, there's apartments, and 184 00:09:44,679 --> 00:09:47,680 Speaker 1: you enter one of the apartments, and if it's a 185 00:09:47,679 --> 00:09:50,079 Speaker 1: two bedroom apartment, it's designed in what someone wants called 186 00:09:50,280 --> 00:09:53,600 Speaker 1: a bowling alley configuration. So you enter it, you enter 187 00:09:53,600 --> 00:09:56,520 Speaker 1: in the kitchen, you're about I don't know, thirty feet 188 00:09:56,559 --> 00:09:59,760 Speaker 1: from the window, probably, and there's not actually a whole 189 00:09:59,760 --> 00:10:01,840 Speaker 1: lot of window space in the apartment, and it's you know, 190 00:10:01,880 --> 00:10:04,080 Speaker 1: thirty feet away from you. So on the left you 191 00:10:04,080 --> 00:10:05,959 Speaker 1: have a bedroom, so you know, you enter in the 192 00:10:06,080 --> 00:10:08,360 Speaker 1: kitchen and then you go then you go forward and 193 00:10:08,400 --> 00:10:11,160 Speaker 1: then you see like a living area, and then on 194 00:10:11,200 --> 00:10:13,000 Speaker 1: the left you have a bedroom. On the right you 195 00:10:13,040 --> 00:10:15,240 Speaker 1: have a bedroom and those are by the window. But 196 00:10:15,360 --> 00:10:18,160 Speaker 1: what do you fill all that other space with. There's 197 00:10:18,240 --> 00:10:21,040 Speaker 1: a ton of this space that would not exist in 198 00:10:21,520 --> 00:10:25,319 Speaker 1: Europe or in Asia, mostly because the building is much 199 00:10:25,480 --> 00:10:28,240 Speaker 1: much thicker than it would be in another country. So 200 00:10:28,360 --> 00:10:29,800 Speaker 1: you know, when we think about what a family wants, 201 00:10:29,800 --> 00:10:33,040 Speaker 1: they want another bedroom. In a bedroom typically you know, 202 00:10:33,080 --> 00:10:36,400 Speaker 1: by codes and customs has to have a window, so 203 00:10:36,640 --> 00:10:38,679 Speaker 1: you know, you want to capture that extra window space. 204 00:10:38,720 --> 00:10:40,480 Speaker 1: But then you need to fill all this space, at 205 00:10:40,559 --> 00:10:43,120 Speaker 1: least in the United States, and you know, this is 206 00:10:43,120 --> 00:10:45,320 Speaker 1: square footage. It costs money to build, it cost money 207 00:10:45,360 --> 00:10:47,520 Speaker 1: to maintain. You have to fill it with something you're 208 00:10:47,520 --> 00:10:49,960 Speaker 1: probably going to fill it with, you know, bathrooms, which, 209 00:10:49,960 --> 00:10:51,679 Speaker 1: as you know if anyone's ever done at home renovation, 210 00:10:51,679 --> 00:10:55,000 Speaker 1: they're the most expensive part. So in the United States, 211 00:10:55,080 --> 00:10:57,600 Speaker 1: when you add an extra bedroom to a two betterom 212 00:10:57,600 --> 00:11:00,600 Speaker 1: apartment or a one bedroom apartment, you typically have to build, 213 00:11:00,679 --> 00:11:03,839 Speaker 1: you know, just within the apartment about three hundred square 214 00:11:03,840 --> 00:11:06,840 Speaker 1: feet of extra space. The bedroom itself is only about 215 00:11:06,880 --> 00:11:09,080 Speaker 1: you know, ten by ten, one hundred square feet, but 216 00:11:09,120 --> 00:11:10,840 Speaker 1: then you need to you know, fill all that space 217 00:11:10,880 --> 00:11:14,840 Speaker 1: in the middle, whereas in other countries in Europe, Latin America, 218 00:11:14,880 --> 00:11:18,280 Speaker 1: or Asia, to add the extra bedroom you might need 219 00:11:18,320 --> 00:11:20,520 Speaker 1: an extra I mean, in some cases you can just 220 00:11:20,559 --> 00:11:22,600 Speaker 1: add an extra hundred square feet, but maybe you'll add 221 00:11:22,600 --> 00:11:26,080 Speaker 1: another one fifty two hundred, but you're adding much less 222 00:11:26,080 --> 00:11:29,880 Speaker 1: space to add that bedroom. So, you know, buildings cost 223 00:11:30,040 --> 00:11:31,880 Speaker 1: money based on the rent per square foot. When you 224 00:11:31,880 --> 00:11:34,600 Speaker 1: rent an apartment or buy an apartment, you're probably not 225 00:11:34,679 --> 00:11:36,520 Speaker 1: looking at it based on a you know, you're not 226 00:11:36,559 --> 00:11:38,240 Speaker 1: looking for a number of square foot if you're looking 227 00:11:38,240 --> 00:11:57,839 Speaker 1: for a number of bedrooms. Bobby, you mentioned the lack 228 00:11:58,000 --> 00:12:01,480 Speaker 1: of floor planned data. What do you mean by that exactly? 229 00:12:01,520 --> 00:12:03,679 Speaker 1: Because when I think of floor plans, I think that's 230 00:12:03,720 --> 00:12:07,760 Speaker 1: like the one thing that is potentially available and kind 231 00:12:07,800 --> 00:12:14,520 Speaker 1: of standardized across every apartment building in America. Certainly, Oh Tracy, 232 00:12:14,600 --> 00:12:21,199 Speaker 1: where to begin answering that, Yes, so I'd say this 233 00:12:21,400 --> 00:12:27,400 Speaker 1: is the that question has been driving me in my career, 234 00:12:27,440 --> 00:12:29,400 Speaker 1: I'd say for the last like seven years and bothering me. 235 00:12:29,440 --> 00:12:32,280 Speaker 1: I'd say in looking at my own Excel models, like 236 00:12:32,280 --> 00:12:35,640 Speaker 1: when I've built ground up apartments, it always intensely bothered 237 00:12:35,679 --> 00:12:38,360 Speaker 1: me that in Excel there was no differentiation between square footage. 238 00:12:38,360 --> 00:12:40,800 Speaker 1: It's always a multiplier, like a base rent per sure 239 00:12:41,000 --> 00:12:43,600 Speaker 1: multiplier depending on type, right at just like a little 240 00:12:43,760 --> 00:12:47,360 Speaker 1: pivot table. If if one bedroom multiply by four square 241 00:12:47,400 --> 00:12:49,760 Speaker 1: four dollars to square foot if two bedroom multiply by 242 00:12:50,120 --> 00:12:54,199 Speaker 1: usually less three fifty, right, and there's no differentiation between 243 00:12:54,200 --> 00:12:55,960 Speaker 1: those two. So I'd say that is something that has 244 00:12:56,000 --> 00:12:58,480 Speaker 1: bothered me for a while, given that anyone who walks 245 00:12:58,480 --> 00:13:02,400 Speaker 1: into a unit knows that there are seven hundred squarefret 246 00:13:02,400 --> 00:13:04,800 Speaker 1: one bedrooms that are great and seven hundred squarefret one 247 00:13:04,840 --> 00:13:07,640 Speaker 1: bedrooms that are a piece of junk. Right, But it 248 00:13:07,679 --> 00:13:10,280 Speaker 1: has to be captured like in data somehow or else. 249 00:13:11,320 --> 00:13:15,440 Speaker 1: It's like the qualitative difference. I would say, yes, qualitative, 250 00:13:15,480 --> 00:13:17,920 Speaker 1: but like you have to use some sort of data 251 00:13:17,920 --> 00:13:22,280 Speaker 1: analytics or some sort of data columns just to say, well, 252 00:13:23,240 --> 00:13:25,800 Speaker 1: how large is I get similar things like we all 253 00:13:25,800 --> 00:13:28,360 Speaker 1: know that height matters, height should increase rent. But what 254 00:13:28,440 --> 00:13:30,199 Speaker 1: would be the only way to prove that, Well, you 255 00:13:30,200 --> 00:13:31,840 Speaker 1: would have to go through and measure the height of 256 00:13:31,880 --> 00:13:36,480 Speaker 1: every place, then equalize for all other like real estate 257 00:13:36,480 --> 00:13:39,640 Speaker 1: type attributes, and then say, aha, now we know that 258 00:13:39,720 --> 00:13:42,559 Speaker 1: height matters by this much, when in fact every person 259 00:13:42,600 --> 00:13:45,000 Speaker 1: knows that to be true, we just don't know exactly hownswer. 260 00:13:45,080 --> 00:13:47,760 Speaker 1: So I would say that the difficulty on that has 261 00:13:47,800 --> 00:13:50,360 Speaker 1: been driving me and my career for a while. It's 262 00:13:50,360 --> 00:13:52,840 Speaker 1: why I left a real estate development for a little 263 00:13:52,840 --> 00:13:55,200 Speaker 1: while to start two different sort of technology ventures and 264 00:13:55,240 --> 00:13:58,479 Speaker 1: now am in, like i'd say, the software data business 265 00:13:58,520 --> 00:14:01,840 Speaker 1: around floor plan data. I was just about to ask, 266 00:14:01,880 --> 00:14:04,959 Speaker 1: could you create an algorithm that takes in like data 267 00:14:05,040 --> 00:14:07,480 Speaker 1: inputs and then tries to spit out I don't know, 268 00:14:07,559 --> 00:14:10,160 Speaker 1: like a livability score. Well, I was just gonna say, 269 00:14:10,240 --> 00:14:12,880 Speaker 1: you know, Bobby, in your Twitter bio, you have quote 270 00:14:12,920 --> 00:14:14,679 Speaker 1: I don't know who made this quote, maybe you even 271 00:14:14,720 --> 00:14:18,440 Speaker 1: made it up Bill James of Apartments, Bill James, of course, 272 00:14:18,480 --> 00:14:22,680 Speaker 1: being the moneyball guy who famously took baseball and tried 273 00:14:22,720 --> 00:14:25,320 Speaker 1: to get it out of pure sort of like subjective 274 00:14:25,400 --> 00:14:28,280 Speaker 1: like yeah, that guy, that guy is good hustle and 275 00:14:28,320 --> 00:14:32,040 Speaker 1: tried to put nu miracle, you know, really quantify the 276 00:14:32,200 --> 00:14:35,440 Speaker 1: speed that someone could go, or how all these other things. 277 00:14:35,760 --> 00:14:38,400 Speaker 1: So how do you go about sort of like taking 278 00:14:38,440 --> 00:14:41,760 Speaker 1: these things that seems subjective, Yeah, that seems like good, 279 00:14:41,800 --> 00:14:44,400 Speaker 1: that's nice an area, it's roomy, and try to put 280 00:14:44,440 --> 00:14:48,080 Speaker 1: some like hard math behind it. So that is a 281 00:14:48,120 --> 00:14:50,680 Speaker 1: self that is a self chosen moniker, and it is 282 00:14:51,520 --> 00:14:54,920 Speaker 1: it is an homage too, I think like the mathematical approach, 283 00:14:55,200 --> 00:14:57,040 Speaker 1: and it is also meant to me to be a 284 00:14:57,080 --> 00:14:59,600 Speaker 1: reminder of how long it takes you that for those 285 00:14:59,640 --> 00:15:01,920 Speaker 1: people who remember the story of Bill James, he was 286 00:15:01,960 --> 00:15:05,880 Speaker 1: doing this by manually calculating things from box scores that 287 00:15:05,960 --> 00:15:08,920 Speaker 1: he got in newspapers thirty forty years ago, and it 288 00:15:08,960 --> 00:15:11,480 Speaker 1: took at least twenty five years for the general approach 289 00:15:11,560 --> 00:15:13,880 Speaker 1: to move forward. And the other thing that I also 290 00:15:14,000 --> 00:15:17,560 Speaker 1: greatly admire about that approach is that none of his 291 00:15:17,680 --> 00:15:21,000 Speaker 1: particular algorithms or that meaningfloor that that good anymore. But 292 00:15:21,040 --> 00:15:22,720 Speaker 1: it was the approach of saying, we're going to go 293 00:15:22,800 --> 00:15:29,560 Speaker 1: through and turn the sweet science into something slightly analytical. 294 00:15:29,760 --> 00:15:31,840 Speaker 1: So for me, how that works in floor plans is. 295 00:15:31,960 --> 00:15:34,400 Speaker 1: As you mentioned, Tracy, there are a tremendous number of 296 00:15:34,400 --> 00:15:37,480 Speaker 1: floor plans. Every apartment has one. The dimensions on them 297 00:15:37,520 --> 00:15:41,120 Speaker 1: are nearly always useless because it's not always clear whether 298 00:15:41,160 --> 00:15:43,000 Speaker 1: it's putting into a wall or whether it ends in 299 00:15:43,000 --> 00:15:46,200 Speaker 1: the middle of the room. Sometimes the dimensions just incorrect. 300 00:15:46,480 --> 00:15:49,440 Speaker 1: Sometimes they've taken room names and change them from something 301 00:15:49,560 --> 00:15:55,560 Speaker 1: useful to something useless, like from bedroom to dream and 302 00:15:55,680 --> 00:15:59,920 Speaker 1: some other some of the ridiculous things which so which 303 00:16:00,040 --> 00:16:02,880 Speaker 1: confuses people. But my basic approach has been to build 304 00:16:02,920 --> 00:16:06,840 Speaker 1: some software tools to take essentially these low resolution image 305 00:16:06,880 --> 00:16:10,400 Speaker 1: files and turn them into a lot more usable pieces 306 00:16:10,400 --> 00:16:12,480 Speaker 1: of data. So instead of a room or a unit 307 00:16:12,520 --> 00:16:15,320 Speaker 1: being described as a seven hundred and seventy five score 308 00:16:15,320 --> 00:16:17,840 Speaker 1: foot one bedroom, it would be described as there is 309 00:16:17,840 --> 00:16:20,320 Speaker 1: a room that has dimensions X and y. It may 310 00:16:20,400 --> 00:16:22,160 Speaker 1: or may not have a living room, it may or 311 00:16:22,200 --> 00:16:24,560 Speaker 1: may not have direct access to a bathroom, and it 312 00:16:24,640 --> 00:16:30,560 Speaker 1: has a closet with linear feet hanging of Z. And 313 00:16:30,880 --> 00:16:33,640 Speaker 1: by breaking things down into some more pieces, then you 314 00:16:33,680 --> 00:16:38,160 Speaker 1: can do some of the fairly straightforward statistical analysis on 315 00:16:39,200 --> 00:16:42,560 Speaker 1: apartments to say, in an area, do people want like 316 00:16:42,760 --> 00:16:45,360 Speaker 1: a kitchen that's fourteen feet or are they okay with eleven? 317 00:16:45,920 --> 00:16:49,320 Speaker 1: Does someone prefer that extra foot in their bedroom or 318 00:16:49,400 --> 00:16:51,360 Speaker 1: in their living room given like a fixed space. So 319 00:16:51,440 --> 00:16:55,520 Speaker 1: I'd say that's where it initially started. The family oriented 320 00:16:55,960 --> 00:16:58,120 Speaker 1: aspect of those apartments kind of came out of the 321 00:16:58,240 --> 00:17:01,640 Speaker 1: data and saying they're all lot of apartments and many 322 00:17:01,680 --> 00:17:05,960 Speaker 1: of them are not being built to these sorts of specifications. 323 00:17:06,000 --> 00:17:08,520 Speaker 1: Stephen touched on some of them, which is that the 324 00:17:08,600 --> 00:17:12,400 Speaker 1: size of closets in the United States is at least 325 00:17:12,400 --> 00:17:14,520 Speaker 1: two to three times what is in Europe, and I'm 326 00:17:14,520 --> 00:17:18,920 Speaker 1: not they're huge in Europe. We still use wardrobe, yes, 327 00:17:19,880 --> 00:17:23,160 Speaker 1: like a piece of furniture that acts like, yeah, Joe's 328 00:17:23,200 --> 00:17:26,359 Speaker 1: looking at no OA, I had a studio or I 329 00:17:26,400 --> 00:17:28,720 Speaker 1: had a loft in the financial district. Right, So you 330 00:17:28,760 --> 00:17:31,200 Speaker 1: have a rail that we're just like, we just bought 331 00:17:31,280 --> 00:17:34,640 Speaker 1: this like huge sort of yeah wardrobe from Ikea that's 332 00:17:34,840 --> 00:17:38,240 Speaker 1: dood like next to our TV. Basically, Stephen is absolutely 333 00:17:38,320 --> 00:17:41,879 Speaker 1: right that our building form does drive a lot of 334 00:17:41,880 --> 00:17:45,359 Speaker 1: this stuff. Right. So the general process for real estate 335 00:17:45,400 --> 00:17:48,119 Speaker 1: development is that a developer is going to go identify 336 00:17:48,200 --> 00:17:51,159 Speaker 1: piece of land and then first say go to the 337 00:17:51,160 --> 00:17:53,520 Speaker 1: city and say I would like to build this approximate 338 00:17:53,520 --> 00:17:56,639 Speaker 1: footprint with this many units, this money, parking spaces, this 339 00:17:56,680 --> 00:17:59,639 Speaker 1: amount of like mixed use. It isn't until after the 340 00:17:59,640 --> 00:18:02,640 Speaker 1: building is approved that then they'll go through and configure units, 341 00:18:02,640 --> 00:18:05,000 Speaker 1: because you're not going to spend money on full architecture 342 00:18:05,240 --> 00:18:08,199 Speaker 1: when you don't know the general layout. So once the 343 00:18:08,240 --> 00:18:11,560 Speaker 1: building footprint is defined, then it's a matter of how 344 00:18:11,600 --> 00:18:14,159 Speaker 1: do you shift around walls? How do you chop up 345 00:18:14,200 --> 00:18:18,200 Speaker 1: that space into a unit mix and type that maximizes 346 00:18:18,240 --> 00:18:21,479 Speaker 1: your returns. And that's why almost always small ends up 347 00:18:21,520 --> 00:18:25,240 Speaker 1: like driving small, and deep ends up like really pushing 348 00:18:25,280 --> 00:18:27,840 Speaker 1: them forward. And once the building is set at being 349 00:18:27,880 --> 00:18:31,320 Speaker 1: like sixty five feet wide in the long direction, well, 350 00:18:31,359 --> 00:18:33,080 Speaker 1: now we know the simple math, like your units are 351 00:18:33,080 --> 00:18:35,760 Speaker 1: going to be about thirty feet deep. Well, then that 352 00:18:35,800 --> 00:18:39,000 Speaker 1: means your smallest studio can be four hundred and fifty 353 00:18:39,040 --> 00:18:42,439 Speaker 1: feet a two bedroom. You need to be what what 354 00:18:42,440 --> 00:18:48,320 Speaker 1: does deep mean? Deep? So the difference the distance between 355 00:18:48,320 --> 00:18:50,440 Speaker 1: one window to the other window on the other side 356 00:18:50,480 --> 00:18:53,080 Speaker 1: of the Oh, so you're looking at it from the street, 357 00:18:53,160 --> 00:18:55,199 Speaker 1: how far back does the whole apartment go? And it 358 00:18:55,240 --> 00:18:57,680 Speaker 1: goes In the United States, it typically starts at about 359 00:18:57,720 --> 00:19:00,520 Speaker 1: sixty five feet. I would say, right, well, yeah, well 360 00:19:00,560 --> 00:19:02,679 Speaker 1: it depends, it depends on what market, but that is 361 00:19:03,160 --> 00:19:06,120 Speaker 1: that is quite typical. That is quite typical, I would say. 362 00:19:06,119 --> 00:19:07,840 Speaker 1: I mean when when we talk about you know, Bobby 363 00:19:07,880 --> 00:19:10,439 Speaker 1: was talking about the built form of the building, we 364 00:19:10,480 --> 00:19:12,879 Speaker 1: don't typically think about real estate as a field like 365 00:19:13,160 --> 00:19:15,560 Speaker 1: education or healthcare where there's like a lot of government 366 00:19:15,600 --> 00:19:19,600 Speaker 1: intervention because you know, it is all owned and developed privately. 367 00:19:19,840 --> 00:19:22,960 Speaker 1: But I think we probably should. I mean, the regulatory 368 00:19:23,040 --> 00:19:27,360 Speaker 1: burden is quite high in modern day society, even even 369 00:19:27,400 --> 00:19:31,040 Speaker 1: outside the United States. The architect isn't really designing the building, 370 00:19:31,200 --> 00:19:33,760 Speaker 1: you know, the codes are designing the building. So this 371 00:19:33,760 --> 00:19:36,000 Speaker 1: this form is sort of set from the start, so 372 00:19:36,040 --> 00:19:38,960 Speaker 1: there's not a ton of flexibility from the architect. And 373 00:19:39,000 --> 00:19:40,800 Speaker 1: a lot of cities they put out these little diagrams 374 00:19:40,800 --> 00:19:43,360 Speaker 1: of how the building should look and it's it's very 375 00:19:43,440 --> 00:19:45,600 Speaker 1: very close to how it actually works. And the architect 376 00:19:45,600 --> 00:19:48,119 Speaker 1: can do the finishes, they can do the interior layout 377 00:19:48,160 --> 00:19:51,679 Speaker 1: of the building, but the fundamental form that is pushing you. 378 00:19:51,680 --> 00:19:54,040 Speaker 1: You know, Bobby mentioned a seven hundred square foot one bedroom. 379 00:19:54,080 --> 00:19:55,800 Speaker 1: I mean, that's a concept that just doesn't exist in 380 00:19:55,880 --> 00:19:58,560 Speaker 1: other countries another countries, a seven hundred square foot apartment 381 00:19:58,600 --> 00:20:00,840 Speaker 1: would be a two bedroom apartment. And it's not just 382 00:20:00,960 --> 00:20:04,480 Speaker 1: because you know, our bedrooms are a little wider. They're 383 00:20:04,480 --> 00:20:06,080 Speaker 1: a little wider. It's not just because we have a 384 00:20:06,080 --> 00:20:08,680 Speaker 1: lot of more closets. We do have a lot more closets. 385 00:20:09,040 --> 00:20:11,160 Speaker 1: It's because that's really the only way that you can 386 00:20:11,240 --> 00:20:13,919 Speaker 1: design the building. If you want a window in the bedroom, 387 00:20:13,960 --> 00:20:17,080 Speaker 1: at least that's exactly right. Right, So once the building, 388 00:20:17,160 --> 00:20:20,040 Speaker 1: once the unit is thirty feet deep, having a window 389 00:20:20,040 --> 00:20:21,640 Speaker 1: in the bedroom means the unit is going to meet 390 00:20:21,680 --> 00:20:24,520 Speaker 1: at least be like twenty three twenty four feet wide. Right, 391 00:20:24,560 --> 00:20:28,600 Speaker 1: So then basic geometry just tells you how your different 392 00:20:28,680 --> 00:20:32,520 Speaker 1: units step up in size as you had bedrooms. Just 393 00:20:32,600 --> 00:20:36,080 Speaker 1: to play Devil's advocate, and I know Joe says he 394 00:20:36,119 --> 00:20:40,440 Speaker 1: doesn't like the suburbs. But setting Joe aside, what evidence 395 00:20:40,480 --> 00:20:44,119 Speaker 1: do we have that families, you know, assuming that there 396 00:20:44,560 --> 00:20:48,359 Speaker 1: were good sized apartments designed for families, what evidence do 397 00:20:48,400 --> 00:20:51,960 Speaker 1: we have that families would want to stay in that 398 00:20:52,080 --> 00:20:56,520 Speaker 1: kind of presumably more urban environment. Are there other factors 399 00:20:56,520 --> 00:20:58,680 Speaker 1: at play where maybe people want to buy a house 400 00:20:58,760 --> 00:21:01,560 Speaker 1: and build up equity. May be they want different schools, 401 00:21:01,600 --> 00:21:04,680 Speaker 1: Maybe they want a garden for their kids to play in. 402 00:21:05,320 --> 00:21:07,560 Speaker 1: What evidence do we have that families actually want this? 403 00:21:07,960 --> 00:21:09,639 Speaker 1: Just to add on today, and I agree with I, 404 00:21:10,280 --> 00:21:13,440 Speaker 1: you know, even though Tracy started at Devil's advocate question, 405 00:21:13,520 --> 00:21:15,640 Speaker 1: I do wonder like, do people go to the suburbs 406 00:21:15,680 --> 00:21:18,320 Speaker 1: because the houses are ye or do they go to this, 407 00:21:18,640 --> 00:21:20,440 Speaker 1: you know, or do they go to the suburbs because 408 00:21:20,440 --> 00:21:23,399 Speaker 1: they want the suburban lives? I mean, the rent shows 409 00:21:23,440 --> 00:21:25,159 Speaker 1: you that there's the demand for it. The rent and 410 00:21:25,200 --> 00:21:28,080 Speaker 1: the prices, you know, like a typical you know, family 411 00:21:28,560 --> 00:21:31,680 Speaker 1: family housing unit in New York might be a townhouse, 412 00:21:31,720 --> 00:21:34,720 Speaker 1: and I mean the prices are extraordinary, so you know, 413 00:21:34,800 --> 00:21:37,719 Speaker 1: I would say the demand. The evidence of the demand 414 00:21:37,760 --> 00:21:39,720 Speaker 1: is there is the very low vacancy rate in our 415 00:21:39,720 --> 00:21:42,880 Speaker 1: cities and the high price. And you know, you look 416 00:21:42,880 --> 00:21:45,199 Speaker 1: at other countries that simply allow this kind of family 417 00:21:45,880 --> 00:21:48,679 Speaker 1: this you know, family oriented apartments, and you have a 418 00:21:48,720 --> 00:21:51,640 Speaker 1: lot more of a culture of families, you know, living downtown. 419 00:21:52,560 --> 00:21:54,720 Speaker 1: Just on that note, can you give us some examples 420 00:21:54,760 --> 00:21:58,120 Speaker 1: of how other countries handle this, because I often think 421 00:21:58,240 --> 00:22:01,120 Speaker 1: with the US housing market, it's really helpful to look 422 00:22:01,160 --> 00:22:03,680 Speaker 1: at how other places do it because there's often such 423 00:22:03,680 --> 00:22:06,960 Speaker 1: a big contrast. Yeah, So the design of a North 424 00:22:06,960 --> 00:22:09,800 Speaker 1: American apartment building is very globally unique and it is 425 00:22:09,840 --> 00:22:12,159 Speaker 1: what in other countries they might think of as a hotel. 426 00:22:12,600 --> 00:22:15,320 Speaker 1: So you enter the building, um, you might remember it 427 00:22:15,320 --> 00:22:18,000 Speaker 1: from the movie The Shining. There's a big law hallway 428 00:22:19,119 --> 00:22:21,679 Speaker 1: and there's you know, there's there's apartment. Great description of 429 00:22:21,680 --> 00:22:24,040 Speaker 1: American apartments. It's like The Shining. Yeah, and I mean 430 00:22:24,080 --> 00:22:26,240 Speaker 1: they all look like this, and maybe the hallway will 431 00:22:26,240 --> 00:22:27,720 Speaker 1: twist and turn a little, but it's going to be 432 00:22:27,800 --> 00:22:29,520 Speaker 1: a long hallway. There's going to be units a rate 433 00:22:29,520 --> 00:22:32,520 Speaker 1: to the left, rate to the right. On the end 434 00:22:32,560 --> 00:22:36,320 Speaker 1: of the building, there might be some you know, three bedrooms, 435 00:22:36,359 --> 00:22:38,480 Speaker 1: sort of reasonably sized departments because they're on the corner. 436 00:22:38,760 --> 00:22:40,920 Speaker 1: In the rest of the world, let's use Europe, because 437 00:22:40,920 --> 00:22:43,400 Speaker 1: the people have a lot of familiarity with it. Typically 438 00:22:43,400 --> 00:22:45,840 Speaker 1: there will not be as much of this hallway space, 439 00:22:46,119 --> 00:22:48,200 Speaker 1: if at all. So typically what it'll be is it'll 440 00:22:48,240 --> 00:22:51,600 Speaker 1: be you'll enter the building, there'll be a single staircase 441 00:22:52,160 --> 00:22:54,280 Speaker 1: till you know, if there's an elevator, it'll probably be 442 00:22:54,320 --> 00:22:57,040 Speaker 1: a little smaller. It'll definitely be a little smaller and 443 00:22:57,160 --> 00:22:59,280 Speaker 1: it'll go you know, you'll so you'll have this vertical 444 00:22:59,320 --> 00:23:01,400 Speaker 1: core of the stair case in the elevator and then 445 00:23:01,400 --> 00:23:05,159 Speaker 1: a raid off of it. There will be likely between 446 00:23:05,160 --> 00:23:08,200 Speaker 1: one and four, but probably two apartments on either side, 447 00:23:08,240 --> 00:23:11,680 Speaker 1: left and right. So each building, or at least little 448 00:23:11,680 --> 00:23:14,440 Speaker 1: core of a larger building, will you know, let's say 449 00:23:14,440 --> 00:23:17,360 Speaker 1: it's a six story building, pretty typical height, there will 450 00:23:17,400 --> 00:23:19,480 Speaker 1: be you know, twelve apartments in the building. There will 451 00:23:19,480 --> 00:23:21,320 Speaker 1: not you know, it's not going to be a you know, 452 00:23:21,359 --> 00:23:23,040 Speaker 1: one hundred unit building. There's not going to be a 453 00:23:23,040 --> 00:23:26,680 Speaker 1: long hallway and these units If if you're an American 454 00:23:27,560 --> 00:23:29,840 Speaker 1: or if you're familiar with New York, I'm really describing 455 00:23:29,840 --> 00:23:33,800 Speaker 1: a tenement, so you know, these units still go from 456 00:23:33,840 --> 00:23:36,000 Speaker 1: the front of the building to the back of the building. 457 00:23:36,840 --> 00:23:39,359 Speaker 1: In the rest of the world, the building will typically 458 00:23:39,400 --> 00:23:43,280 Speaker 1: be maybe forty five feet deep and the apartment will 459 00:23:43,280 --> 00:23:46,480 Speaker 1: go from front to back. So in general, there will 460 00:23:46,560 --> 00:23:50,480 Speaker 1: be a much higher ratio of surface area to volume, 461 00:23:50,480 --> 00:23:52,680 Speaker 1: which is to say, you're going to have more windows. 462 00:23:53,040 --> 00:23:55,679 Speaker 1: So in seven hundred square feet you're going to have 463 00:23:55,680 --> 00:23:57,879 Speaker 1: two bedrooms. In nine hundred square feet you're going to 464 00:23:57,920 --> 00:24:00,240 Speaker 1: have three bedrooms, whereas in the US those are one 465 00:24:00,280 --> 00:24:02,760 Speaker 1: and two better apartments. In the rest of the world, 466 00:24:02,800 --> 00:24:05,080 Speaker 1: you're much more likely to have windows in the kitchen, 467 00:24:05,119 --> 00:24:07,560 Speaker 1: windows in the bathroom. You just have more windows generally, 468 00:24:07,960 --> 00:24:11,200 Speaker 1: and much more flexibility with laying out the laying out 469 00:24:11,240 --> 00:24:15,000 Speaker 1: the plan. It's funny because if someone asked me what 470 00:24:15,200 --> 00:24:18,600 Speaker 1: the differences between a European and apartment building in the US, 471 00:24:18,640 --> 00:24:20,800 Speaker 1: apartment building is like, I don't know what I would 472 00:24:20,840 --> 00:24:23,440 Speaker 1: have said, But then the moment you said, like, oh, 473 00:24:23,520 --> 00:24:28,000 Speaker 1: those tiny elevators and that single central core staircase, I 474 00:24:28,080 --> 00:24:29,880 Speaker 1: was like, oh yeah, and I haven't spent that much 475 00:24:30,160 --> 00:24:32,679 Speaker 1: time traveling in Europe, but I like immediately got that. 476 00:24:32,720 --> 00:24:36,840 Speaker 1: It's like random Arabians have stayed in like Italy or Paris. 477 00:24:36,520 --> 00:24:39,199 Speaker 1: It's not just Europe, it's every you know from you know, 478 00:24:39,320 --> 00:24:43,439 Speaker 1: Daka to Switzerland, you know, from Bladesha, Switzerland. This is 479 00:24:43,720 --> 00:24:45,959 Speaker 1: this is how an apartment building is built. And this 480 00:24:46,119 --> 00:24:48,400 Speaker 1: was how an apartment building was built in America too. 481 00:24:48,600 --> 00:24:50,720 Speaker 1: If you think about like a Chicago three flat, or 482 00:24:50,720 --> 00:24:53,440 Speaker 1: in New York City tenement, or you know one of 483 00:24:53,520 --> 00:24:57,080 Speaker 1: those little two story four unit buildings in Los Angeles, 484 00:24:57,200 --> 00:25:00,160 Speaker 1: this is how apartment buildings by humans are designed. It's 485 00:25:00,160 --> 00:25:04,160 Speaker 1: just in North America we've taken it a different direction. Well, 486 00:25:04,200 --> 00:25:07,840 Speaker 1: can I ask why has that happened? It's a combination 487 00:25:07,840 --> 00:25:09,959 Speaker 1: of I would say two things. It's a combination of 488 00:25:09,960 --> 00:25:13,600 Speaker 1: our very very unique approach to fire safety rules, which 489 00:25:13,600 --> 00:25:16,840 Speaker 1: are in turn driven by our obsession with building buildings 490 00:25:16,840 --> 00:25:19,920 Speaker 1: out of lightwood frame. And then it's also, I would say, 491 00:25:20,000 --> 00:25:23,080 Speaker 1: our obsession with the way our society looks down on 492 00:25:23,160 --> 00:25:27,240 Speaker 1: apartments and confines them to very small pieces of the city. 493 00:25:27,480 --> 00:25:30,200 Speaker 1: So let's take the second one. First. To have an 494 00:25:30,240 --> 00:25:32,639 Speaker 1: apartment that has a lot of windows, you tend to 495 00:25:32,680 --> 00:25:35,320 Speaker 1: need a little bit more land. And in America, you know, 496 00:25:35,359 --> 00:25:38,439 Speaker 1: we have these competing planners, have these competing mandates. On 497 00:25:38,480 --> 00:25:41,119 Speaker 1: the one hand, there's clearly a housing crisis, and you know, 498 00:25:41,240 --> 00:25:43,720 Speaker 1: especially in our cities, we need to allow more apartments. 499 00:25:43,760 --> 00:25:47,000 Speaker 1: On the other hand, you know, the local politics are 500 00:25:47,040 --> 00:25:49,320 Speaker 1: such that nobody wants to live near an apartment. Nobody 501 00:25:49,320 --> 00:25:52,879 Speaker 1: wants it near them, so we confine them to these loud, 502 00:25:52,920 --> 00:25:55,080 Speaker 1: polluted arterial streets. So if you think about a new 503 00:25:55,080 --> 00:25:57,600 Speaker 1: apartment building, it's probably not being built on a leafy 504 00:25:57,640 --> 00:26:00,600 Speaker 1: side street. With a lot of land. So all you know, 505 00:26:00,640 --> 00:26:02,800 Speaker 1: most of our land is locked up in single family 506 00:26:02,840 --> 00:26:05,159 Speaker 1: houses and it would be pretty trivial to demolish them 507 00:26:05,160 --> 00:26:07,600 Speaker 1: and build something new, but that's not really allowed. So 508 00:26:08,240 --> 00:26:11,240 Speaker 1: in this attempt to try to fit so many apartments 509 00:26:11,240 --> 00:26:14,280 Speaker 1: on such a small piece of land, the buildings just 510 00:26:14,320 --> 00:26:16,879 Speaker 1: get like really thick, really deep. And this is a 511 00:26:16,920 --> 00:26:19,440 Speaker 1: good way of cramming in a lot of square footage. 512 00:26:19,520 --> 00:26:21,040 Speaker 1: It's not a great way of cramming in a lot 513 00:26:21,040 --> 00:26:23,439 Speaker 1: of bedrooms. Then, on the other side of things, the 514 00:26:23,560 --> 00:26:27,159 Speaker 1: United States has a very unique approach to construction. Something 515 00:26:27,160 --> 00:26:29,399 Speaker 1: that foreigners are very surprised about when they watch American 516 00:26:29,440 --> 00:26:31,760 Speaker 1: TV series. Is you punch through the wall and I 517 00:26:31,880 --> 00:26:35,040 Speaker 1: mean yeah, drywall. Yeah, you punch through the wall and 518 00:26:35,080 --> 00:26:38,440 Speaker 1: there's nothing there. It's built out of wood and drywall. 519 00:26:38,680 --> 00:26:42,320 Speaker 1: So we've traditionally allowed people to build out of lightwood frame, 520 00:26:42,720 --> 00:26:45,040 Speaker 1: whereas in the rest of the world, again from Bangladesh 521 00:26:45,080 --> 00:26:47,760 Speaker 1: to Switzerland, you build the building out of concrete. So 522 00:26:47,800 --> 00:26:50,639 Speaker 1: as a result, the buildings traditionally have been quite flammable. 523 00:26:50,680 --> 00:26:54,400 Speaker 1: America has a very high rate of fire deaths. You're 524 00:26:54,480 --> 00:26:56,720 Speaker 1: much more likely in America than in any other advanced 525 00:26:56,720 --> 00:26:58,919 Speaker 1: country in a lot of far less advanced countries to 526 00:26:59,040 --> 00:27:01,840 Speaker 1: die in a building than in other countries. So we 527 00:27:01,920 --> 00:27:04,479 Speaker 1: have all these mitigations. One of the mitigations, probably the 528 00:27:04,480 --> 00:27:09,400 Speaker 1: most important one in driving apartment design is two interior staircases. 529 00:27:09,400 --> 00:27:10,879 Speaker 1: There has to be two ways to get out of 530 00:27:10,880 --> 00:27:15,359 Speaker 1: the building by staircase. This is very unique globally in 531 00:27:15,359 --> 00:27:19,040 Speaker 1: other countries. This is really reserved for skyscrapers. So if 532 00:27:19,040 --> 00:27:21,879 Speaker 1: you need two entrances and since nine to eleven, in 533 00:27:21,960 --> 00:27:24,159 Speaker 1: most of the country, except ironically New York, they have 534 00:27:24,240 --> 00:27:26,239 Speaker 1: to be the term is remote from each other. They 535 00:27:26,240 --> 00:27:29,160 Speaker 1: have to be at a distance. So if every apartment 536 00:27:29,160 --> 00:27:30,720 Speaker 1: needs to get out two ways and they need to 537 00:27:30,760 --> 00:27:32,640 Speaker 1: be a distance from each other, well, the most logical 538 00:27:32,680 --> 00:27:34,960 Speaker 1: thing to do is have this long haul hotel light 539 00:27:35,040 --> 00:27:37,960 Speaker 1: corridor in the middle. So that's the simple version of 540 00:27:38,000 --> 00:27:41,399 Speaker 1: what's driving all of this. So, Bobby, as a developer 541 00:27:41,520 --> 00:27:45,800 Speaker 1: and as a floor plan expert floor plan knower, you know, 542 00:27:46,000 --> 00:27:48,600 Speaker 1: how much does that resonate And when you're thinking about 543 00:27:48,600 --> 00:27:53,000 Speaker 1: a new building, how much do you feel constrained ultimately 544 00:27:53,080 --> 00:27:56,439 Speaker 1: in design by some of the rules that Stephen's been 545 00:27:56,440 --> 00:28:00,760 Speaker 1: talking about. Oh completely, but I would say in sports 546 00:28:00,800 --> 00:28:02,560 Speaker 1: the way that I sort of approach it as these 547 00:28:02,560 --> 00:28:04,560 Speaker 1: are the stricters, like I want to try and make 548 00:28:04,600 --> 00:28:07,719 Speaker 1: things as good as possible within within the bounds of that, 549 00:28:08,200 --> 00:28:11,119 Speaker 1: within the bounds of those limitations. So Steven's absolutely right 550 00:28:11,119 --> 00:28:14,520 Speaker 1: that those are the design limitations. I'd say that there 551 00:28:14,520 --> 00:28:17,160 Speaker 1: were some other ones too that have to do with capital. 552 00:28:17,560 --> 00:28:20,600 Speaker 1: It is much more efficient to build a two hundred 553 00:28:20,640 --> 00:28:23,840 Speaker 1: and fifty unit apartment building double loaded, very quickly and 554 00:28:24,000 --> 00:28:26,760 Speaker 1: inexpensive out of wood. And that is one thing that 555 00:28:27,240 --> 00:28:30,200 Speaker 1: especially across the United States, we have done very well, 556 00:28:30,520 --> 00:28:35,320 Speaker 1: very very very quickly in Texas in the suburbs, and 557 00:28:35,640 --> 00:28:39,120 Speaker 1: those projects are the ones that institutional investors want to 558 00:28:39,120 --> 00:28:42,239 Speaker 1: put their money and their tip. A large developer is 559 00:28:42,320 --> 00:28:44,680 Speaker 1: typically not going to waste their time doing any project 560 00:28:45,120 --> 00:28:49,320 Speaker 1: that's under two hundred two hundred and fifty apartments, both 561 00:28:49,400 --> 00:28:52,800 Speaker 1: from the equity side and just it is just as 562 00:28:52,840 --> 00:28:55,880 Speaker 1: complicated to build ten as it is to build two 563 00:28:55,920 --> 00:29:15,400 Speaker 1: hundred and fifty. So I think you mentioned before we 564 00:29:15,480 --> 00:29:19,320 Speaker 1: started recording this, but that you yourself are investing in 565 00:29:19,520 --> 00:29:24,360 Speaker 1: more projects that are explicitly designed for families. How is 566 00:29:24,400 --> 00:29:27,800 Speaker 1: that process like, how is it in terms of identifying 567 00:29:27,840 --> 00:29:31,800 Speaker 1: those projects, how common is it that they're being proposed? 568 00:29:31,840 --> 00:29:35,080 Speaker 1: And then secondly, what are the different calculations that you 569 00:29:35,120 --> 00:29:39,640 Speaker 1: would make for a family oriented project versus something you know, 570 00:29:39,880 --> 00:29:44,240 Speaker 1: I guess more normal for an apartment building. Well, I 571 00:29:44,240 --> 00:29:47,719 Speaker 1: think about it from a product perspective, which is another 572 00:29:47,760 --> 00:29:51,240 Speaker 1: area where I believe that real estate is lacking. The 573 00:29:51,280 --> 00:29:54,880 Speaker 1: product philosophy. Your most apartments, certainly in the United States, 574 00:29:55,000 --> 00:29:57,960 Speaker 1: is to offend as few people as possible. That's why 575 00:29:58,880 --> 00:30:02,880 Speaker 1: there's three different color or palettes of cabinet Country, and 576 00:30:03,360 --> 00:30:08,080 Speaker 1: that's exactly right, right, everyone uses the same light. There's 577 00:30:08,120 --> 00:30:12,320 Speaker 1: there's so that's a problem in general. So I would 578 00:30:12,360 --> 00:30:14,680 Speaker 1: say the way that I start by approaching and is saying, 579 00:30:14,920 --> 00:30:16,600 Speaker 1: I want to build something that is a product that 580 00:30:16,640 --> 00:30:19,160 Speaker 1: will actually delight families, which to me means it's going 581 00:30:19,160 --> 00:30:21,440 Speaker 1: to need to be a smaller project. A two hundred 582 00:30:21,480 --> 00:30:24,560 Speaker 1: and fifty unite project with kids would be unpleasant for everybody. 583 00:30:24,880 --> 00:30:27,000 Speaker 1: And I'd also say that I think there's a lot 584 00:30:27,040 --> 00:30:31,040 Speaker 1: of diversity within family and family oriented, which is why 585 00:30:31,080 --> 00:30:33,360 Speaker 1: I sort of use that phrase. I think that I 586 00:30:33,400 --> 00:30:35,720 Speaker 1: think that it needs to be a product that is 587 00:30:35,760 --> 00:30:39,640 Speaker 1: appealing to someone who doesn't not just people who have kids. 588 00:30:40,040 --> 00:30:42,080 Speaker 1: If there was a problem that Another problem that I'd 589 00:30:42,080 --> 00:30:45,760 Speaker 1: say within US apartments is that it's fairly monolithic. In turn, 590 00:30:45,840 --> 00:30:49,040 Speaker 1: who goes after right? Like I like billiard rooms, but 591 00:30:49,240 --> 00:30:52,160 Speaker 1: every building has, every rooming has a billiard room, Like 592 00:30:52,360 --> 00:30:54,200 Speaker 1: everyone has like a rock climbing wall here in New York, 593 00:30:54,200 --> 00:30:56,160 Speaker 1: they all have these. They all fit these same things. 594 00:30:56,160 --> 00:30:58,360 Speaker 1: So what I want to do is build something different. 595 00:30:58,840 --> 00:31:02,120 Speaker 1: How does that different differentiate from a typical building. It's 596 00:31:02,120 --> 00:31:04,000 Speaker 1: going to be smaller, it's going to be about six 597 00:31:04,080 --> 00:31:07,680 Speaker 1: two one hundred units. That is good for me, and 598 00:31:07,720 --> 00:31:11,040 Speaker 1: that I am not competing with, say the Trammel Crow 599 00:31:11,120 --> 00:31:13,520 Speaker 1: and Avalon Bays of the world, who would eat my 600 00:31:13,600 --> 00:31:18,360 Speaker 1: lunch operationally? And the difference in the type again fitting 601 00:31:18,400 --> 00:31:21,320 Speaker 1: within the double loaded quarter or means. One of the 602 00:31:21,360 --> 00:31:23,920 Speaker 1: metrics that I track in floor plants is something that's 603 00:31:23,920 --> 00:31:26,520 Speaker 1: called like bedroom ratio, which is the amount of square 604 00:31:26,520 --> 00:31:30,080 Speaker 1: footage that is behind bedroom doors, and the other one 605 00:31:30,160 --> 00:31:32,520 Speaker 1: is the ratio of the size of bedroom one to 606 00:31:32,600 --> 00:31:36,120 Speaker 1: bedroom two or bedroom one to bedroom three. So for 607 00:31:36,240 --> 00:31:38,040 Speaker 1: a family, the main thing that I look at is 608 00:31:38,240 --> 00:31:41,640 Speaker 1: reducing the size of those second and third bedrooms. Yeah, right, 609 00:31:41,680 --> 00:31:44,160 Speaker 1: because if it's like two roommates, then presumably they want 610 00:31:44,240 --> 00:31:47,800 Speaker 1: like the same size, whereas like, well, if it's kids, 611 00:31:47,800 --> 00:31:50,080 Speaker 1: they can have a small they don't need a masterom bedroom, 612 00:31:50,440 --> 00:31:52,760 Speaker 1: and they don't need an on sweet bath. Yeah that 613 00:31:52,840 --> 00:31:55,760 Speaker 1: might be nice, but when you're talking about like an 614 00:31:55,880 --> 00:32:01,240 Speaker 1: urban or expensive suburban markets bases at a premium, and 615 00:32:01,280 --> 00:32:04,000 Speaker 1: so it's all about making the best change you can. 616 00:32:04,720 --> 00:32:08,080 Speaker 1: So this might be one for either Bobby or Stephen. 617 00:32:08,400 --> 00:32:11,360 Speaker 1: But you know, Stephen talked a little bit about the 618 00:32:11,480 --> 00:32:14,320 Speaker 1: regulations in the US and how that impacts building designs, 619 00:32:14,360 --> 00:32:18,720 Speaker 1: specifically around fire safety. Are there additional regulations that kick 620 00:32:18,760 --> 00:32:21,680 Speaker 1: in if you know you're going to be having small 621 00:32:21,760 --> 00:32:24,160 Speaker 1: children living in a space. And the reason I ask 622 00:32:24,240 --> 00:32:26,920 Speaker 1: that is because I know in New York if you 623 00:32:27,000 --> 00:32:28,720 Speaker 1: live in an apartment, every once in a while you 624 00:32:28,800 --> 00:32:31,480 Speaker 1: get a form from the city asking you to fill 625 00:32:31,520 --> 00:32:33,560 Speaker 1: it out. If you have small children in that apartment, 626 00:32:33,600 --> 00:32:35,560 Speaker 1: they need to put like bars on the windows so 627 00:32:35,600 --> 00:32:38,600 Speaker 1: they don't fall out and other safety measures. Is that 628 00:32:38,640 --> 00:32:42,080 Speaker 1: a consideration or a thing that comes into play generally, 629 00:32:42,120 --> 00:32:45,160 Speaker 1: not with a new construction. Okay, so there are regulations 630 00:32:45,160 --> 00:32:49,280 Speaker 1: for children around things like lead. For older buildings, owners 631 00:32:49,320 --> 00:32:51,280 Speaker 1: have to continually certify. I don't have to have a 632 00:32:51,360 --> 00:32:54,200 Speaker 1: higher level of certification if there are people under certain 633 00:32:54,240 --> 00:32:57,560 Speaker 1: age living there. But for new construction those safety things, 634 00:32:58,240 --> 00:33:01,640 Speaker 1: I'm not aware of any building regulations or construction regulations 635 00:33:01,640 --> 00:33:06,240 Speaker 1: that are different for who occupies it. In fact, regulations 636 00:33:06,280 --> 00:33:10,120 Speaker 1: like the FHA require that anyone be allowed to rent 637 00:33:10,160 --> 00:33:15,040 Speaker 1: any unit that is there. Now, design will practically discriminate, right, 638 00:33:15,040 --> 00:33:17,920 Speaker 1: Like if you were design a three hundred and seventy 639 00:33:17,920 --> 00:33:20,440 Speaker 1: five square foot studio, a family I suppose could rent it, 640 00:33:20,560 --> 00:33:23,240 Speaker 1: but they're not going to, right Yeah, I mean even 641 00:33:23,240 --> 00:33:25,160 Speaker 1: for these big apartments. I mean the reason they don't 642 00:33:25,160 --> 00:33:26,760 Speaker 1: build them is if they did build them, you couldn't 643 00:33:26,760 --> 00:33:28,560 Speaker 1: afford it. Yeah, Like Joe, you know you're looking for 644 00:33:28,600 --> 00:33:30,640 Speaker 1: a bitter apartment. I'm sure you're seeing them. They're just 645 00:33:30,680 --> 00:33:33,560 Speaker 1: out of your price, right, Yeah, that's what we see 646 00:33:33,680 --> 00:33:35,960 Speaker 1: is like, Okay, there would be the one bedroom, the studio, 647 00:33:36,480 --> 00:33:38,560 Speaker 1: the one bedroom, maybe the two bedroom. And if you 648 00:33:38,760 --> 00:33:40,760 Speaker 1: you know, I don't even need three bedrooms, I just 649 00:33:40,800 --> 00:33:42,960 Speaker 1: need too But if you like go to that next level, 650 00:33:43,080 --> 00:33:46,080 Speaker 1: then a balloon so like the unit to do theoretically 651 00:33:46,120 --> 00:33:49,840 Speaker 1: exist they're just like so much more expensive. Well, you know, 652 00:33:49,880 --> 00:33:52,920 Speaker 1: again this gets to some of these questions about families, 653 00:33:52,960 --> 00:33:55,480 Speaker 1: like really want to live in cities, etc. But if 654 00:33:55,520 --> 00:33:59,320 Speaker 1: there's one sort of like policy change or prescription that 655 00:33:59,400 --> 00:34:03,160 Speaker 1: could really prove the family orientedness of the new housing 656 00:34:03,240 --> 00:34:05,880 Speaker 1: stock in New York, what would it be. I'm gonna 657 00:34:05,960 --> 00:34:08,520 Speaker 1: cheat and give you two. Okay, so well, actually in 658 00:34:08,520 --> 00:34:10,640 Speaker 1: New York, I can just give you one. We need 659 00:34:10,680 --> 00:34:13,120 Speaker 1: to zone more land for apartments. And I think when 660 00:34:13,120 --> 00:34:15,360 Speaker 1: people think of land, they think of big corn fields. 661 00:34:15,400 --> 00:34:18,520 Speaker 1: But most urban land is tied up in single family houses, 662 00:34:18,560 --> 00:34:21,040 Speaker 1: so you know, a single family you know, including in 663 00:34:21,080 --> 00:34:23,319 Speaker 1: New York City. So you know, we think about New 664 00:34:23,360 --> 00:34:25,920 Speaker 1: York City as you know Brownstone, Brooklyn and Manhattan. But 665 00:34:26,040 --> 00:34:27,520 Speaker 1: you know, the truth is a lot of New York 666 00:34:27,600 --> 00:34:29,920 Speaker 1: is Staten Island out of Queens, out out of Brooklyn. 667 00:34:30,000 --> 00:34:33,200 Speaker 1: So more of that land, more of those lots need 668 00:34:33,239 --> 00:34:37,200 Speaker 1: to be zoned for you know, low and mid rise apartments. 669 00:34:37,600 --> 00:34:39,799 Speaker 1: And then some things that need to be changed a 670 00:34:39,800 --> 00:34:41,880 Speaker 1: little in New York in a lot in other cities 671 00:34:42,000 --> 00:34:44,919 Speaker 1: is we need to change our building code so that 672 00:34:45,040 --> 00:34:48,840 Speaker 1: you can build a building with a single staircase. New 673 00:34:48,920 --> 00:34:51,280 Speaker 1: York you can in other places you can so maybe 674 00:34:51,640 --> 00:34:57,480 Speaker 1: make the construction material more resistant to fire, and then 675 00:34:57,600 --> 00:35:00,279 Speaker 1: if you do that you can achieve similar out with 676 00:35:00,800 --> 00:35:03,160 Speaker 1: points of egress. You could do that. Although you know, 677 00:35:03,880 --> 00:35:06,640 Speaker 1: a generation or so ago the United States started requiring 678 00:35:06,680 --> 00:35:09,799 Speaker 1: sprinklers in all buildings, which is globally extremely unique. You 679 00:35:09,800 --> 00:35:12,600 Speaker 1: won't find a sprinkler outside of a high rise skyscraper 680 00:35:12,719 --> 00:35:16,200 Speaker 1: in Switzerland, so, you know, at least in theory, and 681 00:35:16,360 --> 00:35:19,560 Speaker 1: I think in practice, a sprinkler should provide the same 682 00:35:19,920 --> 00:35:21,839 Speaker 1: fire protection that you know, just building the whole thing 683 00:35:21,840 --> 00:35:24,360 Speaker 1: out of concrete does. So I think, frankly, the buildings 684 00:35:24,360 --> 00:35:26,840 Speaker 1: are already I mean, the real fire traps in America 685 00:35:26,840 --> 00:35:28,920 Speaker 1: are the single family homes. You can still build a 686 00:35:28,960 --> 00:35:31,439 Speaker 1: single family home pretty much everywhere out of lightwood frame 687 00:35:31,680 --> 00:35:34,080 Speaker 1: and in most places, especially the places that actually build 688 00:35:34,080 --> 00:35:37,680 Speaker 1: them without a sprinkler system. So in America we you know, 689 00:35:37,719 --> 00:35:40,799 Speaker 1: we we we treat apartments as these you know, dangerous things, 690 00:35:40,800 --> 00:35:44,560 Speaker 1: and you know single family houses you know this, you know, 691 00:35:44,640 --> 00:35:47,200 Speaker 1: just a right and normal thing. But the truth is 692 00:35:47,200 --> 00:35:49,480 Speaker 1: our single family houses are quite dangerous. So I think 693 00:35:49,480 --> 00:35:52,759 Speaker 1: if we if we applied similar standards, either brought the 694 00:35:52,840 --> 00:35:55,200 Speaker 1: standards of the single family homes up or I wouldn't 695 00:35:55,239 --> 00:35:57,279 Speaker 1: do this, but you know, bring this the standards of 696 00:35:57,320 --> 00:35:59,840 Speaker 1: the apartments down, then I think would make a lot 697 00:35:59,880 --> 00:36:03,479 Speaker 1: more sense to build apartments. Like right now, it makes 698 00:36:03,480 --> 00:36:05,240 Speaker 1: a lot more sense for families to live in single 699 00:36:05,280 --> 00:36:08,160 Speaker 1: family houses, partly because they're you know, they're built as firetops, 700 00:36:08,560 --> 00:36:12,680 Speaker 1: so they're a lot cheaper. Bobby, what would you like 701 00:36:12,840 --> 00:36:16,280 Speaker 1: to see when it comes to maybe encouraging more family 702 00:36:16,320 --> 00:36:20,440 Speaker 1: oriented apartments in the US. I think developers have the 703 00:36:20,440 --> 00:36:23,440 Speaker 1: tools to do it. Currently. It is going to require 704 00:36:24,239 --> 00:36:26,239 Speaker 1: creative partnerships with the right tent, with the right kind 705 00:36:26,280 --> 00:36:28,680 Speaker 1: of capital. Short term private equity is going to be 706 00:36:28,719 --> 00:36:31,240 Speaker 1: a lot more difficult in financing these kinds of projects, 707 00:36:31,239 --> 00:36:35,920 Speaker 1: but they work, they pencil. Mainly, it requires, i'd say, 708 00:36:36,239 --> 00:36:40,520 Speaker 1: developers being willing to do the chicken in the egg. 709 00:36:40,680 --> 00:36:43,080 Speaker 1: I fundamentally believe that families do want to live in cities, 710 00:36:43,440 --> 00:36:47,800 Speaker 1: taking too sort of like product oriented approach to thinking 711 00:36:47,840 --> 00:36:51,320 Speaker 1: about real estate and demand for like normal consumer goods, 712 00:36:51,320 --> 00:36:54,280 Speaker 1: like it goes through fads and changes all the time. 713 00:36:55,080 --> 00:36:59,320 Speaker 1: Is there do you perceive a fundamental change in demand? 714 00:36:59,480 --> 00:37:02,440 Speaker 1: Are there more families like mine? That want to stay 715 00:37:02,800 --> 00:37:05,080 Speaker 1: in the urban core, and is this something that's different 716 00:37:05,120 --> 00:37:07,440 Speaker 1: in near twenty twenty three than might have been in 717 00:37:07,480 --> 00:37:10,520 Speaker 1: the year, say, nineteen ninety three. It's not something that 718 00:37:10,560 --> 00:37:12,759 Speaker 1: I can show yet, It's only something I can know 719 00:37:13,280 --> 00:37:15,200 Speaker 1: as being someone who's lived in the city and knowing 720 00:37:15,239 --> 00:37:18,280 Speaker 1: the number of people who are meeting people in the city, 721 00:37:18,320 --> 00:37:21,200 Speaker 1: falling in love with the city, like they have kids here. 722 00:37:21,719 --> 00:37:24,879 Speaker 1: They move after those things occur, So I would say, 723 00:37:24,920 --> 00:37:27,960 Speaker 1: at the moment, the option isn't there for them to stay. 724 00:37:28,040 --> 00:37:30,400 Speaker 1: So I mean, I believe and I'm willing to bet on, 725 00:37:30,560 --> 00:37:33,560 Speaker 1: and I think other developers should too, that that will work. 726 00:37:34,080 --> 00:37:37,440 Speaker 1: People in the United States are delaying having families or 727 00:37:38,560 --> 00:37:41,000 Speaker 1: there are having fewer kids, but they most people still 728 00:37:41,040 --> 00:37:44,319 Speaker 1: eventually make that decision, and that product is not being 729 00:37:44,360 --> 00:37:48,200 Speaker 1: built at all, which to me is even just as 730 00:37:48,200 --> 00:37:51,799 Speaker 1: an investor, is a compelling thesis. If even just a 731 00:37:51,840 --> 00:37:55,200 Speaker 1: small percentage of people staying, then at the moment they 732 00:37:55,239 --> 00:37:59,080 Speaker 1: have no new choices. Bobby and Stephen, I feel like 733 00:37:59,080 --> 00:38:02,279 Speaker 1: we could get there's so many sort of branches of 734 00:38:02,320 --> 00:38:06,440 Speaker 1: this conversation that we could take super fascinating. I'd love 735 00:38:06,480 --> 00:38:08,440 Speaker 1: to have you both back on sometime. Got to leave 736 00:38:08,440 --> 00:38:11,080 Speaker 1: it there. But seriously, like there's so many interesting like 737 00:38:11,520 --> 00:38:14,520 Speaker 1: aspects of the housing conversation we could take this. So 738 00:38:14,640 --> 00:38:17,799 Speaker 1: I appreciate you both coming on the podcast. Thank you 739 00:38:17,840 --> 00:38:20,160 Speaker 1: for having me. Thank you. Yeah, that was great, guys, 740 00:38:20,200 --> 00:38:36,560 Speaker 1: thank you so much. So Tracy, I mean, I know 741 00:38:36,719 --> 00:38:38,640 Speaker 1: you really want me to move to the suburbisode that 742 00:38:38,640 --> 00:38:41,200 Speaker 1: you can have more space in New York, etc. But 743 00:38:41,239 --> 00:38:43,320 Speaker 1: maybe there's an option, maybe it could have it that 744 00:38:43,360 --> 00:38:45,239 Speaker 1: we could both stay here. I just want more dog 745 00:38:45,239 --> 00:38:48,239 Speaker 1: amenage department building. Maybe we could have both. No, you 746 00:38:48,280 --> 00:38:52,720 Speaker 1: mentioned branches from that episode. And one thing that has 747 00:38:52,880 --> 00:38:56,680 Speaker 1: always sort of confused me is why in the US 748 00:38:56,760 --> 00:39:00,320 Speaker 1: the standard like building material is that yeah, that really 749 00:39:00,480 --> 00:39:05,320 Speaker 1: thin like would framing. I've never understood that. And sometimes 750 00:39:05,360 --> 00:39:08,680 Speaker 1: when you see especially single family houses going up to 751 00:39:08,719 --> 00:39:11,239 Speaker 1: Steven's point and you see the framing for those, it 752 00:39:11,280 --> 00:39:13,120 Speaker 1: really looks like nothing, and it does look like they 753 00:39:13,160 --> 00:39:16,040 Speaker 1: could a either go up in flames very quickly or 754 00:39:16,160 --> 00:39:20,320 Speaker 1: be just fall over with like one good gust of wind. Yeah. 755 00:39:20,360 --> 00:39:23,040 Speaker 1: You know, another aspect of this that we didn't get into. 756 00:39:23,120 --> 00:39:27,520 Speaker 1: It's just like you know, homeownership culture or rental culture 757 00:39:27,640 --> 00:39:30,960 Speaker 1: and whether the perception that you don't need to build 758 00:39:31,000 --> 00:39:33,399 Speaker 1: as well for rental. Maybe the problem is really just 759 00:39:33,440 --> 00:39:36,560 Speaker 1: like you know, capitalism and this need for everyone to 760 00:39:36,760 --> 00:39:42,240 Speaker 1: own a home, or the distortionary impacts of this idea 761 00:39:42,320 --> 00:39:45,319 Speaker 1: that everyone needs to own a home. Yeah, there's that, 762 00:39:45,400 --> 00:39:48,120 Speaker 1: But to me, the big like, yeah, the thing that 763 00:39:48,160 --> 00:39:52,200 Speaker 1: resonates is this idea that choice of building materials leads 764 00:39:52,239 --> 00:39:56,240 Speaker 1: to the need for additional regulation, which leads to design 765 00:39:56,360 --> 00:39:59,719 Speaker 1: choices that are not necessarily optimal. Well, and then you know, 766 00:40:00,040 --> 00:40:01,680 Speaker 1: you know, I don't know, I think we talked about 767 00:40:01,680 --> 00:40:03,920 Speaker 1: this and I haven't found it. There's like this famous 768 00:40:04,040 --> 00:40:06,480 Speaker 1: like post that someone put on medium about why like 769 00:40:06,560 --> 00:40:09,680 Speaker 1: all cars will look this same Yeah, and I think 770 00:40:09,680 --> 00:40:11,400 Speaker 1: it's just because they all have to design for the 771 00:40:11,480 --> 00:40:15,239 Speaker 1: same safety and fuel standards rags, and so there really 772 00:40:15,320 --> 00:40:17,680 Speaker 1: is like sort of one optimal design. And it kind 773 00:40:17,680 --> 00:40:20,600 Speaker 1: of sounds like, you know, to some extent, that's the 774 00:40:20,640 --> 00:40:23,480 Speaker 1: same thing that's happened with homes, which is that if 775 00:40:23,680 --> 00:40:26,840 Speaker 1: mainly you're sort of like feeling like you're optimizing for 776 00:40:27,000 --> 00:40:29,440 Speaker 1: one sort of set of regulations, then you do just 777 00:40:29,480 --> 00:40:32,440 Speaker 1: get these endless gray buildings, and then the only places 778 00:40:32,440 --> 00:40:35,160 Speaker 1: where you can exercise. Some creativity is in the rock 779 00:40:35,200 --> 00:40:37,160 Speaker 1: climbing wall, and I want there too. I want to, 780 00:40:37,360 --> 00:40:39,319 Speaker 1: you know, I also want to rock climbing ball. I'm 781 00:40:39,320 --> 00:40:43,480 Speaker 1: not against these things. How regulation ruined design? That's a 782 00:40:43,480 --> 00:40:46,000 Speaker 1: good topic. Okay, shall we leave it there. Let's leave 783 00:40:46,000 --> 00:40:48,560 Speaker 1: it there. This has been another episode of the Odd 784 00:40:48,560 --> 00:40:51,319 Speaker 1: Thoughts podcast. I'm Tracy Allaway. You can follow me on 785 00:40:51,320 --> 00:40:54,479 Speaker 1: Twitter at Tracy Alloway, and I'm Joe Wisenthal. You could 786 00:40:54,520 --> 00:40:57,920 Speaker 1: follow me on Twitter at the Stalwart. Follow our guests 787 00:40:57,920 --> 00:41:02,040 Speaker 1: Bobby Fiance He's at Bobby Yon. Stephen tweets under the 788 00:41:02,120 --> 00:41:07,120 Speaker 1: handle at market Urbanism. Follow our producers Carmen Rodriguez at 789 00:41:07,200 --> 00:41:10,759 Speaker 1: Carmen Rman and Dash Bennett at dashbot. And check out 790 00:41:10,800 --> 00:41:14,560 Speaker 1: all of our podcasts in Bloomberg under the handle at podcasts. 791 00:41:14,760 --> 00:41:17,920 Speaker 1: And for more odd Lots content, go to Bloomberg dot 792 00:41:17,960 --> 00:41:22,000 Speaker 1: com slash odd Lots, where we have blog posts, transcripts, 793 00:41:22,120 --> 00:41:24,359 Speaker 1: and a news limb that comes out every Friday. Go 794 00:41:24,520 --> 00:41:26,320 Speaker 1: there and side up. Thanks for listening.