Monthly Archives: November 2017
An unusual request
Every so often we get a welcome reminder of how much our constituents value our research. Usually that happens when we expect it. For example, when we’re visiting with Realtors at the Texas Association of Realtors convention every fall, or when people visit our offices.
But we received a reminder recently that was a little out of the ordinary, and it caught us by surprise.
A couple of weeks ago, a woman from Houston called us. Her house had been flooded during Hurricane Harvey. Among the many things she lost were her copies of Tierra Grande magazine for the past three years, and she was hoping we could send replacements.
I imagine that for most people who’d just lost many of their worldly possessions, a stack of ruined magazines would’ve been the least of their concerns. But this caller told me she’d worked in real estate since the late ’70s, and she’s always relied on our magazine in her job. She said she frequently looks through back issues and shares information from them with her clients.
I assured her that we’d be happy to replace her copies of Tierra Grande back through 2015 at no charge. Now she was the one caught by surprise.
"But what about all the other people who call asking for replacements?" she asked. "That must get expensive."
I didn’t say anything, but I did chuckle. There was a pause on the line, then she said, "I’m the only who’s called, aren’t I?"
I informed her that she was so far, but that we greatly appreciate knowing there are folks out there who benefit so richly from our research. By the end of the day, replacement copies were in the mail and on their way to her.
By the way, should you ever lose back issues of Tierra Grande magazine, all of the articles are available on our website. You can read them online or print them for free.
Does Hong Kong’s Octopus card have too many tentacles?
IN 1997, two months after Hong Kong reverted to Chinese sovereignty, it acquired a cutting-edge payment technology. People could rush through turnstiles with a wave of their colourful Octopus cards—stored-value cards pre-loaded with cash. Its latest advance, however, is risibly low-tech. On October 30th Octopus launched an extensible pole with a plastic hand to help drivers pay at toll booths. Critics of Hong Kong’s cautious approach to fintech snorted in derision. Meanwhile, a government official was quoted as blaming Octopus for stifling the city’s shift to cashlessness. Both criticisms are unfair. Hong Kongers enthusiastically embrace electronic payments and do well from the fierce competition between different platforms.
The Octopus card, designed for journeys on Hong Kong’s trains, buses, trams and ferries, soon stretched its tentacles into shops. In 2016 the company generated revenues of HK$956m ($122m) for its owners (mostly…Continue reading
Tax Cuts and Jobs Act: A first look at the mortgage interest deduction
The recently released “Tax Cuts and Jobs Act” affects a wide array of industries, none more so than residential real estate.
Changes to the mortgage interest deduction is drawing significant attention across the country. The proposal decreases the cap on newly issued loans from $1 million currently to $500,000, while removing any deductions on second homes. Assuming a 20 percent down payment, homes selling for $625,000 would be the maximum price that allows the deduction of all mortgage interest.
The plan also establishes a $10,000 limit on state and local property taxes, which is particularly relevant to the Texas tax structure. In return, the legislation roughly doubles the standard deduction for individuals from $6,350 to $12,000 and from $12,700 to $24,000 for married couples filing jointly.
Here are a few facts to keep in mind as the debate wages on.
The last media mogul stuns his industry with talk of selling
THE only media mogul still bestriding his industry in old-fashioned style is used to being a predator rather than prey, a builder of empires, not a dismantler of them. So Rupert Murdoch’s reported willingness to sell off much of 21st Century Fox, whether to a rival such as Disney or to a distribution firm like Comcast or Verizon, has come as a shock to many. It should not.
If Fox does follow through with selling the assets—its film and TV studio, its stake in Sky, a European satellite broadcaster, and many of its cable networks—it may well be remembered as one of his cleverest moves. Mr Murdoch would have correctly judged a shifting media and regulatory landscape and sold high (perhaps for $50bn or more; see chart). He would retain lucrative assets in news and sports broadcasting, notably Fox News Channel, which could serve as the base for a new fief of a different sort. Mr Murdoch would also retain plenty of political sway through his newspaper businesses, housed at separately…Continue reading
The fast and the (hopefully not too) furious
Last year, the Texas A&M University System announced plans for a $150 million research campus here in Bryan-College Station. While a wide array of new technologies will be explored at the campus, the one that caught my attention was autonomous (driverless) vehicles.
Until now, my knowledge of autonomous vehicles (AV) was strictly limited to “Johnny Cab” from the Arnold Schwarzenegger movie Total Recall and the self-driving cars in Minority Report. Also, Disney’s The Love Bug, but I’m not sure that counts.
Turns out, the concept dates back at least as far as the 1939 World’s Fair, where Norman Bel Geddes’ Futurama exhibit promoted advances in transportation, including aspects of AV technology.
But enough about history. How could AV technology affect real estate markets? Transwestern suggests some possibilities in its new report, The New Industry Driver: How the Rise of Autonomous Vehicles Could Impact Future Real Estate Strategy.
The report posits that AVs would cause a decrease in car ownership (by as much as 80 percent by 2030, according to one study). If so, Transwestern says the demand for parking across the U.S. may decrease 70 to 90 percent, cutting the need for parking spaces by approximately 60 billion sf.
Assuming widespread AV adoption, office owners and developers may have to rethink how they use parking, whether it is an adjacent parking structure or an underground garage. Transwestern says parking revenue averages 10 percent of a central business district office building’s gross revenue.
The rise of AVs also may add another pawn in the amenities war, the report says. “Features such as curbside pickup and ride-share lobbies could become more prevalent as building tenants and visitors increasingly demand them as next-generation Class A office conveniences.”
Transwestern says the industrial sector could be disrupted most by AV technology.
“With approximately 70 percent of goods delivered via long-haul commercial trucks (a percentage that is expected to widen in the future), the introduction of autonomous long-haul trucks would be a welcomed addition to an industry struggling from a shortage of drivers. There was an estimated deficit of 48,000 truck drivers in the U.S. in 2015, and this problem is only getting worse.”
What about retail?
“Retail properties that could be affected by greater adoption of AVs include auto repair facilities, car dealerships, and the nearly 154,000 gas stations nationwide,” according to Transwestern. “Auto car dealerships and auto repair shops may disappear as we know them if private car ownership decreases. Gas stations, which typically occupy locations at highly visible intersections, could be converted to autonomous charging stations as electric vehicles are forecasted to surpass gas-powered vehicles by 2040.”
On a personal note, I welcome AV technology. Outside of The Terminator movies or HAL in 2001, it’s hard for me to imagine a computer developing a bad case of road rage.
How tech giants are ruled by control freaks
THIS month Schumpeter visited the Barnes Foundation, a gallery in Philadelphia full of paintings by Picasso, Matisse and Van Gogh. Albert Barnes, born in 1872, is notable for two things. He made a fortune from an antiseptic that cured gonorrhoea. And he stipulated exactly how his art collection should be posthumously displayed. The result is hundreds of paintings jammed together nonsensically, often in poky rooms, and the creepy feeling of a tycoon controlling you from the grave.
Barnes’s string-pulling comes to mind when considering today’s prominent tycoons, who often hail from technology, e-commerce and media. At the moment they seem omnipotent. But many founders are gradually cashing in shares in their companies. The consequences will vary by firm, with some tycoons gradually ceding control, and others clinging on to it.
A flurry of selling activity has been in evidence of late. On September 13th Jack Ma and Joe Tsai, co-founders of Alibaba, a Chinese e-commerce…Continue reading
Sustainable investment joins the mainstream
IN 2008, when she was in her mid-20s and sitting on a $500m inheritance, Liesel Pritzker Simmons asked her bankers about “impact investing”. They fobbed her off. “They didn’t understand what I meant and offered to screen out tobacco,” recalls the Hyatt Hotels descendant, philanthropist and former child film star. So she fired her bankers and advisers and set up her own family office, Blue Haven Initiative. It seeks investments that both offer market-rate returns and have a positive impact on society and the environment. “Financially it’s sensible risk mitigation,” she says. “Our philanthropy becomes far more efficient if we don’t need to undo damage done in our investment management.”
Such ideas are gaining ground, particularly among the young. Fans of “socially responsible investment” (SRI) hope that millennials, the generation born in the 1980s and 1990s, will drag these concepts into the investment mainstream. SRI is a broad-brush term, that can be used to…Continue reading
Wealth inequality has been widening for millennia
THE one-percenters are now gobbling up more of the pie in America—that much is well known. This trend, though disconcerting, is not unique to the modern era. A new study, by Timothy Kohler of Washington State University and 17 others, finds that inequality may well have been rising for several thousand years, at least in some parts of the world. The scholars examined 63 archaeological sites and estimated the levels of wealth inequality in the societies whose remains were dug up, by studying the distributions of house sizes.
As a measure they used the Gini coefficient (a perfectly equal society would have a Gini coefficient of zero). It rose from about 0.2 around 8000BC in Jerf el-Ahmar, on the Euphrates in modern-day Syria, to 0.5 in around 79AD in Pompeii. Data on burial goods, though sparse, point to similar trends.
The researchers suggest agriculture is to blame. The nomadic lifestyle is not conducive to wealth accumulation. Only when humans switched to farming did people…Continue reading