Parisian Stairs, Post-COVID Real Estate & Prioritizing the View (Cafe Society Quick Bite #6)

Mini-Downtowns - Is the Future . . . Los Angeles?

Mar 06, 2021

Cafe Society is Maxwell Social’s weekly magazine on the intersection of community and society — an anthropological look at the underpinnings of what makes the world tick, written by David Litwak (@dlitwak) and the Maxwell team. Maxwell is building a new type of social club.

If you missed last week’s Dinner Discussion, Rubirosa, Dodgeball & the Unraveling of the Local Neighborhood, go check it out — I got a lot of personal emails with your own analyses which I’ve really enjoyed reading, and there was a theme — when we re-bundle the local neighborhood it likely WON’T be around commerce:

From Tomos Lovett of WithOthers: “So if you’re not coming together to buy stuff, what are you coming together for? And with all that opened up real estate, what new functions does that serve if it’s not a space to sell people stuff?”

From Phil Levin of the Supernuclear Newsletter: “When people talk about a neighborhood being desirable or interesting, this is often synonymous with there being a high density of unique retail. Interesting neighborhoods (like The Mission or Nolita) are interesting because of a plethora of stores and restaurants and bars. Every real estate developer wants distinctive retail, but there's only so much distinctive retail (that can stay afloat) to go around.

For me the question we should be asking is not "how can we get retail back?" The question we should be asking is "how can local places be about more than buying things?" What should be in the public commons if not retail? What should replace shops on main street to provide that sense of community and place that shops (incidentally) provided in the course of doing their retail business? Is there a more direct way of accomplishing this?”

If you want to discuss this, we’ll be having a Clubhouse chat on our theory of how this will play out this coming Thursday on it, please come and join!

And last public service announcement — we’re also starting to meet people who are interested in what we’re building at Maxwell Social, scheduling chats with anyone who reached out on the website, so feel free to ping us if you’d like to learn more or signup here.

Today we’re discussing the transformation of our neighborhoods through a COVID real-estate lens — your friend who moved to Miami or Austin and how it relates to Parisian stairs, nobility and the invention of the elevator.

. . . removed from the bother of having to walk so many flights of stairs, the view took precedence for the modern nobility and what floors were more valuable were actually reversed . . .
I couldn’t help but think of this as we see so many tech founders and more move to Miami or Austin. Everyday seems to be a new announcement of someone using the pandemic as a reason to move to another city. And many of us know someone who bought a house in Tahoe or the Hudson Valley at some point in the pandemic.
But I’m less interested in the supposed migration away from cities to other lower tax/tropical climate cities and more interested in the migration patterns within cities.

Let’s get started.

A couple of months ago I ran across a tweet storm on Paris by a “traditionalist” account named Wrath of Gnon that got me thinking.

Wrath Of Gnon @wrathofgnon

Before elevators the classic 5+2 Parisian apartment house looked much the same as good apartment buildings have done since the days of ancient Rome. Far more economically diverse than today: shops on ground floor, the rich on top of that, then middle class, at top, working class.

Wrath Of Gnon @wrathofgnon

Rich people weren't interested in walking up all those stairs, so the higher you got in the house the smaller and cheaper the apartments got. Today we have elevators, so these houses are more economically homogenous than they used to be, often the top floor is the most expensive.

What the account is mostly referring to is the Hausmannian buildings that became popular in the mid 19th century as a consequence of an order from Napoleon III to standardize housing.

The first floor is reserved for shops, the 3rd floor is where the nobles lived, the 4th and 5th floor were for the middle class, and the top 2 floors were for the lower classes and/or servants. The 3rd floor was often a foot or so higher ceilings than the other floors, with the top 2 floors having very short ceilings, and the facades were designed differently based on the type of class that was supposed to live on that floor.

While it’s hard to get a ton of historical verification that the design choice of the nobility on the 3rd floor and not the top floor was based purely on not wanting to walk up so many flights of stairs, it seems intuitive enough to be true and I’ve run across a few more mentions of it since I started writing this article.

What was interesting to me was how the invention of the elevator changed all that — removed from the bother of having to walk so many flights of stairs, the view took precedence for the modern nobility and what floors were more valuable were actually reversed . . .

And with it there was a complete reinvention of how we defined social class with regards to space. Pre elevators, the neighborhood you lived in wasn’t the sign of social class, but the floor you lived on. It’d be like instead of judging people on if they lived in Williamsburg, Nolita, Soho or the Upper East Side, or a company if it was headquartered in midtown, Wall Street or Hudson Yards and what that said about them, it instead only mattered if you were a 3rd floor person or a 4th floor person/company.

I couldn’t help but think of this as we see so many tech founders and more move to Miami or Austin. Everyday seems to be a new announcement of someone using the pandemic as a reason to move to another city. And many of us know someone who bought a house in Tahoe or the Hudson Valley at some point in the pandemic.

But I’m less interested in the supposed migration away from cities to other lower tax/tropical climate cities and more interested in the migration patterns within cities.

Only people with a lot of self-determination, the entrepreneurs with the freedom, the highly employable or the financially independent, can make a decision like “I’m moving to Tahoe” or “we’re moving our Headquarters to Miami” without a serious hit to their earning potential.

Most people will stay in cities, and NYC isn’t going anywhere, James Altucher’s douchebaggery aside.

But it begs the question, how will NYC change?

Remote Work : Urban Sprawl :: Elevators : Parisian Buildings

I believe that remote work is a similar “technological development” to the elevator, in that it will reprioritize what real estate we find most valuable, but horizontally instead of vertically.

Instead of “Rich People didn’t want to walk up all those stairs,” the earlier tweet could now be updated to, “Rich people didn’t want to commute all that way.”

As companies give their employees more and more flexibility, an extra 15-30 minute commute simply becomes less of an issue if you only do it a couple times a week instead of every day, and allows you to “prioritize the view.” Maybe that’s being near the surf and you move full-time out to the Rockaways. Maybe it’s being in the better school district for your kids.

The calculus seems clear for residential real estate — if you have to commute half as many times into the city, the commute radius you’ll tolerate doubles, and there will be a flattening of residential real estate prices.

But if you don’t believe offices will completely vanish, the question becomes — where do companies locate those offices for those in-person interactions they do want?

Mini-Downtowns - Is the Future . . . Los Angeles?

I think the closest analogy to what might happen is actually Los Angeles. While I know NYC friends who still don’t have a license, cursed with a bad public transit system, Angelenos get cars the minute they can at 16 and there isn’t really a central downtown that anyone cares about. If you grew up in Los Angeles you realize that only recently has the downtown area been transformed into anything even remotely desirable. I know major companies that are headquartered in El Segundo, Malibu, Santa Monica, Beverly Hills, Century City, Downtown LA, Venice, Hermosa Beach, West Hollywood etc. The average office space rental in Santa Monica, one of the more desirable cities on that list, is $55 per square foot. New York averages about $80.

Urban sprawl has ironically flattened out the real estate market in Los Angeles. In a city where nothing is “convenient” and nothing is “central” you end up with people “prioritizing the view,” as no matter what, the commute is likely to be shitty.

And it means that there isn’t one obvious place to headquarter your business in Los Angeles, resulting in much more reasonable commercial real estate prices.

I’m curious if COVID will allow certain neighborhoods like Astoria, Upper West Side, Harlem, various other parts of Brooklyn like Clinton Hill and Carrol Gardens to actually start evolving into hubs of their own. There are already a healthy amount of people headquartering in Dumbo or Williamsburg, I’ve heard of several companies building headquarters in Gowanus, and I visited a friends film industry oriented workspace he was launching in Ridgewood, Queens this week.

The more interesting COVID real estate trend is not people abandoning cities or switching cities, but people reimagining and using the city they live in and love in a different way — I suspect more companies will decide to choose a different neighborhood to call home, while still appreciating the amazing benefits the aggregation of talent, culture and business a city like New York brings.

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