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Rents in Megacities Can't Go Up Forever

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Re: Rents in Megacities Can't Go Up Forever

#131

Post by mcguire »

lkrubner wrote: post #66
geff82 wrote: post #4

Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. As long as there is a good net connection, it could be anywhere in the world. Let's concentrate on the US for a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Talented people already move from one coast to the other, so they could as well move to any other p…

> Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Some of the burden is on you to prove what has failed so far. If it is possible to build a successful large scale startup in Amarillo, why hasn't it happened? I'll point out the theory of agglomerative clustering also includes the contrary point: a city that is great at something tends to exclude other activities, for any given amount o…

It's also important to note that "successful large scale startup" in this context means "a new web application with a lot of users".

The Dept. Of Energy, Southwest Airlines, Texas Instruments, and Principal Financial Group need not apply.

Re: Rents in Megacities Can't Go Up Forever

#132

Post by humanrebar »

reverend_gonzo wrote: post #33
geff82 wrote: post #4

Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. As long as there is a good net connection, it could be anywhere in the world. Let's concentrate on the US for a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Talented people already move from one coast to the other, so they could as well move to any other p…

I live in Chicago. I love it here because of everything else it has to offer. I have everything almost everything I need available to me within walking distance from home. That includes grocery store, dive bars, cheap restaurants, high end restaurants, clubs. For anything else I may want to do (concerts, sports games, plays, comedy), there are dozens of world class options within a ten minute cab drive / 30 minutes o…

> If you wanted culture, you'd have to get in your car and drive at least an hour.

Everywhere has culture. You just didn't like the one you were in.

In tiny towns, the culture looks more like running around in the woods, country music, 4-H club, and church potlucks. That's a culture, even if you don't like it. And, besides, in the internet age there are plenty of farmers' daughters that get really into oil painting or Korean TV or opera. Producing great culture is harder without a local community, but it's not like there's no access to culture in small towns. They're binge watching Iron Fist just like all the other geeks.

Re: Rents in Megacities Can't Go Up Forever

#133

Post by reverend_gonzo »

robterrin wrote: post #60
reverend_gonzo wrote: post #33

Earlier quoted context omitted.

I live in Chicago. I love it here because of everything else it has to offer. I have everything almost everything I need available to me within walking distance from home. That includes grocery store, dive bars, cheap restaurants, high end restaurants, clubs. For anything else I may want to do (concerts, sports games, plays, comedy), there are dozens of world class options within a ten minute cab drive / 30 minutes o…

I've heard this pitch for Chicago many times, and it seems reasonable if you are in the one of the industries, Tyler mentions, that are more diffuse. The main problem with Chicago is it lacks an anchor industry. Is it the best place to be for finance? No, that's NYC. Is it healthcare? Boston, Baltimore, Cleveland or Rochester. Energy? Houston. Technology? SF. Entertainment? LA or NYC. Politics? DC. What exactly is Ch…

Chicago is the center for futures and options trading, especially commodities. Proprietary trading is generally based in Chicago, while banks and hedge funds are usually in NYC.

There are a massive number of other companies headquartered here, like Boening, CNA, Kraft Foods, Walgreens, State Farm.

While NYC might be known for its comedy, it recruits directly from Second City in Chicago, and the numerous small comedy clubs and schools here feed into Second City. It has its own caliber of theatre it puts out as well, regardless of whether it matches NYC on notoriety.

Lastly, while having the benefits of a large city, Chicago also does not have the stupidly high rents of NYC or SF. It is a very livable city, even for those on modest incomes. Public transportation is excellent (though not as good as NYC).

And if you are doing well enough to have a six-figure salary, you can live very well here as opposed to how you would live even on an cost-of-living adjusted salary in SF and NYC.

The primary downside to this city is the weather. In my opinion, the secondary downside is how far it is from outdoor activities, but, then again, you can easily fly elsewhere via O'Hare/Midway.

Re: Rents in Megacities Can't Go Up Forever

#134

Post by mcguire »

acchow wrote: post #89
supergeek133 wrote: post #21

> Rents in Megacities Can't Go Up Forever Yes it can, College Tuition is a great example. Instead of finding the cause and treating it, we just increase the amount of aid people have access to.

No, college tuition will rise with middle-class incomes. This is a cultural phenomenon. We're "supposed" to get our children the best education we can possibly afford, otherwise we are bad parents. Since colleges don't have price discrimination, this essentially means tuition is set at the absolute maximum that the middle class can afford - squeeze every penny out of them. This is why aid won't reduce the burden of t…

College tuition has been going up much faster than incomes. When I went, the only people I knew getting student loans were those getting professional degrees: medical doctors and lawyers.

Re: Rents in Megacities Can't Go Up Forever

#135

Post by wjoe »

geff82 wrote: post #4

Especially for information technology, I don't understand the rationale why it has to be concentrated at certain places. As long as there is a good net connection, it could be anywhere in the world. Let's concentrate on the US for a moment. Why can't a successful startup not be in Dallas, Amarillo, Miami or Des Moines? Talented people already move from one coast to the other, so they could as well move to any other p…

I think it's mostly just because the concentration of the industry is convenient.

In the UK, there are tech jobs all over the country. But there are probably more in London than everywhere else combined, especially if you're looking for the start-up unicorn types. I lived in a smaller city for a while after university, but there were very few jobs to choose from that interested me.

I moved to London for one job in particular at the time, but also safe in the knowledge that it would be easy to find another job. I've had 4 different jobs in London since then, and it's never been very hard for me to find something else that's suitable and interesting for me.

The same holds true for most of my friends from university - many of the moved to London because it was the most obvious option for finding a tech job. So it has a further concentrating effect, that people are more likely to know others who are working in the capital city than elsewhere in the country.

If I was seeking a new job and open to moving anywhere in the country, I could find one somewhere outside of London. But if I was already living in another city, it might be harder to find a job without moving. It might not be quite the same in US, where there are a number of cities around the country that are a similar size to London, but in the UK there are maybe only 2-4 other cities that are large enough to have a wide selection of jobs in one industry, and none besides London with a population of over 1 million.

Re: Rents in Megacities Can't Go Up Forever

#136

Post by tsunamifury »

zanny wrote: post #109
reverend_gonzo wrote: post #33

Earlier quoted context omitted.

I live in Chicago. I love it here because of everything else it has to offer. I have everything almost everything I need available to me within walking distance from home. That includes grocery store, dive bars, cheap restaurants, high end restaurants, clubs. For anything else I may want to do (concerts, sports games, plays, comedy), there are dozens of world class options within a ten minute cab drive / 30 minutes o…

I have to imagine I'm somewhere on the opposite end of the spectrum. I could care less about attractions, since even when I lived in the city I was spending a lot of evenings just playing video games anyway. I think the broad adoption of mobile gaming and the Millennial adoption rate on video games and the successor generation (whatever we are calling them now) basically being raised on them will break down the relia…

I pretty much think the expansion of drugs and crime due to boredom in rural America proves you wrong.

On top of the fact that many people are different than you (in fact the 100s of millions who live in cities) are not satisfied just playing video games all day long.

Re: Rents in Megacities Can't Go Up Forever

#137

Post by mcguire »

elastic_church wrote: post #22
Finnucane wrote: post #6

To put it another way, the cost of real estate in a given area is proportional to the rate of money flowing through that area. Will ever larger flows go through New York and San Francisco, increasing without end? History suggests that is unlikely.

Well the frothiness of the tech bubbles are purely a factor of a lack of liquidity of meaningful services to create. VC capital focused on tech is a tiny sliver of available capital given the sources VCs get their funding from, and an entire order of magnitude of greater flows could come through. So if you were using that as an excuse not to buy that costly condo on the island or peninsula, its not a great excuse.

“The market can stay irrational longer than you can stay solvent.”

Re: Rents in Megacities Can't Go Up Forever

#138

Post by andrewprock »

The author is of course strictly correct, and practically wrong. Eventually our civilization will collapse, and the sun will go supernova. But for the foreseeable future, fiscal policy will be managed by inflation, and economic policy will be managed by economies of scale. The surprising thing is the author, doesn't mention either inflation or scalability once.

When information technology no longer scales, and we achieve full saturation for jobs that support scaled services, the prices will plateau. Until then, I expect them to rise at a rate faster than the rest of world. I don't expect that trend to end in my lifetime.

Re: Rents in Megacities Can't Go Up Forever

#139

Post by humanrebar »

zimzam wrote: post #25
bpicolo wrote: post #8

Earlier quoted context omitted.

There are certainly a lot of factors. People want to live in trendy cities. There's a lot to consider besides rent - culture, nightlife, etc. San Francisco sure does have some of the best food in the country (and with tech consuming most of spare time the way it is, eating out is really a huge part of culture). Rent definitely ends up being the deal breaker for many, but for others isn't. It's a lot harder for a comp…

See, here's the thing about coastal types: they are obsessed with getting the "top" talent, as if every project or startup requires it. What if most startups only need "good" developers to develop their mostly CRUD apps and don't need "the best" developers?

> What if most startups only need "good" developers to develop their mostly CRUD apps and don't need "the best" developers?

There are some exceptions, but most any successful technology product needs at least a few great technical leaders, if only to say no to net-negative ideas, provide mentoring to those who need it, and to make strategic technical decisions (architecture, tech stack, technical hiring strategy, etc.).

Re: Rents in Megacities Can't Go Up Forever

#140

Post by tsunamifury »

klenwell wrote: post #105
supergeek133 wrote: post #21

> Rents in Megacities Can't Go Up Forever Yes it can, College Tuition is a great example. Instead of finding the cause and treating it, we just increase the amount of aid people have access to.

I remember hearing a variation of this claim by rationalizers for the dot-com stock market bubble in the 90's and the housing bubble in the 00's. I recognize you're not trying to rationalize this, but you've identified the common factor to each bubble: a new and unsophisticated source of investors being aided by the financial industry. With the dot-com bubble, it was daytraders and online traders generally (including…

Thats not the case here. The financial industry is not driving up rents and costs in San Francisco. The pure amount of private wealth pouring into the area is.

Thats the dramatic shift this time around -- this isn't a bubble propped up by lending -- this is a bubble due to the fact that we are living in a time where the rich _have so much money they dont know what to do with it._

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