Tag Archives: wealthy

More wealthy city neighborhoods hire private police

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This is one benefit of being wealthy in the city: more urban neighborhoods are hiring private police.

Long known for patrolling shopping malls and gated communities, private security firms are beginning to spread into city streets. While private security has long been contracted by homeowners associations and commercial districts, the trend of groups of neighbors pooling money to contract private security for their streets is something new.

Besides Oakland, neighborhoods in Atlanta and Detroit – both cities with high rates of crime – have hired firms to patrol their neighborhoods, says Steve Amitay, executive director of the National Association of Security Contractors.

“It’s happening everywhere,” Mr. Amitay says. “Municipal governments and cities are really getting strapped in terms of their resources, and when a police department cuts 100 officers obviously they are going to respond to less crimes.”…

Meanwhile, the private security industry is projected to grow by about 19 percent – from 1 million to 1.2 million guards – between 2010 and 2020, according to the Bureau of Labor Statistics. Most of that growth will come because private firms are doing jobs once held by law enforcement, according to the bureau.

Another side effect of the economic crisis. Of course, this reinforces some of the differential opportunities and resources available to different neighborhoods and communities. Similar to other areas like education or health care, the wealthy can simply purchase the services they need to live int he way they would like.

Differentiating between playgrounds and parks in poor versus wealthy neighborhoods

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Researchers in recent years have looked at different amenities in poor versus wealthier neighborhoods, things like pawn shops, payday loan stores, and grocery stores. But what about parks and playgrounds? Here is a summary of a new study:

A recent study, published in the journal Annals of Behavioral Medicine, looked at the amenities in 165 parks in the four-county Kansas City metro region. Low-income neighborhoods actually had more parks per capita (perhaps a result, the authors suggest, of the fact that minority communities in the area are largely located in the older urban core where more parks were once planned into the city’s layout). Parks in predominantly minority communities were also more likely to have basketball courts.

But the researchers also found that these same parks were less likely to have aesthetic features like decorative landscaping, trails and playgrounds. As the authors explain:

These findings are problematic because playgrounds have been shown to promote increased [physical activity] intensity and healthier weight status among children. Areas of low [socioeconomic status] are perhaps the neighborhoods that need playgrounds the most due to the increased likelihood of those areas having a higher prevalence of youth who are overweight or obese.

These findings also suggest one simple strategy (among many needed) to address health disparities in low-income communities in any city: Make sure public parks seem like places a 7-year-old would actually want to spend the day.

Parks are complex spaces. Jane Jacobs discusses them in The Death and Life of Great American Cities and suggests they aren’t necessarily good – like other areas of a neighborhood, they require care and benefit from a mix of uses and people on surrounding streets. Parks can be planned for but also require physical and social maintenance.

I was reminded again of some of these different amenities in a recent visit to a community gym in a nearby community. It was a busy weekday evening with a variety of activities taking place: the large room with aerobic and weight equipment was packed, the gym with gymnastics had a small class in there, and then there was another larger gym space. It was an open night for basketball with two possible courts. However, one court was being used for about 10 ping-pong tables and the other for basketball. In other words, how much are park amenities, like basketball courts or hiking trails, tied to the race and class status of the neighborhood?

A boom in “mega basements” in London draw ire

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The London neighborhood of Kensington is discussing rules to ban “mega basements” being constructed under the home and property of the wealthy:

The “iceberg home” mega basements dug three or four storeys into the ground with private cinemas, spas and swimming pools are set to be banned in one of London’s most affluent areas.

New draft rules that will limit basements to a single storey and impose much tighter limits on how far they can extend under a garden were today published by Kensington and Chelsea council.

The move follows a huge surge in applications for basements over recent years as wealthy owners have sought to by-pass planning restrictions on changes to their homes above ground by massively extending their living space underneath.

The subterranean extensions have often outraged local residents because of the noise, dust and disruption caused by digging them out, which can last for up to two years…

One of the most notorious applications was by former Foxtons estate agency owner Jon Hunt who successfully submitted plans for a cavernous basement under his home in Kensington Palace Gardens that included a tennis court and a showroom for his collection of Ferraris.

This sounds very similar to anti-McMansion ordinances with outcry over the disturbance to the neighborhood and restrictions on how big these basements can be. But, on the other hand, there is a big difference: these underground basements are hidden out of view and theoretically shouldn’t change the visible character of the neighborhood much. In some ways, the basements are genius: why not make use of underground space that is less disruptive and doesn’t alter the neighborhood’s appearance? I wonder if this is really just about construction inconvenience or it is more of a reaction to rich newcomers making changes.

How the megarich live in London: in the shadows

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A profile of a newer housing development in London suggests the megarich live in secrecy:

The secrecy extends to the media, many of whose members, including myself and the London Sunday Times’s and Vanity Fair’s A. A. Gill, have tried but failed to gain entry to the building. “The vibe is junior Arab dictator,” says Peter York, co-author of The Official Sloane Ranger Handbook, the riotous 1982 style guide documenting the shopping and mating rituals of a certain striving class of Brits, who claimed Knightsbridge’s high-end shopping area, which stretches from Harrods to Sloane Square, as their urban heartland…The really curious aspect of One Hyde Park can be appreciated only at night. Walk past the complex then and you notice nearly every window is dark. As John Arlidge wrote in The Sunday Times, “It’s dark. Not just a bit dark—darker, say, than the surrounding buildings—but black dark. Only the odd light is on. . . . Seems like nobody’s home.”

That’s not because the apartments haven’t sold. London land-registry records say that 76 had been by January 2013 for a total of $2.7 billion—but, of these, only 12 were registered in the names of warm-blooded humans, including Christian Candy, in a sixth-floor penthouse. The remaining 64 are held in the names of unfamiliar corporations: three based in London; one, called One Unique L.L.C., in California; and one, Smooth E Co., in Thailand. The other 59—with such names as Giant Bloom International Limited, Rose of Sharon 7 Limited, and Stag Holdings Limited—belong to corporations registered in well-known offshore tax havens, such as the Cayman Islands, the British Virgin Islands, Liechtenstein, and the Isle of Man.

From this we can conclude at least two things with certainty about the tenants of One Hyde Park: they are extremely wealthy, and most of them don’t want you to know who they are and how they got their money.

This reminds me of Veblen’s idea of conspicuous consumption where the rich spend or waste money to show that they can. In other words, the rich often want people to take notice of their wealth and status. But, this London development suggests the opposite: some of the megarich today want to stay hidden. Why is this? I wonder if it has to do with modern society where having lots of money is not always viewed positively, particularly when tied to particular industries or practices such as storing money in tax havens.

Bad logic: stories of successful college dropouts obscure advantages of going to college

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The president of the University of Chicago writes that holding up successful college dropouts as models takes away attention from the advantages of a college degree:

Names like Jobs, Gates, Dell, and others lend star power to the myth of the wildly successful college dropout. One recent New York Times homage to the phenomenon compared dropping out to “lighting out for the territories to strike gold,” with one young executive describing it as “almost a badge of honor” among startup entrepreneurs. Like any myth, this story has a kernel of truth: There are exceptional individuals whose hard work, determination, and intelligence make up for the lack of a college degree. If they could do it, one might think, why can’t everybody?

Such a question ignores the outlier status of these exceptional drop-out entrepreneurs and innovators.

Those who are able to achieve such success often rely on a set of skills already developed before they get to college. They know how to educate themselves, get a bank loan, and manage their time and their money. They may benefit from a network of family, friends and acquaintances who open doors and provide a safety net.

But what happens to young people without access to these important resources? For them, skipping college to pursue business success is like investing their savings in lottery tickets in the hopes they will be a multimillion-dollar winner, or failing to pursue an education because they expect to be an NBA superstar. The reality is that the next college dropout will not be LeBron James, James Cameron, or Mark Zuckerberg. He will likely belong to the millions of college drop-outs you don’t hear the press singing about. These are the 34 million Americans over 25 with some college credits but no diploma. Nearly as large as the state of California, this group is 71 percent more likely to be unemployed and four times more likely to default on student loans. Far from being millionaires, they earn 32 percent less than college graduates, on average.

I’ve seen this logic used in arguments about not having to spend lots of money on college or from those who see college as liberal indoctrination. As Zimmer argues, using outliers to build a theory is just not a good idea. These famous cases are held up partly because they are so rare, not because this is necessarily a good path to pursue. This is similar to the logic used in holding up rages to riches stories; while it is true that social mobility, upward and downward, occurs in the United States, a phenomenal change in position over one lifetime is more rare.

I’ve used this very example with my Introduction to Sociology class when talking about why people go to college. I ask them if they are aware of wealthy college dropouts like Bill Gates and Steve Jobs. They say yes. I then ask if they dropped out of college, would their parents accept these stories as good rationale? They answer no. I then tell them a little of the Bill Gates story as relayed by Malcolm Gladwell in Outliers. Gates attended a pretty good high school that through one student’s parent who worked for a computer company was able to purchase a used mainframe computer. Gates then had a rare opportunity at the time for a high school student to spend hours with the mainframe and learn about it. He was then able to build on this background and later founded Microsoft with Paul Allen. Gladwell uses this as an example of the Matthew effect where those who come from more advantaged backgrounds (or who happened to be the oldest hockey players) tend to get more opportunities later in life.

Drawing the line: an 18,000 square foot, $45 million home IS NOT a McMansion

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I know the line and price point between a mansion and a McMansion is not exact but this goes way over the line: an 18,000 square foot, $45 million home in the Hamptons is definitely not a McMansion.

Even in a rich man’s playground lined with one McMansion after another, the Linden Estate in Southampton, N.Y., stands out as one of the best. The stately — and gigantic — home sprawls across 18,000 square feet on a 9.11-acre plot, and it has not one but two outdoor pavilions and a bevy of resort-style amenities (including indoor and outdoor pools). But it seems like that might not have been enough to satisfy one tech tycoon.

James H. Clark, co-founder of Netscape (you remember that, right?), was reportedly under contract to buy the glorious property at a $49 million price tag last July — after the mansion spent a staggering four years on the market. Clark and his wife (both pictured at left) even gave Haute Living magazine a tour of the home’s immaculate grounds. But the sale was never completed, and now, less than a year later, the home is once again up for sale for $45 million, Curbed reported. It’s unclear exactly what happened, but man, what a bummer for the owner.

I’m not sure exactly what McMansion means in this setting. Mass-produced? Probably not homes of this size. A large house? This one is extra large, or gigantic as noted in the story. A home for the wealthy? Clearly.

I wonder if there is something else going on here. One idea about McMansions is that they are about excessive consumption. This often refers to the average American taking on too big of a mortgage or purchasing a lot of space that they don’t need. But, might this also refer to excessive consumption by the ultra-wealthy? Of course, the wealthy may not have the financial difficulties in purchasing some homes but the tone here might be that the even the wealthy don’t need a home like this. Then, the term McMansion applies even more broadly to any home consumption that might be considered out of the ordinary.

The cities at the top of the global power hierarchy

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The 2013 Wealth Report Global Cities Survey ranks the top cities in the world in terms of power:

The survey was launched in 2008 to monitor city-level power shifts. Its objective is to assess the key urban centres across the world in terms of investment opportunities and the influence they have on global business leaders and decision makers…

Our Global Cities Survey’s four-part assessment of performance is designed to give the most rounded picture of the places that matter to the wealthy and influential. The survey focuses on four categories: economic activity; political power; quality of life; and knowledge & influence.

While New York and London hold on to the top two spots, the Asia-Pacific region, with four entries, has the tightest grip on the top 10. Europe and North America also feature, with three cities each. The Middle East’s first entry, Dubai, is at number 29, while South America’s leading cities, Buenos Aires and Sao Paulo, only just scrape into our top 40.

New York’s strength is reflected in its consistent showing across all four of our categories. The city is particularly strong in economic activity (being the wealth and financial centre for the world’s richest economy undoubtedly helps) and knowledge & influence, where the power of US media firms shines through. Indeed, there is a close relationship between economic activity and overall ranking, with New York, London, Paris and Tokyo occupying the top four slots for both.

When we turn to political power, Washington DC unsurprisingly leads the field, followed by Beijing and then Brussels – a small city in many ways, but one that punches above its weight politically as the headquarters of the European Union. Berlin sits just one place lower down, highlighting the growing tensions within the world’s largest economic bloc.

Here is a chart of the top five cities in each category:

This list doesn’t seem too different from the one A.T. Kearney released last year.

What would be nice to see in addition to these rankings is the interaction between these cities. For examples, how much do the social networks of the wealthy overlap across these places? How many corporations and organizations do significant business in each place? How is wealth actually spread across these places? I assume there are some significant patterns here but the emphasis in these lists is to still see these cities as separate places representing different countries.

Can a $10 million home really be a McMansion?

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I’ve worked on defining a McMansion before but after seeing a recent story about a new house listing few times, I stumbled into a new definitional issue: is there a price point where a home can no longer be considered a McMansion?

Location: Los Angeles, Calif.
Price: $10,000,000
The Skinny: Just weeks after closing on a 9,000-square-foot McMansion in Bel Air and reported plans for a gut renovation, hip-hop star Kanye West and reality TV regular Kim Kardashian have decided to cohabitate elsewhere. According to recent reports, the duo have flipped the property for around a million more than they paid. Redfin lists the previous sale price at $9M, so it seems Kim and Kanye have unloaded the place for somewhere around $10M. The mansion, completed in 2010 on less than an acre in the Holmby Hills neighborhood, features five bedrooms and seven bathrooms, but that wasn’t enough for the celeb couple, who were planning to gut the place and expand to 14,000 square feet.

Several features of this home would seem to put it in McMansion territory: it is 9,000 square feet (though this is getting close to regular “mansion” status), it is on a fairly small lot for a house its size, and it may be located in a neighborhood with a number of similar homes.

Yet, the price for this home may be way beyond the typical McMansion at $10 million. This is not just a mass produced home for the American masses; it is a home that from the beginning was only available to the wealthiest in global society. In this case, two of the biggest entertainment stars were able to flip the house. Because of this, I argue this home isn’t really a McMansion at all even though it might exhibit some McMansion traits. It should fall more in the mansion category because its price makes it quite inaccessible.

Quick Review: The Queen of Versailles

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I recently watched the 2012 documentary The Queen of Versailles which details the quest of David and Jacqueline Siegel to built the largest house in the United States. My thoughts on the film:

1. I’ll be honest: I’m disappointed more of the movie isn’t about the house. And, I hope the house is completed just to see what an 85,000 square foot house looks like.

2. The film ends up being a lot more about what happens when a wealthy person/family suddenly sees that money disappears. This is an interesting story in itself. How do they adjust? How much of their behavior really changes? Even if they say they can readjust to a lower income, which is closer to what they grew up with, it appears this is is a really hard process. This reminds me of recent research suggesting people feel losses more strongly compared to equal gains.

3. Jackie is a somewhat sympathetic character but David Siegel is the one to watch here. His mood gets darker and darker as his financial prospects dim. I felt sorry for him; he freely admits at several points that he can’t separate his family and work and it shows in how he lives. Is this what trying to hold on to money looks like? If so, it doesn’t look attractive at all.

4. The film does address at various points who is responsible for the situation the Siegels are in: banks who made money easily available or people who got addicted to this easy money? But, the film doesn’t go far enough in trying to resolve this. It would be interesting to see banks or financial institutions interviewed on this particular case, or even more broadly, to get their side. We see the personal fallout of the problem as the Siegel family tries to recover but the film only hints at the bigger picture.

While this is an interesting story, I wonder: if the outlandishly large house was not involved, how different is this from a number of reality shows or films about wealthy people? In the end, I do think the family is pretty honest about the changes they are experiencing and perhaps it is this authenticity that sets this documentary apart.

(Note: critics like the film. On RottenTomatoes, 98 out of 103 reviews were fresh.)

Curbed’s “Whale Week” highlights wealthiest landowners in the world

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If you missed it, last week Curbed.com highlighted the world’s wealthiest landowners. Here were the five people featured during “Whale Week”:

At a spry 26 years of age, movie producer Megan Ellison might have been forgiven for moving back into one of her billionaire father’s many homes and whiling away her days on the beaches of his $500M private Hawaiian island or in a temple on his $100M Japanese-inspired Bay Area estate. Instead, she has carved out a professional niche as a backer of high-brow films, using—unsurprisingly—seed money from dad. While she was accumulating producer credits on films like The Master, True Grit, and Zero Dark Thirty, Ellison was also busy buying up prime property…

Brainy corporate raider John Malone might not be a household name, but he made a killing in the media industry and parlayed that fortune into his position as America’s largest landowner. Following a 2011 purchase of more than 1,000,000 acres of timberland in Maine and New Hampshire, Malone’s property portfolio now includes a whopping 2,200,000 acres. As the Daily Mail put it, “the total sum of Mr Malone’s land is nearly three Rhode Islands. Or two Delawares.” The low-profile Malone won’t say how much he paid for the latest million-acre addition, saying only that it was purchased for a “fair price,” but with a $4.5B net worth, the media mogul should have plenty of cash left over for further acquisitions…

Formula One chief Bernie Ecclestone turned a grassroots auto racing series into one of the world’s most watched sports, and made billions in the process. Now, when the time comes to spend some of that hard-earned wealth, he can afford some of the world’s most expensive real estate. But he doesn’t keep all the fun for himself, and has repeatedly splashed out to keep his two daughters, Petra and Tamara, ensconced in the height of luxury…

Boyish telecom mogul turned property whale Michael Hirtenstein may not be a household name, in fact, few outside of the NYC nightlife world have ever heard his name, but he has been behind more than a few high-end real estate deals. Since selling his start-up, Westcom Communications, for $270M in 2005, Hirtenstein has been linked to some of New York’s most coveted buildings, and not always positively. In October of last year, Extell Development’s Gary Barnett claimed that he had canceled Hirtenstein’s contract on a high-floor unit at the unfinished blockbuster One 57 after the Hirt paid a construction worker to snap pictures from his unfinished sky-high flat. Hirtenstein told the Post, “You want me to spend $16 million without seeing it? … All I was trying to do was be an informed, intelligent buyer. Apparently, that doesn’t sit well with Mr. Barnett. That’s not nice.”…

Of all the rich Russians to emerge from the post-Cold War turmoil, Roman Abramovich isn’t the wealthiest, but he is among the most publicly profligate. Between Chelsea F.C., the top British soccer club he acquired in 2003 for $220M, a huge art collection, a veritable fleet of yachts, and a host of luxury properties spread across the world, Abramovich is probably the ultimate whale. The 46-year-old who started off selling stolen gasoline under Soviet rule now commands a property portfolio that would make even an Ellison blush.

I’ve highlighted John Malone before but I suspect most Americans are not aware of the property held by these people. If they do know these people, it is because they cross over into other areas of life like sports or Hollywood. I propose a few reasons why we don’t hear more about the property ownership of these five:

1. Their properties are exclusive and generally out of the public eye. It is intentional that most people won’t get anywhere near some of these properties.

2. Perhaps having these kinds of properties or this much land is simply seen as obscene or excessive. With the example of Malone, what does one do with 2.2 million acres? Does anybody need this kind of land or house? McMansions are derided but they are relatively common (particularly emphasized with the Mc- prefix) and this might leave them more open for discussion.

3. Owning a lot or expensive land is simply not very interesting to people in a world of celebrity news and entertainment culture. Land is more permanent and inaccessible and lacks novelty.