Many years ago, I had the opportunity to venture into the depths of Durban Deep, the world-famous gold mine in South Africa. This was after Nelson Mandela came to power and apartheid ended.
There was great hope in the air, and everyone was optimistic after the reunification. People believed that once they were reconnected to the world, the economy would boom and people would prosper.
At the time, crime was running rampant. Rapes and murders were surging. Those whites with money and opportunity fled to London or Sydney or New York. The rest of the middle and upper class left the cities to live behind 12-foot-high stone walls in the suburbs.
When we were leaving Johannesburg, our guide pointed to a skyscraper and told us that squatters lived there now. The mining companies had abandoned their headquarters.
A few weeks ago, I came across a story from September 1.
More than 70 people were killed overnight when a fire raged through a run-down, five-story Johannesburg apartment block, one of the worst such disasters in a city where poverty, household fires, and homelessness are widespread
Johannesburg officials initially suggested the building had been occupied by squatters, but Lebogang Isaac Maile, the head of the Human Settlements department for Gauteng province, which includes Johannesburg, said some of those who died may have been renting from, or were being extorted by, criminal gangs.
"There are cartels who prey on vulnerable people. Because some of these buildings, if not most of them, are actually in the hands of those cartels who collect rental from the people," he told reporters.
Apparently, it was an old municipal building that had been taken over by immigrants from neighboring countries seeking a better life. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
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Last Saturday, I was avoiding a traffic snarl on the beltway and cut through downtown Baltimore. It was one of those beautiful September days — sunny, mid-70s, a day that in years past would have people flooding to the Inner Harbor to eat ice cream, shop, and walk along the water.
But on Saturday, it was a ghost town. Nothing but trash and old papers tumbling down Pratt Street. Heck, even the beggars were gone, having no one to bum from. Most of the shops in the Inner Harbor are empty and boarded up now.
We’ve all heard of the crime and the empty office buildings as people work from home. There is also the falling city revenue and declining police departments that add to the so-called “doom loop.”
In San Francisco, both Meta and Red Hat canceled their annual conferences downtown for 2024.
An office building in that same city that once sold for $300 million was let go for $60 million. In Baltimore, a downtown building that sold for $66 million in 2015 just sold for $24 million. In Portland, Oregon, the American Bank Building, which sold for $45 million in 2014, recently sold for $13.6 million.
In Philadelphia, the two famous cheesesteak places hired armed guards with assault rifles to protect the crowds. A coworker tells me they do this at the bougie, newly built neighborhood of Harbor East in Baltimore as well. This type of security is common in Nairobi and Mexico City, but I never expected it to become an everyday occurrence in America.
People go to cities for trade, culture, education, and economic opportunity. Most if not all of these are no longer the sole domain of urban areas.
The biggest trade hub in the world is the New York Stock Exchange, which is technically located in a server farm in the New Jersey countryside. Outside of day trips to see professional sports and museums, culture can be found in most places without the hassle of parking. Outside of universities like Johns Hopkins, the education in most cities is awful. And with many people working from home or from office parks in the suburbs, economic activity happens mostly online.
The question is when will the 7 million new illegal immigrants now in the U.S. figure out that there is all sorts of empty living space right downtown. It will be sooner than you think.
All the best,