TGIF. This is the Shake 🤝 : The newsletter that slaps up your Friday morning like…

Here’s what we've got for you this week:

• Paddle Up: The Rise of Pickleball 🚀 

• The Privatization of Landfills 🗑️ 

• Player Portfolio 🕵️ 

MARKET RADAR

PADDLE UP: THE RISE OF PICKLEBALL 🚀 

It’s official, folks, pickleball isn’t just that sport that your neighbor with bad knees keeps telling you about as he packs his car for his Tuesday night match.

Pickleball is now the fastest-growing sport in the United States (sorry lax bros) and also a centerpiece of conversation in the world of real estate.

Luxury developers and large-scale real estate investors alike are following the trends, but before we go into that…

Didn’t realize that pickleball got this intense to be honest.

Luxury real estate developers have always gone heavy on the amenities, and over the years we’ve seen multiple renaissance periods: steam baths, infinity pools, wine cellars, and more recently smart homes are only some of the examples of the upgrades we’ve seen on incredible homes across the country.

Today, there’s an even better way to show off your wealth and taste, and it’s putting a pickleball court in your backyard. Per Zillow, the amount of for-sale listings that explicitly mention pickleball rose 86% YOY in Q4 of 2022. 

It’s impossible to deny the popularity that pickleball has swept the nation with. From the common man to world-class athletes like Lebron James and Tom Brady, there are many people who are major proponents for the sport that is really just a combination of ping-pong, tennis, and badminton.

That being said, pickleball has not been universally accepted and is actually causing some awkwardness in some communities, and it’s all over 2 things:

1. The overly-competitive people that ruin it for everyone and are smack-talking their neighbors in their 55+ communities

2. The noise. Have you ever heard pickleball played before? It’s actually a weirdly loud and distinct noise. Want to make the sound yourself? Put your top lip over your bottom and blow your mouth open so it makes a “pop” sound. Now imagine that sound over, and over, and over…

People are actually selling their homes over the pickleball noise in their communities. Isn’t that ironic?

In one camp we see people putting their courts in their backyards, but in other communities with HOAs, it’s about to cause a civil war. It’s easy to imagine for some people who live by the courts that a pickleball alarm clock might be annoying, though.

I’m sure like with most situations the HOA will come to a consensus that everyone agrees with, right? 🤦‍♂️ 

On a larger scale, big-time investment dollars are flooding into the sport as well.

In September a few commercial real estate entrepreneurs got together and committed to deploying $180 million into 15+ indoor private pickleball cubs. Known as The Pickleball Club (TPC), this group is quickly becoming a behemoth during what the investors themselves are calling a massive land grab.

Other companies are finding ways to reuse now obsolete spaces. National fitness chain LifeTime has an entire facility near Minneapolis that was once one of their gyms dedicated to just pickleball. Even Jeff Zwiefel, Life Time’s COO noted “I’ve been in the health and fitness business for almost 40 years and never seen such organic growth”.

That being said… anyone reading this who is a savvy investor has to be thinking about what the return could look like on a business like this. It feels a lot like Topgolf.

Topgolf has its hardos who come in with their entire bag and take it way too seriously, but Topgolf also has my buddies and me who are there to get to a point where we need an unnamed rideshare app (no free ads 😜 ) to drive us home, all while slicing a few golf balls along the way.

It appears that the top pickleball groups are realizing that, with many of them including food and liquor sales in their streams of income.

See you all on the courts 👀 

THE PRIVATIZATION OF LANDFILLS 🗑️ 

“Trash, garbage, waste” - these are all words to describe something tangible that is deemed no longer useful. Hold your tongue though because there is a whole lot of opportunity in the disposing of waste, and no signs point to it slowing down.

America is the biggest dumpster fire when it comes to trash. We produce a whole lot… roughly 239 million metric tons of garbage every year. This equates to about 1,600 to 1,700 pounds per person.

With those types of numbers, it’s no surprise that waste management companies' stocks have outperformed the market in the last 7 years.

Smell that? Smells like money.

There’s one place all this waste goes, and that’s to a landfill (aka the only mountains in Florida). These landfills are meticulously engineered for each use-case of waste and turns out they can be extremely lucrative when done right.

So how do landfills make their money? The main source is tipping fees 💸  

There’s no avoiding these tips and they aren’t the same as the complimentary 20% you give at a restaurant (10% for you Canadians 🇨🇦 visiting for the winter).

Based on weight per ton, these fees are charged to every truck dropping a load at the landfill. In 2020, municipal solid waste landfills had an average tipping fee of $53.72 per ton. That’s a 133% increase from the 1980s when it was ~ $8.07/ton ($23/ton when adjusted for inflation).

This comes out to roughly $1.4 million a year in gross revenue for small landfills and $43.5 million a year for large landfills. That’s a good chunk of change!

The catch is that it costs about $1.1 million to $1.7 million just to construct, operate and close a landfill. This makes it tough for small players like local municipalities.

Due to this, we’re seeing private companies start to grow like a weed. 

The two head honchos - Waste Management and Republic Services - own about 480 landfills out of the 2,627 landfills across the United States. And we have a feeling they want to keep acquiring more.

There’s more icing on the cake though 🎂 In the same way a real estate investor finds a value-add edge on a property, these players are getting creative and unlocking other revenue streams on landfills.

Two big plays are:

1. Landfill mining and reclamation: creating more capacity and selling reprocessed materials 🪙 

2. Generating & selling energy from gas emissions: earning extra revenue and government subsidies due to creating a form of sustainability ⚡️ 

Landfill gas generates about 10.5 billion kilowatt-hours of electricity every year. That’s enough to power roughly 810,000 homes and heat nearly 547,000 homes each year.

What’s even better is that landfill sites are useful after they hit capacity and need to close.

Engineers and landscape designers transform these sites into parks, golf courses, wildlife refuges, and other spaces that can be enjoyed by the entire community.

A few examples of sites that are built on closed landfills include the Palomar Airport in California, and Mile High Stadium, the former home of the Colorado Rockies and Denver Broncos, which is now a parking lot for the city’s new stadium.

This niche sector of real estate seems to be a hidden gem 💎 with a lot of growth potential for those willing to get their hands dirty (pun intended).

So next time someone says “you’re trash” - take it as a compliment ❗️ 

PLAYER PORTFOLIO 🕵️ 

This global superstar has splashed on mansions across all of Europe. His portfolio of homes is worth north of $45M 🤑 

Done deal! 🤝 If you enjoyed this week's edition, don’t be selfish — share The Shake with a friend!

^{DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.}