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From back of house to front of house

Daniel Foch, Daniel Clark, and Adam Darvay recently stopped by Mackay Laneway House to film a last-minute video tour before the new tenants move in. They had quite the rig setup (see above). There was also a drone flying around that is not pictured here. The full house tour should be available in about two weeks and I’ll be sure to share here on the blog.

One of the things we talked about during the tour was the future of laneway housing in Toronto. Will we see strong adoption going forward and, if yes, what does that mean for Toronto’s laneways? I think we will continue to see a steady increase in the number of laneway suites that get built in Toronto each year. And so eventually this form of living will become a ubiquitous part of the urban landscape. It’s happening fast.

Now consider what this could mean for Toronto’s laneways. As garages and parking spaces get slowly replaced by new housing, it will mean that our laneways could at some point flip from being vehicle first to pedestrian first. Mackay Laneway House does not have any vehicular parking. The front door is off the laneway. You enter on foot. That’s how you experience the lane. And Gabriel and I thought it should be celebrated.

If or when this tipping point occurs, it will trigger a perception change. Slowly but surely we will start to think of our lanes not as back of house, but as front of house. And when that happens, it’ll almost certainly force us to rethink how we design them. Forget utilitarian. Our laneways have the potential to become some of the most pedestrian-friendly streets in the city, especially with a few streetscape and landscape improvements.

Pushing this idea even further, could you imagine a world where our laneways not only become more front of house, but where the laneway side becomes the more desirable side of the property? If we gave people the option, how many would prefer to build their main house on what is today considered to be the backside? (Remember how things once flipped in Paris?)

But for the fact that we have an entrenched built form that could make this “inversion” challenging, I think there are people who would prefer to have their front door on the quieter and more pedestrian-friendly side of their property. Either way, I continue to believe that we are in the early stages of an ADU/laneway housing revolution. And things are just getting started.

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Scarcity and stories

Scarcity. FOMO. Scott Galloway is right. In this recent post, he talks about why humans are programmed to chase scarcity and why blockchains (specifically NFTs) could represent something incredibly meaningful for not just the art world but for many other asset classes. Here’s an excerpt from the post:

People like scarcity — a lot. Owning something scarce makes one feel unique, and signals success and worthiness as a potential mate. Scarcity is also an instinctual trigger for obsession — when we sense a scarcity of something, be it food or a mate, we are programmed to become obsessed with finding it. Art auctions, the (pre-pandemic) lines outside Supreme, and the margins on a Panerai Tourbillon prove this point.

A Van Gogh and a Rothko are both unique, and therefore scarce, because they are made of atoms, and it is impossible to arrange a second set of atoms in an identical configuration. Print artists, whose lithographs are made to be reproduced without alteration, use a small “17/100” written in the corner, to distinguish each print and bestow scarcity upon it.

To hold value, scarcity must be credible. The dirty (not-so) secret of the art world is that art buyers, and even professional art appraisers, struggle to discern originals from forgeries. A well-made forgery provides the same practical value as an original — you can hang it on your wall and bask in its profundity. Yet the art world invests millions of dollars in identifying the “real” version of valuable works; once unmasked, forgeries are nearly worthless.

I have always found this fascinating about art (but really, it applies to most other things). Is the price you pay so that you can “bask in its profundity” or because the object in question signifies something — it tells a story? In addition to scarcity, we also obsess over stories. They help create meaning for us.

The interesting thing about all of this is that it’s really just a question of perception. When a work of art is discovered to be a fake that is, indeed, detrimental to value. But what changed? The art itself hasn’t changed. We just no longer enjoy it and derive as much value from it because the story is not what we thought it was.

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Toronto condos on the rise again

CIBC Deputy Chief Economist Benjamin Tal was recently interviewed by Larysa Harapyn of the Financial Post about the state of the housing market in the Greater Toronto Area. The message he delivers is pretty clear: “If you think that Toronto is unaffordable now, you wait.” The long-term fundamentals in this market remain strong. Demand is outstripping supply and will likely continue to do so, which is why Tal also stresses the importance of delivering more purpose-built rental housing. If you can’t see the video above, click here. (And with that, I think it’s time to switch topics for tomorrow’s post. That’s enough Toronto housing for one week.)

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Penthouse at 388 Richmond Street West sells for $2.4 million

My friend Christopher Bibby — who is a real estate agent here in Toronto — is in the Globe and Mail today talking about how Toronto-area buyers have returned to downtown. The article is by Carolyn Ireland and in it Bibby cites two of his recent deals: A large 2 bedroom suite at 168 King Street East that just sold for $1.2 million and an even larger penthouse at 388 Richmond Street West that just sold for $2.4 million.

(Sidebar: 388 Richmond Street West is one of my all-time favorite buildings in the city and was developed by Howard Cohen nearly two decades ago. For more on Howard, check out this post I wrote back in 2016.)

These are two examples of buyers who want to live in the city. Of course, there are countless others who are making moves right now. As Bibby points out in the article, the mood has certainly shifted from what we were seeing last year in the condo space. Condo buyers today are even starting to comb through expired listings in the hopes of finding off-market deals.

I view this kind of real estate activity as a leading indicator for what’s to come in the the city. Rental activity is naturally going to lag until people starting returning to offices en masse and downtown life fully resumes. It’s more of a short-term “buying” decision. But as a condo purchaser, it’s easy (and probably better) to look through the short term.

I think that’s what people are doing right now and they’re saying to themselves, “yeah, I want to be in the city.” I know that’s how I feel.

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The new Miami

The last year has been challenging for the hospitality industry. But at the same time, it was a good year to renovate. The W South Beach recently unveiled a $30 million renovation project that includes all 357 rooms. Designed by local studio Urban Robot Associates, the project directive was an interesting one. The team was asked to reimagine the hotel for the “new Miami.” A Miami that is more grown up and cultured, but that, of course, still has a bit of an edge. With all of the attention that Miami and Florida are getting right now, this project feels timely and indicative of something broader underway. Indeed, it’s hard not to acknowledge that Miami is having a moment right now. This also happens to be one of the last hotels that I stayed at prior to last March’s lockdown. So I have a clear “before” in my mind. It’s fun to see how much it has changed over the last year while I was mostly sitting at home. (Shameless plug: I also love the pale wood herringbone floors, which, coincidentally, will also be on offer at One Delisle.)

Images: Urban Robot Associates

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Net domestic migration is still pretty suburban

For years, the data has been clear. Many Americans are moving from expensive cities, like Los Angeles, to less expensive metropolitan areas like Dallas-Fort Worth.

But Wendell Cox’s recent article over at New Geography is a good reminder that these data sets can be limited. The US Census Bureau currently tracks domestic migration at the county level only. This can be a bit of a problem as counties vary dramatically in terms of geography and population.

The New York metropolitan area, for example, is comprised of 25 different counties averaging about 750,000 residents. The Los Angeles metropolitan area, on the other hand, is compromised of two counties averaging about 6.6 million residents.

These sorts of nuances become important when you’re trying to figure out things like whether people are moving to/from urban cores or the suburbs. Case in point: The San Diego metro area is compromised of a single county. When people move there, the data says nothing about how urban or suburban they might be.

Dallas-Fort Worth is a lot easier to read. Since 2010, it has had the largest net domestic migration of any metro area in the US: +443,000 residents. But county data reveals that it is entirely suburban. The core (Dallas County) actually lost 57,000 people from 2010 to 2019. And this is not unique to the Dallas-Fort Worth area.

Photo by Gabriel Tovar on Unsplash

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From social housing to highly desirable in Stockholm

Feargus O’Sullivan is back with another Bloomberg CityLab article about “the iconic home designs that define our global cities.” In this recent article he focuses on the Barnrikehus of Stockholm (and also talks about Sweden’s housing market in general). Originally built in the 1930s, the slab-like midrise buildings were largely intended to address two pressing problems: 1) the need for affordable housing and 2) Sweden’s incredibly low birthrate (supposedly the lowest in Europe at the time).

The Barnrikehus template was deployed on the edges of Stockholm and other Swedish cities. The designs were/are fairly simple. Very little ornament (this is Scandinavia). Four or five storeys usually. And no more than about 12 meters deep. This allowed for better natural ventilation, which was important for stymying the spread of tuberculosis. The rents were also heavily subsidized and declined even further with every child in the family. In other words: the more kids you had, the less rent you had to pay.

The suites were fairly compact, with many around the 430 square foot mark. This kind of space might have housed a family of six according to O’Sullivan. But compared to the other available housing options at the time, this was a significant improvement. Perhaps not surprisingly, these “child-rich houses” (which is how the name translates) developed the same kind of social housing stigma that was prevalent in many other countries and cities around the world.

But that perception changed over time and, today, these rent-controlled apartments are apparently highly sought after. (Here’s a listing to give you a taste of what they’re like.) Originally on the fringe of cities like Stockholm, they are now very well located and offer a high standard of living. (You also can’t go wrong with white walls and pale woods.) To learn more about the evolution of Stockholm’s depression-era housing, click here.

Photo by Jon Flobrant on Unsplash

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Returning to an office-centric culture

Earlier this week, Amazon announced that it plans to return to an “office-centric culture” as its baseline. Its rationale was that being in an office allows the company to better “invent, collaborate, and learn together.” All of this was laid out in an announcement that was distributed to its teams globally. On the other end of the spectrum, Twitter continues to double down on working from home. The company, which is currently hiring, is even trying to target talent that may be disgruntled by the fact that their current company is planning for them to return to the office. Two very different approaches. So which one is right?

This is, of course, a great debate right now and the right answer probably depends on a myriad of different factors, some of which are likely specific to the company. Dror Poleg has been trying to think through this problem with something he calls the talent equation (because it’s all about talent). It works like this: level of in-person interaction x overall size of talent pool = innovation and financial success. The basis behind this equation is pretty simple. In-person interaction is great for business. This much we know. But you also need the right talent interacting. Allowing remote work is one way of expanding the size of your talent pool. But again, you do this at the expense of in-person interaction.

In-person interaction is what makes cities the great organisms that they are. And I believe firmly in this side of the equation over the long-term. Even right now I find that when I go into the office, my call and Zoom volumes go down dramatically and I have more time to think, collaborate, and do, you know, actual work. This is because many interactions don’t require a Zoom meeting when you’re in the office. You stop by someone’s desk. You ask a thing (usually pretty quickly). And then you go off and action that thing. But I also acknowledge that for some companies, access to the right talent — and lots of it — may be a real challenge, particularly in smaller cities.

Like Amazon, I am a supporter of office-centric work cultures. But I do think that Poleg’s talent equation is a useful way to think about this debate right now.

Photo by Shridhar Gupta on Unsplash

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The Koblick House by Richard Neutra

I came across the above photo this morning. If you can’t see it, click here. It’s a photo of the Koblick House in Los Angeles designed by Richard Neutra and Gregory Ain for art professor Harry Koblick. Built into the hills of Silver Lake in 1937, the house is a three-storey duplex with about 1,620 square feet according to some sources. (I couldn’t find any plans or drawings, but I’d really like to see the section.) The upper unit has 2 bedrooms and 1 bath. And the lower unit has 1 bedroom and 1 bath.

Richard Neutra was a prolific modernist and designed numerous “international style” buildings, like the Koblick House. His work was included in the seminal 1932 MoMA (New York) exhibition on modern architecture, which was an important moment for modernism in the United States. It helped to import the international style from Europe at a time when exhibitions did things like that. It is perhaps easy to forget that ideas didn’t spread as quickly around the world back then.

I love the simplicity of this house. The double car garage that services the two units. The side stair that leads to the front door. And the two large terraces that probably look out over some kind of landscape. Over 80 years later and it still feels contemporary. Perhaps some of you will be equally inspired by this archive photo.

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Second home and investor mortgage applications accounted for 14.1% of all applications in February

As a follow-up to my recent post about the rise of the second home, here is a chart (via the WSJ) showing second home and investor mortgage applications as a share of all applications in the US. In February of this year (2021), second home and investment properties accounted for 14.1% of all applications. This is a record number going back to January 2010.

What’s also interesting about this chart is that, but for COVID, it shows a general decline over the last decade. I’m not sure what the split is between vacation and investment properties, but can we conclude that pre-COVID Americans were becoming less interested or perhaps less able to own a second home? And could the reason be that instead of owning a second home, more people simply started relocating permanently?

There is also an obvious seasonality to these applications. Each of the above valleys tend to correspond to the spring and summer months. It’s almost as if every fall/winter we start thinking to ourselves, “Right, winter. Let’s look for a place somewhere else.” Is it that, or are there other forces at work here?