Month: January 2015

• How are you attracting and retaining top talent?

  Yesterday I received a comment on my post about service and product companies with a suggestion to check out an interesting Fast Company article talking about the future of work (thank you Amy). The article was based on a research report – commissioned by CBRE and a real estate developer in China (Genesis) – called Fast Forward 2030: The Future of Work and the Workplace.

  This is a topic that’s getting a lot airtime right now because Millennials are starting to impact work in a big way. But what’s interesting about it is how broad these impacts will be. Changes in how we work will affect the way we design our cities; the way architects and developers build and lease space; the type of people and roles companies will need to hire and create; and so on.

  Here’s a snippet from the report:

  “Providers of commercial buildings and places to work will need to develop new, sometimes counter intuitive, business models and work with partners who understand service and experience in order to compete with emerging workplace competitors. Successful providers will work with tenants to unlock ‘win win’ solutions that reduce occupier costs, increase flexibility, and simultaneously provide enhanced levels of community, amenity and user wellbeing. Cities will have a role to lead and nurture changes that will support the changing landscape of work.”

  I plan to go through the report in more detail this weekend, but I did want to point out one thing. When business leaders from around the world were asked what their biggest competitive advantage would be by the year 2030, the top choice was: the ability to attract and retain top talent. This topped organizational vision and even the ability to innovate.

  This might not come as a surprise to some of you, but it’s worth repeating. And in many ways, it’s a chain that begins first with cities. 

  If you’ve ever watched The Startup Kids documentary, you’ll know that when Alexander Ljung (CEO of Soundcloud.com) was about to found his company, he actually started by first traveling around Europe looking for the coolest city in which to base his company. The last city on his trip was Berlin and that just so happened to be the team’s favorite. So that’s where Soundcloud was founded.

  My point with that story is simply that the “workplace” of today – forget the future – means so much more than just your rentable area. Yes, that’s important. But there’s a lot more to consider when trying to get the best people. Cities play a huge role.

  2015.01.22

• Before and after at 109 Hazelton Avenue

  I recently connected with one of the principals of a Toronto-based construction management firm called Ripple Projects, which focuses primarily on contemporary custom homes (credit to 52 Pick-up for the introduction).

  They’ve only been in business for a few years, but the founders spent many years prior to this doing similar projects at similar companies, such as Wilson Project Management.

  Since they don’t yet have a lot up on their website, I asked if he could share one of his recent projects with me. He was happy to do that and so, with his permission, I’d now like to share it with all of you.

  It’s a renovation and expansion of a semi-detached house at 109 Hazelton Avenue in Toronto’s upscale Yorkville neighborhood. The end result is roughly 3,000 square feet with 3+1 bedrooms and 5 bathrooms. If I remember correctly, it sold for close to $3 million.

  Here are a few before pictures. It wasn’t in bad shape – just a bit dated.

  

  

  

  And here are a few after photos.

  

  

  

  

  

  I personally would have gone with something even more modern, but that’s just me and I wasn’t the client. It’s still a phenomenal project. So if you’re in the market for a new custom home, I would encourage you to give Ripple Projects a call. I was really impressed by our conversation.

  Note: I have zero affiliation to the company. I just believe that good people deserve exposure.

  2015.01.21

• The pull from services to products

  

  This morning I woke up to a fascinating post by designer Tobias van Schneider called: The agency is dead. Long live the agency.

  What he’s talking about is the phenomenon of design agencies being gobbled up or “acqui-hired” by product firms such as Facebook and Google. The latest of which is (or was) Toronto-based design agency Teehan+Lax. The partners have closed up shop and are in the process of moving to San Francisco to join Facebook Design.

  But what he’s really talking about is the pull from services to products.

  When you’re a services firm, you do work for outside clients and they pay you for that work. But there are only so many hours in the day, which is why the marginal cost of taking on new clients is relatively high – to scale up you generally need lots more people.

  On the other hand, when you’re a software company creating products, the marginal cost of serving additional customers is almost nothing. Sure, there are some variable costs, but the impact to your cost structure is not nearly as significant as when you’re a services firm. That’s how a company like Instagram can be bought for $1 billion with 30 million users and only 13 employees.

  So products are a bit of a holy grail in some circles. You can achieve greater scale. You can focus on fewer projects as opposed to jumping around from client to client. And you can make a lot of money.

  But it’s often easier said than done. Back in 2012, Teehan+Lax wrote a great post where they talked about the allure of products and the challenges they faced in trying to build their own:

  37Signals* was the worst thing to happen to services businesses trying to make products. They fucked it up for all of us, because they made it. For those of us old enough to remember, 37Signals was a services company like Teehan+Lax. They had clients and did work for hire. Of course, 37signals isn’t a services company anymore. They make amazing digital products and their success is enviable. (*37Signals became Basecamp)

  So why is it so hard to transition from services to products?

  Clayton Christensen, the father of disruptive innovation, says, “you can’t start a disruptive business from inside an incumbent one.” The incumbent business will always take the resources from the disruptive one. He argues that if you want to create a disruptive business you need to isolate it from the incumbent business. The disruptive business needs its own values, processes and resources to be successful.

  Regardless of whether you’re trying to build something disruptive or not, amazing products are hard to build. They take focus.

  But what’s also interesting about services and products is that there’s a parallel in the world of architecture and real estate development. As an architect, you’re basically a service provider. You have clients and they pay you for the work that you do. However, as a real estate developer, you offer a product: physical space. The cost structures are not nearly as beneficial as with software, but it’s a product nonetheless.

  And similarly, we’re already starting to see some developers bring architecture in-house. Will we see more of this in the future? Will there be a similar pull from services, to products?

  Image: Flickr

  2015.01.19

• Our economy doesn’t suck

  

  On Friday my friend Paul Crowe (of BNOTIONS) wrote the following Facebook post (rant) about the retail landscape here in Canada. It was a direct response to the claims that the recent loss of Target, Mexx, and Sony is “a warning sign for our economy.” If the text is too small below, you can also click here to read it on my wall.

  

  I would say that competition did impact these retailers, but the key message remains the same: there’s nothing wrong with failure and companies going out of business (although success is obviously a more ideal outcome).

  And it shouldn’t necessarily be interpreted as a bad thing for our economy. In fact, a lot of the time it’s something quite healthy. When companies stop being competitive, the market is supposed to punish them. That’s how this game works.

  2015.01.18

• Two thoughts on reviving post-industrial cities

  

  Yesterday Adam Radwanski of the Globe and Mail published an interesting article called, Rust Belt revival: Lessons for southwest Ontario from America’s industrial heartland. 

  The article talks about some of the things that the Rust Belt is doing to revitalize their cities and the lessons that many cities in Ontario – which are facing similar fates – could learn from. It’s worth a read.

  I’m not going to summarize his article, other than to say that some of the key points were around tax increment financing, tax incentives, University connections, a DIY/entrepreneurial culture, and the American tradition of philanthropy – which Radwanski points out is probably the least imitable for Canada.

  And it’s this last point that I would like to focus on first. The US has a deep history of people getting rich and then giving back – certainly more so than in Canada in my opinion.

  If you think about the resurgence of cities such as Detroit, you’d be hard pressed not to think of people like Dan Gilbert. He has become the poster boy for Detroit’s resurgence by moving his companies to downtown and buying up most of the office buildings. If and when Detroit comes back (I think it’s a when), Gilbert will easily be one of the biggest beneficiaries.

  Now, you could argue that this is made possible because of greater income inequality, but there’s something to be said about powerful individuals acting on intrinsic passion. Gilbert is investing in Detroit because he personally wants to see his home city come back. And that’s hard to replace.

  The second point I would like to focus on has to do with this snippet:

  With oil’s current slide, Canada really can’t afford for it to remain a drag – and in fact there is some expectation that Ontario will instead reclaim its old role as the leader of Canada’s economic growth. Its premier, Kathleen Wynne, recently expressed optimism that plummeting oil prices and a sinking dollar will prove a boon to manufacturing. “I don’t wish for low oil prices and a low dollar for Alberta,” she said earlier this month. “But at the same time, we want our manufacturing sector to rebound. So if that [low oil price] helps, then that’s a good thing.”

  I don’t know what context this was said in, but I continue to feel strongly that we cannot rely on low oil prices and a low Canadian dollar for Ontario’s competitiveness. That is a terrible business model, and an unsustainable one. We need to figure out ways to create value and grow the economy without relying on currency differentials and other macroeconomic factors. Radwanski is right to point that out in his article.

  So let’s hope we don’t let any short term benefits go to our head. There’s lots of exciting work to be done.

  Image: Old Detroit auto factory via Flickr

  2015.01.17

• Fun Friday: How Montreal makes winter awesome

  //player.vimeo.com/video/113321361

  It’s wintertime in Canada and that means people complaining about the cold and/or the fact that in our climate there are certain things that simply can’t (or shouldn’t) be done when it comes to city building.

  But I don’t buy that.

  A great counter example is Igloofest in Montreal. Unless you’re into electronic music (OK, fine, young people call it EDM today), you probably haven’t heard of it. But it’s basically an outdoor dance party on Montreal’s waterfront in the middle of the winter.

  The opening night is tonight and the overnight low is expected to hit -27 degrees celsius. Take a look at the video at the top of this post though (click here if you can’t see it). That’s how many people are going to crowd outside in the cold and dance their hearts out this evening.

  And so whether you’ve got harsh winters or summers, there are always creative ways to make it work for you. You just have to own it.

  If anyone would like to take a trip to Montreal this winter, I promise to stand by my words and dance outside in the cold. Have a great weekend everyone.

  2015.01.16

• Thanks for visiting Canada, Target. Now what?

  

  The big news in the (Canadian) retail world this morning is that Target has confirmed that it will be shutting down its entire Canadian operation. That means 133 stores will close and about 17,600 employees will soon be out of work. Here’s what the CEO had to say:

  “After a thorough review of our Canadian performance and careful consideration of the implications of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” said Brian Cornell, who became the new chief executive officer last summer.

  I can already hear the keyboards typing as business schools across Canada and the world prepare this case study: Why did Target Canada fail after not even 2 years?

  I don’t really want to focus on that in this post, but my initial sense is that they came in too big and too undifferentiated. Maybe they underestimated the particularities of the Canadian market and shopper, but they certainly didn’t come in lean.

  They bought up over a hundred Zellers leases and used that platform to obtain a critical mass quickly. But the problem with this approach is that it meant lots of upfront costs and fewer opportunities to adjust as they gained real feedback from the market.

  Regardless of what happened, I’m more interested in what the impact will be to the retail real estate industry going forward. Remember, Target is an anchor. And when it entered Canada, it was viewed as an opportunity to refresh some of our tired malls – many of which were already showing signs of dying.

  So what happens now? Who comes in to fill their shoes?

  Image: Flickr

  2015.01.15

• Why Dovercourt Village is the next Ossington

  

  Back in 2011, blogTO ran an article calling Geary Avenue one of the ugliest streets in Toronto. And it’s certainly up there. It’s an industrial street with a mixture of different building types (lots of autoshops), giant power lines running along the south side of it, and a railway disconnecting it from the city to the south.

  But as somebody who used to live around the corner from this street, I’ve had my eye on it for a number of years. Despite the fact that it was never very pretty, it always felt like an area with lots of potential. And sometimes it’s the areas that seem most unlikely to gentrify, that end up doing exactly that.

  Probably the first signs of hipness came with the opening of places like Kitch Bar on Geary Avenue and Actinolite on Ossington Avenue. More recently though, it was announced that Dark Horse Espresso will be opening on Geary and that Bellwoods Brewery will be opening their second location on Dupont Street in this incredible building:

  

  So whether you call it Dovercourt Park, Dovercourt Village, or some other name, I think it’s only a matter of time before Ossington cool moves north and the area in and around Dovercourt Road and Dupont Street becomes one of the hippest areas in the city. Get ready.

  Full disclosure: I own a house very close to this neighborhood.

  Images: Actinolite and Bellwoods Brewery

  2015.01.15

• How open are you to experiences?

  This morning Richard Florida published an interesting CityLab article that talks about how different personality types cluster within cities. The study he references was done by a team of psychologists that surveyed 56,000 people in the London metro area.

  Here is a summary of what they found (darker red indicates higher concentration of each personality trait):

  

  Probably the most interesting personality trait is the “openness to experience” one, as there appears to be a clear divide between people who live in the center of London and people who live in the suburbs.

  Here’s how Florida describes it:

  The most clustered personality trait the researchers found was “openness to experience” (bottom left map), which is concentrated in the center of London. Openness to experience, according to a wide body of psychological studies, is associated with creativity, innovation and entrepreneurship. This type is concentrated in higher density neighborhoods, with higher housing prices, more ethnic and religious diversity and higher crime rates. Meanwhile, the blue concentrations at the periphery indicate that there are fewer people open to experience in metro London’s suburbs.

  It’s fascinating to think about the role of psychology in city building. It’s not something we often talk about, but it’s there.

  I live downtown and I would definitely classify myself as extraverted and open to experiences. How would you classify yourself?

  Maps via CityLab

  2015.01.14

• Is Toronto’s urban growth boundary really making the city less affordable?

  

  This morning the Globe and Mail published an article by Toronto’s chief planner, Jennifer Keesmaat, called Greenbelts make cities more livable, affordable and transit-friendly.

  The headline immediately caught my attention because conventional economic wisdom would suggest that supply constraints – whether natural or artificially created – generally have a negative effect on housing affordability.

  To be clear though, I support Ontario’s greenbelt. I think an urban growth boundary is the right thing to have if we want to build sustainable, walkable, and transit-oriented communities. But I’m also not blind to some of the potential (negative) externalities.

  However, Keesmaat’s article got me wondering just how prevalent those externalities might be and to what extent our greenbelt is actually impacting housing affordability in Toronto. In her article she cites a recent report by the Pembina Institute that very clearly argues the following:

  “There is no shortage of land throughout the GTA [Greater Toronto Area] to build single-family homes for decades to come, but this land is predominantly located far from the City of Toronto and other established centres of employment in the GTA.”

  More specifically, the report found that of all the land available for development in the region (within our growth boundary), 81% of it is projected to still be unused by 2031. This got me thinking: it’s not that there isn’t land still available in the region; it’s that there isn’t land in the areas where demand is the greatest.

  Put differently, young families aren’t clamoring for single family homes in High Park and Leslieville because the greenbelt has restricted their ability to find new housing. They’re doing so because they want to live in neighborhoods like High Park and Leslieville.

  If you dive into the data, the report shows that in 2004 the average price of a detached home in Toronto was about $117,000 more than the rest of the Greater Toronto Area. As of 2013, that spread had grown to about $200,000. And indeed the data shows that it’s the core of the city where home prices seem to be appreciating the fastest.

  

  So when it comes to housing affordability and supply, the greenbelt may actually be a red herring. Releasing it would not increase the supply of housing in areas where demand is already high, which is probably why this same report also found that – with or without an urban growth boundary – most Canadian cities are seeing similar increases in home prices.

  So what should we be doing?

  I think we should do two things: (1) focus on accommodating more growth in the areas that people already want to live in, and (2) figure out ways to transform the less desirable areas into more desirable ones. This second one will be the hardest, because it’s likely going to mean changing car dependent areas into transit-oriented ones, which is no easy task.

  The good news though is that we are already doing these things. There’s more that I would like to see happen, but we’re headed in the right direction.

  If your city has a greenbelt or you have experience with greenfield development in the Toronto region, I’d love to hear your thoughts in the comments. This is an area of development that I’ve never really been involved with.

  Image: Flickr

  2015.01.13