Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Month: April 2016

  • 100 years since Cincinnati tried to build a subway

    image

    I can get lost on Google Maps for hours on end. I love looking at maps and I love using Street View to virtually explore cities. This morning I’m honed in on Cincinnati, Ohio (a city I’ve never been to) while I listen to this podcast about their unfinished subway.

    In 1916, the city voted in favor of spending $6 million on a new subway. But it was never finished and so today – 100 years later – it has the dubious distinction of being the largest abandoned subway tunnel in the United States. 

    The podcast I’m listening to is with a fellow by the name of Jake Mecklenborg. He has written a book on the subway’s history and has emerged as the expert on this topic. And it all started with him just throwing up a website.

    One particularly interesting aspect of the subway is how it tied into the city’s flooding problems. At the time, the population density of the constrained downtown was surging and the subway was viewed as a way to stitch together desirable land and relieve some of those urban pressures.

    I’m also very interested in understanding how cities got founded in the locations that they did. As in, who was the person who dropped their bag and said: “yup, this, is the spot.” Somebody had to have made a decision.

    Oftentimes there were specific strategic, economic, and/or environmental reasons for a certain location. And this is something that Jake touches on. In the case of Cincinnati, flooding was again a major determining factor. 

    If you can’t see/listen to the podcast through the embed below, click here.

    //html5-player.libsyn.com/embed/episode/id/4210424/height/90/width/580/theme/custom/autoplay/no/autonext/no/thumbnail/yes/preload/no/no_addthis/no/direction/backward/render-playlist/no/custom-color/87A93A/

    Image: Jonathan Warren via Wikipedia

  • Project Sidewalk

    One of Alphabet’s subsidiaries is a company by the name of Sidewalk Labs. Some of you, I’m sure, have been following it. The goal of the company is to leverage technology in order to solve some of our biggest urban challenges.

    Initially, they were fairly under the radar, but more recently they’ve become a lot more public with their projects and their mission. Here is a snippet from a recent blog post written by their CEO, Daniel L. Doctoroff: 

    “The world is poised for a fourth urban-tech revolution — an age of connectivity capable of reshaping cities as much as the steam engine, electricity, and automobile have in the past. New technologies will help citizens and elected officials tackle those intractable urban challenges that Larry outlined last summer, but making sure this age imposes fewer social costs than those previous shifts is critical.”

    Earlier this week it was also announced that the company is likely to enter the real estate development business and construct a new city precinct in order to pilot some of their ideas and projects. The initiative is called Project Sidewalk. 

    Here is an excerpt from the Wall Street Journal:

    “According to people familiar with Sidewalk’s plans, the division of Alphabet is putting the final touches on a proposal to get into the business of developing giant new districts of housing, offices and retail within existing cities.

    The company would seek cities with large swaths of land they want redeveloped—likely economically struggling municipalities grappling with decay—perhaps through a bidding process, the people said. Sidewalk would partner with one or more of those cities to build up the districts, which are envisioned to hold tens of thousands of residents and employees, and to be heavily integrated with technology.”

    When I read this, I immediately thought of the Port Lands area in Toronto. Not because Toronto is decaying – far from it – but because it’s a massive 880 acre site that is both adjacent to downtown and entirely underutilized. I can’t wait to see this area transformed into a thriving waterfront community.

    In any event, if or when Project Sidewalk gets off the ground, it will be very interesting to see what a Google-backed real estate development company looks like.

  • America needs a new map

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    Parag Khanna recently published an article in the New York Times calling for a new map for America. 

    Here’s why:

    “The problem is that while the economic reality goes one way, the 50-state model means that federal and state resources are concentrated in a state capital — often a small, isolated city itself — and allocated with little sense of the larger whole. Not only does this keep back our largest cities, but smaller American cities are increasingly cut off from the national agenda, destined to become low-cost immigrant and retirement colonies, or simply to be abandoned.”

    This is something that I’ve been writing about for awhile on this blog. As we continue to transition to an urban-based information economy, it strikes me that, here in North America, we’re going to need to refocus our governance structures around cities. We’re going to need to place our metropolitan regions at the fore if we want to continue competing with rising powers like China – which, by the way, seem to be adopting a megacity model.

    Here’s another snippet from the article:

    “While Detroit’s population has fallen below a million, the Detroit-Windsor region is the largest United States-Canada cross-border area, with nearly six million people (and one of the largest border populations in the world).

    Detroit’s destiny seems almost obvious if we are brave enough to build it: a midpoint of the Chicago-Toronto corridor in an emerging North American Union.”

    I’ve argued for this before and I continue to believe that it makes a lot of sense.

    Image: New York Times

  • The Social Life of Small Urban Spaces

    “It is difficult to design a space that will not attract people. What is remarkable is how often this has been accomplished.” -William Whyte

    In 1980, the sociologist and urbanist William Whyte published a revolutionary book called The Social Life of Small Urban Spaces. 

    The ambition was to discover why some urban plazas are successful and why many others fail. And to do that, he went out and studied urban plazas throughout New York using video and simple observation, such as head counting.

    His work has been hugely influential for architects, designers, and other urbanists. But if you think about how often we fail at creating urban spaces that actually attract people, I think it’s worthwhile revising what Whyte discovered way back in the 70s and 80s.

    Some of the principles – such as providing places to sit – are dead simple and intuitive. But again, a lot of urban spaces suck. So we’re clearly not doing it.

    The other thing I feel we often forget is that it’s not just the space itself that matters, it’s also the urban fabric around it. The Seagram Building in New York plays a central role in Whyte’s work as an example of a successful urban plaza. 

    But we can’t forget that Mies van der Rohe’s simple gesture of setting the tower back from the street is strengthened by the remaining urban fabric and the activity along Park Avenue. The plaza acts as a kind of release.

    Alongside the book, Whyte also published a 60 minute video. If you’ve never seen it, I highly recommend you watch it when you get a chance. Click here if you can’t see the video below.

    [youtube https://www.youtube.com/watch?v=MjxXTsHgc8g&w=420&h=315]

    To close out this post, I thought it would be fun if everyone shared their favorite public urban space in the comment section. It can be in your city or it could just be a place you’ve visited.

    To kick things off, I’m going to go with with a space that’s close to home: Berczy Park. It has lots of places to sit, including movable chairs. There’s a great water feature. And it’s well connected to the rest of the area and surrounding streets. I often sit there during lunch or when I just want to think.

    It’s also in the midst of a revitalization and I’m excited to see that come together.

  • The ROI of cycling infrastructure

    Toronto can’t make up its mind right now as to whether it would like to invest in additional cycling infrastructure. 

    Of course, we have a history of vacillating on topics like this. And I think it’s because we’re at a tricky inflection point. We are weaning ourselves off of the car, but most parts of the city remain underserved by transit and heavily dependent on the car.

    So today I thought I would share some numbers from a research study that was published last year by Stefan Gössling of Lund University and Andy S. Choi of the University of Queensland. It’s called, Transport transitions in Copenhagen: Comparing the cost of cars and bicycles.

    Much of the focus of the paper is on the cost-benefit analysis that the City of Copenhagen uses to make its cycling investment decisions. Here is an excerpt from ScienceDaily:

    “If the costs to society and the costs to private individuals are added together, the impact of the car is EUR 0.50 per kilometre and the impact of the bicycle is EUR 0.08 per kilometre.

    The study by Stefan Gössling and his colleague also shows that if we only look at costs/benefits for society, one kilometre by car costs EUR 0.15, whereas society earns EUR 0.16 on every kilometre cycled.

    “The cost-benefit analysis in Copenhagen shows that investments in cycling infrastructure and bike-friendly policies are economically sustainable and give high returns,” says Stefan Gössling.”

    So there you have it. Now I thought we could debate this in the comment section. Your thoughts?

    P.S. The images at the top of this post were taken by me using my new GoPro bicycle handlebar mount.

  • Lists, disciplines, and AI

    I have a bit of an obsession with my calendar, lists, and goals. On the home screen of my phone I have Wunderlist, Evernote, Google Drive, and 2 calendar apps (more on that in a second).

    This obsession is probably one of the reasons I write this blog. I like writing, drawing, and documenting things. It helps me sort through my thoughts. I have everything from a list of cities I want to visit to a list of billion dollar business ideas (yes it’s really called that).

    But the other reason I like to keep lists is because – as I said in this post – I’m trying to be cognizant about overcommitment. And when I write things down, it serves as a reminder of what I’m doing and what I’m allowed to focus on.

    One of the ways I do that is through repeatable goals (or disciplines). These are non-negotiable things that I’ve committed myself to and that I just have to grind out – such as writing on this blog every day. I can tell you that some blog posts come out a lot easier than others. But I’m a firm believer that there are few substitutes for just showing up every day and putting in the work.

    On that note, let me tell you why I have 2 calendar apps on my phone. I’ve been testing out the latest version of Google Calendar because of a new feature they rolled out this month called Goals.

    What it does is automatically schedule repeatable goals. So for instance, you could tell it that you want to work out 3 times a week for 1.5 hours each time and that you prefer to work out in the evenings. It will then go and find 3 times for you to do it every week for all of eternity. 

    If a conflict arises, that’s no problem. As soon as you enter another appointment, the app will automatically reshuffle your calendar goals to make sure that you still get your 3 workouts in. It’ll even learn your preferences as you make changes to these appointments over time. 

    So far I’ve been finding this feature really useful. I used to do this for myself manually, but now I have a computer that does it for me. Even better.

    It’s also a glimpse into the future that Sundar Pichai, CEO of Google, was talking about on a recent earnings call:

    “We’ve been investing in machine learning and AI [artificial intelligence] for years, but I think we’re at an exceptionally interesting tipping point where these technologies are really taking off,” he said. “That is very, very applicable to businesses as well. So thoughtfully doing that externally we view as a big differentiator we have over others.”

    “In the long run, I think we will evolve in computing from a mobile-first to an AI-first world,” Pichai said in closing. “And I do think we’re at the forefront of developments.”

    For the past 5 years, it’s been all about mobile. But now much of the tech community – including the CEO of a pretty big company – is saying that artificial intelligence is next. What do you think this will mean for cities?

  • What is this a building for ants?

    One of the things you’ll often hear people deride at cocktail parties is the trend toward smaller urban dwellings. They get called “shoeboxes” and “cubby holes in the sky.” So let’s unpack that a bit today and try and better understand the economics behind it all.

    When a new building is being developed, pretty much everything gets normalized to a per square foot (or square meter) number. 

    This is important because saying that building X cost $50 million to build and building Y cost $100 million to build doesn’t tell you much if the buildings are completely different. 

    However, saying that building X cost $500 per square foot to build and building Y cost $475 per square foot to build, tells you that building Y, despite being more expensive in absolute terms, was actually cheaper and/or more efficient.

    The same is true on the revenue side. And typically, developers are looking (struggling) to meet a certain per square foot number in order to make the project financially feasible. 

    For instance, let’s say you’re building a 100,000 sf condo building. Once you subtract the non revenue generating spaces, you might determine that you need 85,000 sf x $600 per square foot in revenue in order to make the project feasible.

    But there’s a back and forth game that needs to be played here. You have to ask yourself: for the product that I’m hoping to build, does $600 psf translate into something that people can actually afford?

    You might think: everyone keeps telling me at cocktail parties that condos in this city are too small. So I’m going to build a bunch of 1,800 sf, 3 bedroom condos. Based on the above, these homes would be priced at around $1.08 million (1,800 sf x $600 psf). Your on-site signage would read: “Condos coming soon. From the low $1 millions.”

    But wait a minute, how many families can afford a condo north of $1 million? Some could, but definitely not the majority. So then you determine through rigorous market analysis that $600,000 would be a better number. That is something that is within reach of more families.

    But then you look at the math and realize that if you build that same 1,800 sf home, your per square foot revenue number now drops to $333 psf ($600,000 / 1,800 sf). 

    Given that you bought the land for $100 psf buildable (market price in the area) and that your construction costs alone are going to be $250 psf, you realize that you’re now underwater ($100 + $250 psf > $333 psf) without even adding in any soft costs (consultant fees, city fees, and so on). If you showed this to your investors on the project, they would throw you out of the room.

    So instead of building that 3 bedroom condo at 1,800 sf, you say to yourself: what if I made it 1,000 sf? You’re confident that your architect could lay out a terrific condo at that size and it now magically gets your per square foot revenue number back up to $600 psf. 

    This solves two problems: it returns the project to positive feasibility and it keeps the total sale price within reach of more people. It promotes greater affordability. So you go ahead and do it. Boom – shrinking urban dwelling.

    All of this is not to say that this is fair or unfair, good or bad. It is simply to say that this is the way it often is.

  • A real estate dynasty without heirs

    Throughout history, real estate has been a tremendous source of wealth for a lot of people. Many family dynasties were created by accumulating property, holding it, and then riding the valuation wave.

    Here in Toronto, there was the Reichmann family. At one point they had created the largest real estate company in the world (Olympia & York). But I’m not sure exactly how much of that wealth remains today following the company’s bankruptcy in the early 90s. That was a tough time in Toronto real estate.

    In line with this, the NY Times recently published a fascinating account of the Wendel family in New York. In terms of how they conducted themselves, they were the polar opposite of some of today’s real estate families (i.e. Trump), but they certainly built an empire.

    Here are two snippets from the NY Times:

    In the early 20th century, the Wendels were perhaps the most powerful landlords in New York City, a dynasty with more than 150 properties in Manhattan worth over $1 billion in today’s dollars. The Wendels were the delight of the local papers, for, rich as they were, the family — six sisters and a brother, all unmarried — lived together in a shuttered mansion without electricity on the northwest corner of Fifth Avenue and 39th Street, and dressed in grim Victorian garb that had gone out of style half a century earlier. Tour buses regularly pulled up in front of “the House of Mystery.”

    Alongside their austere lives, they also practiced a strict and disciplined approach to investing: 

    Never mortgage a property; never sell anything; never pay for repairs; and never forget that Broadway moves uptown at a rate of 10 blocks a decade.

    In fact, they were so draconian in their approach, that the sisters were supposedly prohibited from marrying. Unions were not allowed because that, according to the NY Times, “would disperse the accumulated property and put it under other names than Wendel.”

    But in the end, this meant that the last Wendel – Ella, who died in 1931 – died alone and with no one to pass along the empire to. So instead it was distributed to various charities and the inevitable “cousins” that come out of the woodwork when a rich person passes.

    I guess the moral of the story here is the old saying that you have to “give to receive.” From the sounds of it, the Wendel family didn’t like to do that.

    Image from March 15, 1931 obituary

  • Automobile vs. tram

    In grad school, I was fortunate enough to be a teaching assistant for a class called Urban Real Estate Economics, which was taught by Dr. Richard Voith. It was one of my favorite classes. So if you ever find yourself at the Wharton School, I would highly recommend it.

    Richard is also the President of a consulting firm in Philadelphia called Econsult Solutions. And I think a lot of what they focus on would be of interest to the audience of this blog. Their focus is on urban economics, real estate economics, transportation, public policy, and – you get the idea.

    Recently, he wrote a post called, Moving Cities: Berlin, where he outlines some of the transportation decisions that West and East Berlin made in the second half of the 20th century. 

    What I found most interesting was how the trams of East Berlin were stigmatized to represent communism and a centrally planned economy. On the other hand, West Berlin was all about the free market, and the symbol for that was none other than the automobile. That meant that the trams had to go. 

    Here is a quote that he shares from B.R. Shenoy, first published in August 15th, 1960:

    “The main thoroughfares of West Berlin are near jammed with prosperous looking automobile traffic, the German make of cars, big and small, being much in evidence. Buses and trams dominate the thoroughfares in East Berlin; other automobiles, generally old and small cars, are in much smaller numbers than in West Berlin. One notices cars parked in front of workers’ quarters in West Berlin… In contrast with what one sees in West Berlin, the buildings [in East Berlin] here are generally grey from neglect, the furnishings lack in brightness and quality, and the roads and pavements are shabby…”

    My favorite line: “…jammed with prosperous looking automobile traffic.”

    Of course, Berlin wasn’t the only city to eschew trams in the 20th century. Detroit and Los Angeles both did exactly the same thing. But in Berlin, this philosophy wasn’t applied equally across the urban fabric. And that’s what makes it a particularly interesting case study.

    I don’t know Berlin well enough to comment specifically, but Richard writes about how parts of East Berlin remained quite pedestrian friendly compared to West Berlin. That makes intuitive sense, given that it didn’t reorient itself towards the car in the same way that the West did. That being the case, I am curious to what extent those parts of the city may be benefiting today.

    In any event, you should also give Richard’s article a read. You can do that here.

  • Nest or cave?

    I was recently introduced to the work and writing of Japanese architect Sou Fujimoto. One concept that he writes about that I really like is the idea of nest vs. cave.

    The way Fujimoto describes a cave is that it’s a naturally occurring and pre-existing condition. It is exists independent of humans. So if and when a human decides to occupy a cave, he or she must assimilate their lives to that which is already there. They have to deal with the ambiguity of the spaces because it is not clear how everything should be used.

    A nest, on the other hand, is something completely created by and for the benefit of a person or animal. It would not exist without someone creating it and so it is prescriptive and functional in a way that a cave is not.

    Fujimoto is interested in exploring architecture that is analogous to caves. Which is why he designs houses like this one (House NA) in Tokyo:

    In most countries, a house like this would not meet code and would be illegal. But in Tokyo it’s obviously allowed. And his hope is that the owners will discover new and unintended ways to interact with the unusual pairing of levels and platforms.

    However, I think about this juxtaposition differently – likely incorrectly in the mind of Fujimoto.

    I’m actually more interested in nests. Because in a way, mass produced housing is like a cave. It exists whether or not we decide to occupy it. And it is generally created to appeal to lots of people, rather than to the idiosyncratic tastes of one person. So when someone does occupy it, they invariably end up trying to shape it.

    But not to the extent of a nest. A nest is custom. It is what you would build for yourself given the opportunity to do so. And that thought is really appealing to me. Maybe it’s because I don’t like the ambiguity of a cave. That could be a possibility.

    I could also be thinking about it differently because I tend to think of Japanese homes as being quite individualistic. Since Japanese people generally don’t care about resale value, they don’t have the same fixation with marketability and future value. That means they’re more likely to just build what they want.

    I’d love to have my own nest.

    Image: Wall Street Journal