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: December 2021

  • How past pandemics affected the urban housing markets of Amsterdam and Paris

    Past performance, we are often told, is not necessarily indicative of future results. At the same time, history has a funny way of repeating itself. I recently stumbled upon this research paper by Marc Francke (University of Amsterdam) and Matthijs Korevaar (Erasmus School of Economics) looking at the impact of pandemics on housing markets. More specifically, it looks at the impacts of the bubonic plague on 17th-century Amsterdam and of cholera on 19th-century Paris. Here’s an excerpt that summarizes what they found:

    Our analyses for both cities point to substantial impacts of pandemics on property prices. We find that sales prices respond negatively to outbreaks, in particular in heavily affected areas, and that responses are short-lived, with the effects on sale prices being particularly significant in the first six months of an epidemic. Evidence from aggregate house and rent price indices suggests a smaller negative impact on rent prices. Amsterdam and Paris were very resilient to these outbreaks, with population and house price growth quickly reverting to prior trends.

    This paper was first published at the beginning of 2021. A lot has changed since then and, in some ways, their findings now seem obvious. There was still a great deal of uncertainty in the market 12 months ago. While it seems like eons ago, I remember our team having discussions around when would be the right time to launch sales for One Delisle. Of course, 2021 turned out to be a record-setting year for housing and that includes the core/urban housing that the media was quick to write off at the onset of COVID.

    This is not to say that certain things haven’t changed or that there won’t be further changes — both positive and negative — that come out of this. To give one just example, we all continue to hear anecdotal evidence that a lot of tech talent would now prefer to be in cities like Miami over San Francisco. (I’m not tech talent, but this would be my strong preference.) Did the pandemic help fuel this? Probably. It opened a door for the people who no longer wanted to live in a city with such a supply-constrained housing market. (I’m sure there were other reasons, too.)

    These things, of course, happen. Cities are powerfully resilient, but they still need to compete. The bigger point is that cities continue to be our greatest centers of opportunity. And here we have centuries of data and housing records to support the fact that opportunity is both a powerful motivator and a centralizing force for urbanization. This is true even in the face of things like pestilence.

    Happy new year, everyone. I think there’s a lot to look forward to in 2022, including far less talk about pandemics and hopefully far more talk of places like Miami.

    Photo by Adrien Olichon on Unsplash

  • Largest cities in the world — revisited

    Following my recent post about the largest cities in the world (from 100 to 2015 CE), a number of you rightly pointed out that the data looked questionable. Where, for example, is Shanghai in this latest list of largest cities? So I think it’s important that I do a follow-up post.

    There are a number of nuances to consider when trying to measure urban populations. Perhaps the two most obvious are the geographic extent of each city (i.e. what urban boundary do you use) and the number of people living in informal settlements.

    The UN recently estimated that there are some 1 billion people living in slums or informal settlements. That represents nearly a quarter of the world’s urban population, which is a staggering number and a pressing global need. We desperately need more housing.

    When it comes to measuring the size of an urban agglomeration, most of the studies that I have seen tend not to focus on municipal boundaries (“city propers”) or metropolitan areas. The former is often based on arbitrary political boundaries and the latter often contains undeveloped rural land.

    So for the purposes of this post, I’m going to go with Demographia’s definition of “built-up urban area.” They define this as being a continuously built-up area with one labor market and with no rural land. In their view, the world is either urban/built-up or rural. The built-up part is the lighted area that you would see on a nighttime satellite photo.

    Given this definition, there are a number of interesting fringe cases. For example, contiguous/adjacent urban areas with more than one labor market get split up into multiple ones. This is the case in the US with the northeastern “megalopolis” that runs from Boston to Washington.

    Conversely, if adjacent urban areas share a labor market and are linked together by similar commuting flows, then they get grouped into one urban area. This might be the case even if the area(s) straddle a national border. In this particular case, the free movement of people and goods would be another prerequisite.

    With these definitions out of the way, below is another stab at sharing an accurate list of the world’s largest megacities or built-up urban areas. This is one is by Demographia and there are a number of key changes compared to the last one I shared. Shanghai now features in the top 10. But Lagos drops down to number 20, which remains a bit of a question mark for me.

    For a copy of Demographia’s full report, click here. It looks at all urban areas with a population greater than 500,000 people (total is 985). Of course, if any of you have any other data sources that you think I should take a look at, feel free to share them in the comment section below.

  • Is crypto just snake oil?

    As I understand it, databases are pretty important to technology companies. Here is an excerpt from a recent post by Albert Wenger talking about why he and his company (Union Square Ventures) believe that web3/crypto is going to unlock new value for our society:

    As a first approximation all the big powerful internet companies are really database providers. Facebook is a database of people’s profiles, their friend graphs and their status updates. Paypal is a database of people’s account balances. Amazon is a database of SKUs, payment credentials and purchase histories. Google is a database of web pages and query histories. Of course all of these companies have built a great deal more over time, but operating a database has stayed at the core of why they are powerful. Only they get to decide who has permission to read and write to this database and which parts of it they get access to.

    So how will web3 be any better? Well blockchains, at least right now, are poorer performing databases in almost all dimensions, according to Albert. And this is one of the reasons why they’re being so quickly dismissed by most people. But they do have one key advantage: permissionless data. No single entity controls a blockchain database. More from Albert:

    It is difficult to overstate how big an innovation this is. We went from not being able to do something at all to having a first working version. Again to be clear, I am not saying this will solve all problems. Of course it won’t. And it will even create new problems of its own. Still, permissionless data was a crucial missing piece – its absence resulted in a vast power concentration. As such Web3 can, if properly developed and with the right kind of regulation, provide a meaningful shift in power back to individuals and communities.

    All of this said, I do agree with Fred Wilson and others that the web3/crypto enthusiasts on Twitter these days are getting to be a bit much. For obvious reasons, everyone is trying to pump the crypto stuff that they own. And it can certainly feel like shills trying to sell snake oil. But as Fred pointed out today, this isn’t the first time that we’ve been here:

    It reminds me of the early days of web2 in 2001/2002/2003, when we started USV. That was also a time of great cynicism. We almost did not get our first fund raised. Nobody was buying the story we were telling. But of course, that story turned out to be true. And I am confident this one will too.

    If/when this story does turn out to be true — and I believe it’s a when — I think we will see it permeate through all sectors of the economy, including how we plan, build, and operate our cities. Of course, this will probably take decades and much of what will happen is unknowable right now. But it’s pretty hard to ignore that this was a pivotal year for the crypto space.

  • Choice over convenience

    “Change makes us uncomfortable. Sunk costs are hard to ignore. Possibility comes with agency, and agency comes with risk.” –Seth Godin

    This is a quote from a recent blog post by Seth Godin talking about choice vs. convenience. His overarching argument is that we tend to go with convenience over choice when making decisions, and that means forgoing many/most of the options that we actually have available to us. Life inertia is a thing, which is why we often require big and meaningful events to shake us out of the conveniences of complacency.

    I think that is one of the reasons why you’re hearing talk of a “great resignation.” This pandemic has shocked many people into thinking about whether or not they’re truly happy doing what they’re doing. And for many people, that has translated into going out and starting their own business. Fred Wilson recently argued that what we’re living through right now isn’t actually a great resignation, it’s a great formation.

    I have never been a huge fan of new year’s resolutions for the simple fact that I don’t think you should wait until the new year to do something you allegedly want to do today. If you want it, do it now. But there is no denying that this week is probably the slowest week of the year. And this slowness has a way of freeing up cognitive capacity. Perhaps it’s just enough breathing room to encourage more choice over convenience. Whatever the choice may be.

  • Londoners bought a record number of homes outside of the city this year — or did they?

    The Financial Times published an article this week talking about the record number of homes that Londoners bought outside of the boundaries of the city this past year. The total was about 112,780 homes worth some £54.9 billion — again, it was a record in terms of total value.

    The argument is that this pandemic continues to fuel decentralization, flexible working arrangements, and greater demand for larger spaces. Housing preferences have permanently changed. And the suggested takeaway is that this dynamic might have “serious consequences for the city’s population and housing market.”

    But of course, I’m going to question whether this is really the case. The ~£55 billion number is clearly a new high according to the article. The previous record was £36.6 billion back in 2007. But that doesn’t give you the full picture because homes cost a lot more today than they did back then.

    If you look at the total number of homes purchased outside of the city by Londoners, the record still belongs to 2007 with approximately 113,640 homes. When I see this number it makes me pause.

    Because here we are living through a global pandemic and the largest work from home experiment in modern history, and yet the total number of homes purchased outside of the city this past year is still comparable to that of the last housing cycle.

    Did this moment in time really create an anomalous and irreversible shift in housing preferences?

    Photo by Fineas Anton on Unsplash

  • Largest cities in the world from 100 to 2015 CE

    I just discovered this set of maps (via Brian Potter) looking at the largest cities in the world from 100 CE all the way through to today (well 2015 CE). Here are what the two bookends of this map series look like:

    It is an interesting reminder of just how centralized the world was around the Mediterranean and parts of Asia, and also how nothing is guaranteed. As recent as 1900, cities like Manchester and Philadelphia were among the top 10 largest cities. Today they aren’t even close.

    For the full map collection, click here.

    UPDATE: The data behind these maps has been called into question. Look out for a follow-up post.

  • The world’s first 3D-printed home, kind of

    Habitat for Humanity recently announced that they have completed, in partnership with additive construction company Alquist, the first 3D-printed owner-occupied house in the world. I’m pretty sure that I’ve seen other 3D-printed homes kicking around, but this is still a big deal and one of the first of such homes for Habitat for Humanity. (It also 3D-printed a house in Arizona this year, but I guess that one wasn’t owner-occupied.)

    The 1,200 square foot three-bedroom home is located at 129 Forest Heights Road in Williamsburg, Virginia. And it was “printed” in just 22 hours, which Habitat and Alquist are claiming reduced their construction schedule by approximately weeks compared to a traditionally framed house. Overall, this translated into an estimated savings of 15% on the total construction costs. (Again, according to Habitat and Alquist.)

    These kind of savings are particularly important in many rural communities where it is not uncommon for homes to sell below their replacement cost. Not surprisingly, when you have a market dynamic like this, there’s zero incentivize to build new. I mean, why would you when you can just buy something that already exists for less money, and with less risk.

    Alquist uses a patented concrete to print its homes. The concrete can be left exposed, or it can be finished with traditional building materials. For any load-bearing or structural walls, I understand that they print two walls with a cavity and then use typical reinforcing bars. I would imagine that this approach is particularly helpful when lumber costs are high, but there’s an obvious question around embodied carbon (concrete in lieu of wood).

    Still, it’s hard not to believe that we will be seeing more, rather than less, 3D-printed homes in the future.

  • Merry Christmas everyone

    Merry Christmas everyone!

    And for those of you who don’t celebrate, I hope you have a relaxing day with family and friends. We’ll be making pancakes, because that’s one of the things that we like to do on Christmas morning.

    This time last year I think a lot of us thought that the world would feel far more normal by now. We’re not in total lockdown like we were, but we are also not back to normal. And that is impacting our ability to be with some loved ones in the ways that would normally be possible.

    Prior to this pandemic, we had also made a point of traveling during the holidays. This is that one time of the year when you can truly disconnect, explore the world, and not feel any anxiety every time you pick up your phone and see your inbox. That is obviously a challenge right now.

    But these realities are no reason not to be grateful for this holiday season and to be hugely optimistic for the year ahead. We will be doing both of these things while we enjoy our Christmas pancakes. If any of you have any Christmas traditions of your own, I would love to hear from you in the comment section below.

    P.S. The image at the top of this post is my CryptoBabyPunk NFT (#660) all dressed up for Christmas.

  • Which building or structure would you say best symbolizes Toronto?

    I tweeted this out last night:

    blogTO then picked it up and it got quite a bit of engagement.

    Some people, okay a lot of people, used it as an opportunity to be tongue in cheek and respond with things like: cheaply built condos, boarded up Starbuckses, Hooker Harvey’s, Drake’s house in the Bridle Path, the crumbling Gardiner Expressway, and that McDonald’s at the northwest corner of Queen and Spadina (this one is no longer a contender for me now that they’ve gotten rid of their walk-up window).

    Of course, there were also a lot of the usual suspects: The Sky Dome, The Gooderham Building (our miniature Flatiron Building), Casa Loma, The Royal Ontario Museum (specifically the expansion by Studio Libeskind), “New City Hall”, The Royal York Hotel, Honest Ed’s, The St. Lawrence Market, Robarts Library (University of Toronto), and a bunch of others that you might find displayed on the seat screen on your next Air Canada flight.

    But I’d like to unpack the initial question a bit more. Because what does it really mean for something to be a symbol of a city? And is there an important distinction between the symbols that resonate with locals on a personal level and the symbols that get exported around the world as a city’s brand and identity? Indeed, one of the criteria in most global city rankings is a prominent and recognizable skyline. Icons are important.

    Let’s consider an example. I agree entirely with Sean Marshall that “New City Hall” is a deeply symbolic building. Built in the early 1960s after decades of work, New City Hall was the outcome of an international design competition. And it was decidedly modern at a time when Toronto really wasn’t that modern. Montréal was the biggest and most global city in the country and multiculturalism hadn’t yet become a federal mandate. And so New City Hall symbolized our genuine ambitions to becoming something more.

    But does the rest of the world care? If you were to ask somebody my question on the streets of Rio de Janeiro or Tokyo, what would they say? What would they remember? The thing about most tall buildings or other city symbols is that they become abstractions. They turn into pictures on social media — like logos of a company. But maybe that’s all we can reasonably ask of the world. Maybe all that really matters is that a symbol has local significance; it’s then up to us to export it and tell that story to the rest of the world.

  • The elbow suites

    Last night as I was walking home, I came across the recently completed Yonge + Rich condominiums at Richmond and Victoria (I think they won awards for this name back in the day). I stopped to look up because I was curious about one particular detail — the elbows.

    This tower is, in effect, two towers that are attached in middle. And the differing facade treatments are meant to reinforce this: two towers, not one.

    But because they are in fact connected, there are some unavoidable 90 degree angles in the floor plates. These spaces can be extremely tricky when it comes to laying out residential suites because they skew your ratio of square footage to vision glass. Usually you get too much of the former relative to the latter. You can also get awkward facing / privacy conditions.

    And so these spaces are often referred to in the industry as the “elbow” suites or sometimes the “armpit” suites. Though I think elbows are a lot nicer than armpits.

    Here’s the Yonge + Rich example to illustrate what I’m talking about:

    In this case, the entire stack is comprised of frosted translucent glass. So it is pretty clear that these spaces are not residential suites. Here’s the floor plate:

    What was done here was to make it circulation/corridor space. This solves the elbow suite problem and adds a nice feature to each floor. These days, very few corridors have natural light. Vision glass is too precious of a commodity. You could argue that it should have been clear glass, but presumably frosted glass was used to avoid privacy concerns.

    The other trade-off that needs to be considered is that of efficiency. What is the ratio of saleable/rentable area to gross construction area? Adding circulation space lowers this number. So it can come down to whether it is better to have a higher efficiency with some elbows, or a lower efficiency with no elbows.

    Every building is a prototype, isn’t it?