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: July 2023

  • Geography of activity centers

    We need more “activity centers”. That is my takeaway from this report by Brookings.

    Activity centers are exactly what they sound like. But to be more specific, the definition used in the report is based on five categories of assets: community, tourism, consumption, institutional, and economic. And what the authors did was look at the relative concentration of each across the 110 metropolitan statistical areas (MSAs) in the US with at least 500,000 residents.

    They then came up with 3 different kinds of activity centers. Monocenters (blue in the above map), secondary centers (yellow), and primary centers (orange). Monocenters have, as you’d probably expect, a lot of one kind of asset. Secondary centers, on the other hand, have “some of at least two kinds of assets.” And primary centers have “a lot of at least two kinds of assets.”

    Looking at the above map, it is pretty clear — and not at all surprising — that Manhattan is, for the most part, one giant activity center. There is a lot going on. But this is not the typical condition. In the 110 metro areas looked at in the study, activity centers only occupy about 3% of land on average. The remaining 97% of land is, based on the above definition, a non-activity center.

    Why this matters is that activity centers punch above their weight. Despite representing a small land area, activity centers are home to 40% of all private sector jobs in the US. Supposedly, they also increase productivity (by an additional ~$1,723 per worker), yield higher property values (+26%), increase inclusivity, and reduce vehicle miles travelled.

    So yeah, more activity centers sounds like a good thing for our cities. Though as we have learned in recent years, we need to be careful with monocenters.

    Map: Brookings

  • Phase one of Montreal’s REM is now open

    The first phase of Montreal’s new Réseau express métropolitain (or REM) just opened it up. It is a 17 km light-rail line that includes five stations running from Brossard in the south (A1 above) to Gare Centrale in downtown Montreal. Eventually this network — which is distinct from but connected to the city’s existing metro network operated by STM — will span 67 kilometers and have a total of 26 stations. To put this into perspective, Montreal’s current metro totals 69.2 kms. So this is a near doubling.

    As with most big city building projects, Montreal’s REM is being and will continue to be criticized. Back in 2016, the project had an estimated total project cost of $5.9 billion. By 2021, this number had increased to $6.9 billion. Today, who knows what the number will be. But it will be more. The reality is that everything went up, by a lot, over the last five years. During the pandemic, we were seeing 30-40% cost increases on some of our construction line items.

    What’s perhaps most noteworthy about this project is its delivery model. It is being delivered through a partnership with the the Caisse de dépôt et placement du Québec (CDPQ):

    Under the pact, the Caisse’s infrastructure arm is assuming $3.5-billion of the project’s $6.9-billion construction cost while Quebec is committing $1.28-billion and the Canada Infrastructure Bank is providing a $1.28-billion loan. The balance consists of a $295-million payment from Hydro-Québec for the line’s electrification, while the Autorité régionale de transport métropolitain, the transit authority for the Montreal region, is pledging $512-million.

    Provincial and local governments will provide continuing operating subsidies for the REM to make sure the Caisse earns its required return on the project, currently pegged at 8 to 9 per cent. The pension fund manager will get 72 cents for each passenger-kilometre travelled on the light rail system. Without such a subsidy, fares would climb to a level few passengers could afford.

    It’ll be interesting to see how this approach stands the test of time. As I understand it, CDPQ wants to continue building and operating transit in other cities around the world. I don’t know any of the specifics other than what I have read online. But from the outside, things seem to be working. The first phase of the REM broke ground in April 2018, and the opening ceremony was held this month (July 2023). That’s basically warp speed in transit timelines.

    Map: Montreal REM

  • Junction House by Air Norm

    If you work in the development industry in Toronto, then you know, or know of, Norm Li. He runs one of the top visual content studios in the city and the country. But he (and the company) also do a bunch of other things like DJ at industry events and fly around in a helicopter taking incredible photos of the city from above. He invited me to join him in 2018 and I captured photos like these.

    This past week he sent me a text with the below photos of Junction House and a message saying, “new lock screen.” I, of course, immediately blasted them around to the team and then asked if I could post them online. I love how these turned out. And every time I see our placemaking sign, I am happy that we fought for what we all believed would end up looking pretty cool.

    Thanks for the photos, Norm.

  • Developing, operating, and owning lagoons

    Here is a company that I just discovered called, The Lagoon Development Company. What they do is develop, operate, and own large-scale lagoons for both swimming and water sports.

    From what I can glean from their website, they make money by selling access tickets to these lagoons and/or by partnering with other developers on master-planned communities.

    In this latter scenario, I would imagine this means fee revenue upfront, with the ongoing operations then getting funded, at least partially, by the communities where they are housed.

    From the videos they have online, these lagoons look very impressive. I think they’re some of the largest ever developed. But at the end of the day, these are artificial lagoons, and so I’m expecting there to be mixed opinions.

    Would you want to see something like this developed in your city? And if it did exist, would you pay to go? I would.

  • A worsening housing shortage is expected

    Last month we spoke about how our current economic environment is going to negatively impact housing supply in the short-term. Now here’s some further evidence for this argument (via Bloomberg):

    “As rates started ticking up, the faucet started to turn off,” says Jonathan Gertman, senior vice president for development at the NRP Group, one of the largest multifamily housing developers in the country. “The number of projects starting this year already has been cut significantly. Anything that started in 2022, in most of the country, comes online 18 to 24 months later. So by the middle of 2025, you see that new supply start to go down significantly.”

    This is also being reflected in Federal Housing Administration (FHA) loan applications for new multi-family housing:

    Or put another way: FHA multifamily loan applications are on track to total as much as $18 billion for FY 2023, compared with $29 billion for FY 2022, $51 billion for FY 2021 and $45 billion for FY 2020.

    The above article is specifically talking about a looming affordable housing shortage. But these exact same headwinds are also impacting new market-rate housing. Of course, there’s always a lag when it comes to development. So it’ll likely be a few years until we really feel the impacts.

  • Sloping columns and columns in tension

    I had an interesting meeting today talking about the structural approach behind this OMA-designed project in Brooklyn (pictured above).

    I have always found structural engineering fascinating. Structures, along with physics, were some of my favorite classes from high school all the way to grad school. So even though I don’t think my personality is ideally suited to engineering, if I were ever to become an engineer, I’m fairly certain that I would need to be a structural one.

    For this project the big structural challenge was the large cantilevers that you see above in the tower on the left. As I understand it, there a number of ways to deal with this. One way would be to just design large transfer slabs and/or beams. But given the size of this tower, these would end up being very deep, and so you’d be really compromising the spaces where these structural transfers occur.

    How they actually dealt with it is through sloping columns (which you can see in the above photo if you look closely). What these columns do is gradually transfer the loads across multiple floors in the building, until they reach structure that runs all the way down the tower.

    At the same time, the spaces underneath the sloping columns are essentially “hung” from above. Meaning the columns are in tension, instead of being in compression, which is typically how columns work. The result is that you get some sloping columns in the suites. But I think that’s kind of cool. If you’re nerdy enough to care, it tells you how the structure of the building is working.

    Obvious disclaimer: I am not a structural engineer. You probably want to consult one if you’re looking to do a cantilevered tower with sloping columns.

    Photo: Elevated Angles via Highbury Concrete

  • Lyft might sell its bikeshare business

    So apparently Lyft is the largest bikeshare operator in North America. They operate around 68,000 bikes and scooters, which equaled some 52 million rides last year. Ridership also continues to grow. Since 2020, ridership has grown in cities like New York (+56%), Chicago (+79%), Boston (82%), and Denver (+170%).

    However, this part of Lyft’s business was in the news this week because the company announced that they are entertaining proposals to sell it, as well as “strategic partnerships.” The company has said that it remains committed to offering bikes through the Lyft app, but clearly it is trying to shore up its balance sheet.

    This raises some interesting questions. Can bikeshare be a profitable and sustainable for-profit business? Or do we now need to be thinking of it as an important public service that is deserving of subsidies — similar to how public transit and cars/roads work in most cities? My own view is that these networks are here to stay regardless of how profitable or unprofitable they might be.

    For additional stats on Lyft’s bikeshare business, click here. One of the figures that I found interesting, but not surprising, was that 71% of riders use bikeshare for “fun.” This is by far the most popular use case. The next most popular use is “errands” at 39%.

  • Can I take your order — from somewhere else?

    There is a Freshii at the bottom of our office building that is staffed by exactly one human. This human’s main job is to prepare food orders and then distribute those food orders to the humans waiting for lunch.

    If you’d like to place an order, well that is done through an iPad-like device on the counter and a video feed of someone that is seemingly located very far away from the bottom of our office building. You just tell the person on the screen what you’d like and they ring it through.

    And if you’d like to add a drink to your order, simply grab it yourself, hold it up to the iPad, and then boom. There’s very little room for chitchatting. This is an important lunch transaction.

    Virtual humans are not a new thing. Some, though not many, residential buildings use them in place of in-person concierges. I don’t know exactly how much money this saves, but I would imagine that it’s meaningful. You can now leverage one human across multiple buildings.

    So I think there’s no question that the world is heading in this direction. That is, less rather than more human interaction. But clearly this is all about utility. It’s about delivering you a healthy lunch bowl as quickly and efficiently as possible.

    If you’re instead looking to sit by yourself at a bar and learn something from the bartender, or you’re looking for a truly remarkable hospitality experience — well those are different things all together.

  • Line 1 to dinner

    On most days, I walk to the office. That is going to be changing later this summer, but what I’m about to say will still apply.

    Because I walk more often than I drive, whenever I have to go somewhere that necessitates a car and that obligates me to leave during the evening rush, the first thing I usually think to myself is “shit, it’s going to really suck getting out of downtown.”

    I have very little patience when it comes to sitting in traffic. So when I’m faced with this kind of situation, my mind immediately goes to: “okay Brandon, what are your other options here?”

    And this is exactly what happened this past Friday. I had a dinner up in Vaughan after work and I opted to take the subway to VMC station (the northern terminus of one of Toronto’s lines).

    It was actually my first time riding this new line extension and it was cool to see the area around the station. It’s not yet a 15-minute community, but I believe it can get there with some narrow streets and the right kind of ground floors.

    The entire trip took about 45 minutes, and I can tell you that on more than one occasion I thought to myself, “this is way better than sitting in traffic.”

  • Canada is a suburban nation

    Dr. David L. A. Gordon leads a research project at Queen’s University that is focused on determining the proportion of the Canadian population that lives in a suburb. Why this is interesting is because the data isn’t normally looked at in this way. As I understand it, the way Statistics Canada thinks about things is that you’re either rural or you’re urban, living in a major population center.

    But this isn’t exactly right. Obviously there’s a difference between living in a dense transit-oriented community and living in a car-centric one. The former is actually “urban” and the latter is not.

    So what the research team set out to do was more accurately classify Canadian cities. And after doing that, they ended up with four categories within each census metropolitan area: (1) active core, (2) transit suburb, (3) auto suburb, and (4) exurban. See above example. What they then discovered is that about 66% of Canadians live in a suburb. And in our largest cities — Toronto, Montreal, and Vancouver — the figure is over 80%.

    Canada is often referred to as one of the most urbanized nations in the world. But as we can see here, that’s not exactly true. Canada is more accurately a suburban nation.

    Image: Canadian Suburbs