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.

Subscribe

Month: July 2024

  • What’s best for the project?

    Development is tough. Among a long list of other things, it requires making a lot, and I mean a lot, of decisions. Oftentimes you won’t have all the information. And sometimes they will be uncomfortable ones to make. But you need to decide on something. It is, arguably, almost always the case that any decision is better than no decision.

    In situations like these, I often like to think back to something that my first boss in development used to drill into me. She would simply ask: What’s best for the project? Now, this is not to say that you should ever do bad things simply for the betterment of a project. That is clearly the wrong thing to do. What I am instead saying is that it can be helpful to keep this guiding light in mind.

    Developers have a fiduciary duty to their investors and partners. But they also have a responsibility to the people who will ultimately occupy the spaces that they’re building and to the communities that they’re building in. And at the highest level, all of these groups should be aligned in wanting the best possible project.

    So if you’re ever struggling with a development decision or you just need a goal reminder, try asking yourself this basic question. It may not work or apply in all scenarios, but I have found it to be helpful in situations where I’m wrestling with something and I need to take emotion out of the equation. What’s best for the project? That’s what it’s all about.

  • Elevators in North America are broken

    It was not my intention to make this building code week on the blog, but for some reason that has happened. So let’s continue. Here is an interesting guest essay — about elevators — written by Stephen Smith for the New York Times.

    Stephen is the founder and executive director of a Brooklyn-based non-profit called the Center for Building in North America. And what they do is conduct research on building codes, specifically in the United States and Canada, and then advocate for reforms.

    Here’s what he thinks about elevators (taken from the above essay):

    Elevators in North America have become over-engineered, bespoke, handcrafted and expensive pieces of equipment that are unaffordable in all the places where they are most needed. Special interests here have run wild with an outdated, inefficient, overregulated system. Accessibility rules miss the forest for the trees. Our broken immigration system cannot supply the labor that the construction industry desperately needs. Regulators distrust global best practices and our construction rules are so heavily oriented toward single-family housing that we’ve forgotten the basics of how a city should work.

    Here’s how the US compares to a few European countries:

    Nobody is marveling at American elevators anymore. With around one million of them, the United States is tied for total installed devices with Italy and Spain. (Spain has one-seventh our population, 6 percent of our gross domestic product and fewer than half as many apartments.) Switzerland and New York City have roughly the same population, but the lower-rise alpine country has three times as many single-family houses as Gotham — and twice as many passenger elevators.

    And here’s a set of cost comparisons:

    Behind the dearth of elevators in the country that birthed the skyscraper are eye-watering costs. A basic four-stop elevator costs about $158,000 in New York City, compared with about $36,000 in Switzerland. A six-stop model will set you back more than three times as much in Pennsylvania as in Belgium. Maintenance, repairs and inspections all cost more in America, too.

    If you’re interested in this topic, I would encourage you to give the full article a read. It’s highly relevant to our ongoing discussions around missing middle housing. If cities, like Toronto, hope to build a lot more apartment buildings (especially smaller-scale ones), they are going to need affordable and plentiful elevator options.

    (Thanks to Michael Visser for sharing this article me.)

  • Single exit stairs in buildings up to 4 storeys

    Conrad Speckert got in touch with me following yesterday’s post (about single-stair buildings) and he was kind enough to let me know that, this Thursday, Toronto Planning and Housing Committee will be considering this single exit stair item.

    Included in the agenda item is a building code report that was done because City Council wanted to know if it were feasible to design multi-residential buildings up to four storeys that wouldn’t be detrimental to human health.

    Now that the report is done, one of the recommendations being put forward this week is for Toronto to create a guideline that would help people prepare alternative solution proposals under the Ontario Building Code.

    Alternative solutions provide greater design flexibility. We almost always have them come up on our projects. In essence, they are a way of saying, “yeah, I know this design doesn’t precisely meet the code, but it still satisfies its intent, and it works, so please approve it.”

    In this particular instance, the idea is to create a public-facing guideline so that more people will be able to figure out how to build 4-storey buildings with a single means of egress. Again, the current maximum is 2 storeys.

    Four storeys isn’t quite six storeys. But we’re getting there. And it has become increasingly obvious that it is now just a question of when, not if. At some point, we won’t be calling this an alternative solution proposal. It will just be — the way.

  • Building code change request

    Point access blocks (or single-stair buildings) are now an important part of today’s discussions around housing supply in Canada. They are seen as a way to encourage more and different types of housing — something we have been talking about on this blog for years. Here and here are two recent posts.

    This week, I discovered the work of Conrad Speckert, who works at LGA Architectural Partners and has become a leading voice for this movement. Conrad completed his M.Arch at McGill University and, as part of his thesis project, he developed this website called Second Egress.

    Since then it has grown to become a major resource for point access blocks. But most importantly, it has evolved into a catalyst for change. On April 18, 2022, he and David Hine (of David Hine Engineering) submitted this code change request to the Canadian Commission on Building and Fire Codes.

    The ask: Allow a single means of egress for multi-unit residential buildings up to 6 storeys. (The current maximum is 2 storeys.) Well done, Conrad and David. This is a massively important request with far-reaching benefits, and so I would encourage all of you to check out his website and spread the word.

    P.S. My second favorite part of his site is a section called Manual of Illegal Floor Plans. It’s a catalog of highly livable single-stair buildings from around the world; all of which would be currently illegal to build in Canada.

  • European office vacancy rates: La Défense vs. the Paris-CBD

    The first thing that stands out to me in this European office vacancy rate chart from Savills is the difference between Paris-La Défense (~15%) and Paris-CBD (2%).

    For those of you who maybe aren’t familiar, La Défense is the largest purpose-built business district in Europe. It houses upwards of 40 million square feet of office space and covers about 1,400 acres. It’s also more or less where Paris decided to allow and put tall buildings. Though, it is about 3 km west of the city limits.

    The Paris-CBD, on the other hand, is within the city limits and I’m assuming it refers to the quartier central des affaires (QCA). But regardless of the exact boundary definitions, what we are comparing here is a purpose-built business district to an older supply-constrained central one. And clearly there are, right now, meaningful differences in demand for the offices in these two areas.

    What’s also interesting is that there’s a meaningful difference in the rents. According to Reuters, office space in La Défense is on average about 50% cheaper than the QCA. This, to me, is a reminder that monofunctional urban areas tend to be less resilient over time. And that’s why La Défense is actively working to add additional uses, such as more residential.

    But it’s not just about uses. The area will also need to contend with the fact that it has a vastly different kind of built form; one that isn’t fine-grained and walkable like the QCA. This matters.

  • Using maps on a bike

    I have started using Apple Maps when I cycle. I’ve been using Apple instead Google because it automatically pairs with my watch and tells me (through vibrations) when I need to turn somewhere, but I’m not here to argue that one is better at navigating than the other.

    What’s great about using either Apple or Google Maps is that it will take you on routes that have bike lanes or, at the very least, routes that have less vehicular traffic.

    Toronto’s cycling network is far from complete. But I have been impressed by how far I can go on dedicated lanes and by how many lanes/trails exist that I didn’t know about. Here is the city’s 2024 map showing only dedicated bikeways:

    It is not fun riding a bike when you have to fight with city traffic. And so this is a great way to try and avoid that, and not think too much about which routes you should be taking. It’s also a great way to test the completeness of your city’s biking network.

    I’m glad that Toronto is becoming a much better place to ride a bike.

  • Montréal is making yet another case for pedestrian-only streets

    There are parts of Toronto that are pedestrian only. There’s the Distillery District, some small laneways in Yorkville, the Toronto Islands (though this is a bit of a unique situation), and various other pockets around the city.

    There are also streets that we temporarily open up to only pedestrians, such as Market Street and King Street, and areas, such as Kensington Market, that we have been rigorously considering pedestrianizing for as long as I can remember.

    What is clear is that pedestrian-only streets are controversial. Motorists fear that it will make driving in the city even more inconvenient. And businesses fear that it will limit their customer base.

    While it is true that not all streets can and should be pedestrianized, there are countless examples of streets and areas that appear to be thriving because of it.

    Take, for example, Montréal.

    Since 2021, the city has been pedestrianizing a stretch of 30 blocks along Mont-Royal Avenue during the summer months. And according to Mayor Valérie Plante, the commercial vacancy rate for the street has dropped from 14.5% in 2018 to 5.6% in 2023:

    Maybe you don’t want to infer causality here, but at the very least, it seems to suggest that the street isn’t dying and bereft of human activity. This year, pedestrianization is also planned to be extended further into the fall.

    This won’t necessarily be the outcome for all streets, but I do agree with this recent Globe and Mail article that, oftentimes, the reasons for not pedestrianizing are “a question of philosophy, not geography.” Because there’s lots of research and data to support doing this.

    If any of you are business owners along Mont-Royal, I’d love to hear about your experiences and how you think, for better or for worse, it has changed the area. Leave a comment below or drop me a line.

  • So, what is Globizen doing?

    First, the why. The why is to build better cities. And it’s as simple as that. I love cities. The team loves cities. And we all feel a great sense of responsibility when it comes to doing our part to make them more prosperous, more beautiful, and overall better places to live and work.

    It is for this reason that Globizen refers to itself as a city builder. We obviously didn’t invent this moniker, but we do take it seriously. And our specific intent is to be both a city-building company and a city-building community.

    What this means is that we do the things that most companies do, including trying to make money. But in parallel to this, we also aspire to create a community of like-minded city builders.

    City building isn’t just about real estate development. It’s also about the artist that just painted a mural, the local restauranteur that just opened up a new concept, and the individual that just did something, whatever that may be, to improve their community.

    We would like to do our part to celebrate these actions and support more of them. This is how we want to build.

    As for what we actually do, we are developers of creative mixed-use infill projects. Currently, we are developing and managing projects on our own account (we invested our own equity) and on behalf of great partners. But in all cases, we have a consistent investment philosophy and approach to development:

    • Focus on fundamentals
    • Search for overlooked assets and opportunities
    • Embrace non-consensus views
    • Create value by innovating with design, culture, and technology
    • Execute with discipline and passion
    • Think long term

    We are actively looking for new development opportunities. We are also exploring/underwriting a number of income-producing asset strategies. If you’d like to pitch us a site or project, or you just want to grab a coffee somewhere cool, please feel free to send me an email (brandon.donnelly@globizen.com).

  • Manhattan’s sticky street

    Street networks tend to be pretty sticky. Meaning, they tend not to change very much, or at all, over time. We have spoken about this before, over the years.

    A good example of this is Broadway in Manhattan. Broadway is a world-famous street. And it’s perhaps no coincidence that it’s also the only street that runs the full length of Manhattan and breaks across the city’s regular street grid.

    The exact reasons for this are somewhat nuanced. And for a more fulsome backstory, I recommend you watch Daniel Steiner’s recent video on the topic (embedded above).

    It is alleged that Broadway started out as the Wickquasgeck trail. Meaning it pre-dates the arrival of Europeans to the island. But regardless, we know that it came before New York’s famed Commissioners’ Plan of 1811, which is the plan that gave the city its grid.

    So it would appear that, sometimes, even the most rational of plans can be no match for something even stronger: a street that already exists.

  • Buy quality

    When the market is hot, it becomes more difficult to buy real estate. You end up with more buyers than sellers. And because of this, there’s a natural tendency to look further afield for opportunities. You don’t want to overpay for the obvious assets, and so you start to pioneer.

    This can work out just fine, particularly if the market remains strong. But oftentimes, when the market does turn, it is the peripheral stuff that gets hit the hardest. There is a flight to quality and pioneering gets quickly viewed as too risky.

    Here in Toronto, I am consistently being told that there are peripheral development sites that have seen their value drop to 20-25 cents on the dollar compared to the peak, and that’s if you can actually find a buyer. In many cases, the sites are now unsellable.

    This, to me, is our periodic reminder that while it’s important to search for overlooked opportunities and buy cheap, you can’t forget to also buy quality.