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 2024

  • What actually happened in 2024

    December 31, 2024 · View original

    Exactly a year ago, I wrote this post talking about “what might happen in 2024.” Now let’s see what actually happened and how I did with my predictions.

    – Interest rate cuts: This was perhaps an easy one as there was already a market consensus that rates would start to come down in 2024. The Bank of Canada cut its policy interest rate by 175 bps (target of 3.25%), and the US cut its federal funds rate by 100 bps (target of 4.5%). [1 point] – Impact of higher rates: I predicted that things would get worse in 2024 before they started to get better (maybe toward the end of 2024 or perhaps in 2025). In some ways, I think I was right. But I’m not sure we’ve returned to a “risk-on” approach in commercial real estate, like I suggested. Toward the end of the year, my American friends were telling me that things were suddenly feeling a lot more optimistic and that more deals were being done. But I still feel like we’ve been kicking the can down the road here in Canada. The public markets certainly did very well, but I think the private markets are still hiding some underwater real estate investments. [0.5 point] – Balanced residential resale market: I thought that we would return to a more balanced resale market in 2024, certainly for the most-in demand cities and submarkets. Here in Toronto, it remains a buyer’s market on the condominium side, but the freehold market in Central Toronto has shown signs of improvement over the last few months. Detached house values are up 4.6% year-over-year, despite listing supply also being up 29%. The resilience of core submarkets is what you would expect to see right now during this part of the cycle. (If you’re interested in Toronto real estate, my friend Christopher Bibby has a great newsletter that he publishes periodically.) At the same time, I thought that the Bank of Canada would be more resistant to lowering rates compared to other central banks, and that this would be good for the Canadian dollar. I was wrong. [0 points] – Finding good real estate deals in 2024: I argued that this year would be a pivotal year for finding new opportunities. Maybe that was the case for some of you, but as I said above, I think that here in Canada we’re still kicking the can down the road. So this one is hard to say. 2025 may end up being more pivotal for many real estate developers and investors. [0 points] – Declining hard costs: Like many of my other predictions, this is market specific. But this absolutely happened here in Toronto. For some trades and divisions, costs are down in the range of 25-30%. And I can tell you that over this past year I received many phone calls from construction executives that sounded something like this, “Hey, I’m about to lay off a bunch of people, so I just wanted to call and see if you might have any new projects starting up in the near future.” [1 point] – Return to office: A year ago, I wrote that return to office seemed to have stalled out at around 50% utilization. But I argued that this wouldn’t hold and that, of the people who work in offices, most would go back to spending > 50% of their week in it. Looking at the latest data for Toronto’s CBD (from November 15, 2024), the average weekly utilization figure is now up to 73%. And the peak day figure (Wednesday) is now 84%. (Both of these are relative to pre-COVID.) This is up meaningfully compared to last year. I don’t know at what point we reach an equilibrium, but for now, we seem to be still heading up and to the right. [1 point] – Augmented reality: 2023 was the year of AI. I argued that this year would be the year of augmented reality and that this would represent a further blurring of our offline and online worlds. This was, I think, coming from the fact that Apple Vision Pro was set to be released. But if this happened at all, it happened only incrementally and it certainly wasn’t a mainstream phenomenon. Most people I talk to haven’t even tried Apple Vision Pro, though I remain blown away by the technology. If you haven’t yet tried it, do yourself a favor and book a demo at your local Apple Store. That said, I’m not going to give myself any points for this one. [0 points] – Autonomous vehicles: I was somewhat bearish on this a year ago. I said that it feels as if we’re in the trough of disillusionment (within the hype cycle), even if I was optimistic long term. So this year was a pleasant surprise and I was thoroughly impressed by the progress that Waymo, in particular, made. As of June of this year, they had already logged over 22 million rider-only miles. They are the company to beat right now. [0 points] – Impact of automation: This was a weak prediction because it wasn’t particularly precise. I said that our shift toward greater automation would feel more insidious than immediate (certainly in 2024). I guess this is true. Elon Musk unveiled dancing bartender robots this year, but they weren’t exactly ready to take all of our jobs. Reluctantly, I’ll give myself a half point. [0.5 point] – Growth of TikTok Shop: This is where I argued that we should be looking for the future of shopping. And the data certainly supports this. According to recent research from The New Consumer, over 60% of Gen Z’s report using TikTok every day. And half of all monthly active users report having already made a purchase through the platform. For those that use it every day, this figure increases to 57%. I don’t use TikTok very often — if at all — but I know it’s extremely popular. I’m also not an expert on e-commerce, but I have a belief that TikTok (and the likes), augmented reality, and crypto are going to give birth to some interesting new ways of buying things. [1 point] – Return of crypto: When I wrote last year’s post, the total crypto market capitalization was approximately $1.74 trillion. This was down from almost $3 trillion at the peak of the market in 2021. I argued that the “crypto winter” would end this year and that its total market cap would exceed its previous peak by the end of this year. Today, it’s about $3.45 trillion. If only I bought more. But to be honest, this was a total guess. [1 point]

    Total score: 6/11 (~55%). Not bad.

    I like this score because it means I’m not being too consensus. What fun would that be? That said, I do think some of my predictions were a little obvious. I don’t want to be just extrapolating existing data forward; I want to be thinking critically. I also try not to stray too far into topics that I’m not well versed on, like shopping on TikTok. But it’s a fine line given my strong interest in tech and crypto. I’ll see what I can do to tighten things up and be a little more non-consensus with my predictions this year.

    Stay tuned.

  • My new favorite bar in Toronto

    December 30, 2024 · View original

    Bianca and I we were walking home from dinner at a friend’s place the other night — which we see as one of the great perks of living in the city in a walkable neighborhood — and we stumbled upon a new bar in Koreatown on Bloor Street. Neither of us had heard of the place before, but there was loud electronic music emanating from the building and an obscene amount of neon-like lights inside, and so naturally we decided to investigate it further.

    We immediately crossed the street, walked inside, and found this:

    This, it turns out, is a cyberpunk-themed bar called Zui Beer Bar. They have another location at Yonge & Finch, which is arguably now a bigger Koreatown than our older one here on Bloor, and so this is their latest location. It only opened a few weeks ago.

    They serve asian street food (which we didn’t try since we were full from a wonderful dinner). They’re also very obviously trying to create a fun party vibe. On every table is a light. The QR code is how you order things. But there’s also the option of alternating the light between yellow and purple. Yellow means you want to be left alone. And purple means, “come join our table.” It’s a bit like the Grizzly House in Banff where every table has a phone and making cold calls is encouraged.

    It’s the kind of bar and restaurant that will transport you into a different world. I was imaging that we were in a John Wick movie discussing some sinister plot. And at some point, we were going to get up, tug on one of the infinity neon art pieces, and then be led down a secret passage to people of questionable moral fiber. That never happened, but we loved the music and we loved that the owners just went for it.

    At the very least, it will make you feel like you’re in some futuristic Asian city. The kind that would have LED dragons animating across their downtown office towers.

  • The world’s largest collection of black sheep

    December 29, 2024 · View original

    I’ve only been to Berlin once. It was for a long weekend in 2007; one where my friend Alex Feldman and I grossly underestimated the required travel and ended up not sleeping very much. But it was awesome. I loved the city. So much in fact that the two of us ended up enrolling in a basic German class once we got back to Philadelphia. I, of course, remember almost nothing from this class, but I can say apfelstrudel with a surprising degree of convincingness, provided there are no follow-up questions.

    One of the ingredients that, I think, made Berlin what it is today is that, at one point, it had a lot of empty buildings. As many of you know, these under-utilized assets ended up becoming a breeding ground for creativity and, more specifically, techno music. It’s a perfect example of Jane Jacobs’ mantra that new ideas required old buildings. This overall creative energy is also what gave Berlin the slogan, “poor but sexy.” What the city lacked in wealth, it made up for in spades with coolness and creativity.

    But that was then. Eventually the buildings filled up, the city got richer, the secret got out, and things started getting more expensive. In the span of a decade, Berlin saw its average apartment rents double. Which is why in 2020, the city approved a five-year rent freeze for the 1.5 million or so flats that were constructed before 2014. Eventually this freeze was deemed unconstitutional, but it didn’t change the fact that the city was clearly becoming less poor and — arguably — less sexy.

    Or maybe not. Guy Chazan — who is FT’s departing correspondent in Berlin, just wrote this in a recent opinion piece:

    > Despite everything it is still, in the words of one Irish friend of mine who has lived here for more than two decades, the world’s “largest collection of black sheep”. It is a sanctuary for renegades and misfits of all persuasions, who benignly coexist with their more bourgeois Bürger neighbours. Despite the rising cost of living here, it still seems to be full of creative people doing God knows what but always looking like they’re having the time of their lives.

    > And as anyone navigating its countless construction sites knows, it’s also a place of sheer, unbounded potentiality. As the art critic Karl Scheffler famously wrote in 1910: it is a city that is “damned to keep becoming, and never to be”. When I finally board the plane out of here after nearly a decade in this city, it will be that “becoming-ness” I’ll miss most.

    This to me is an incredible compliment for a city that I barely know, but that he presumably knows quite well. What makes cities truly great is that they’re constantly in a state of becoming. In fact, it’s exactly how I would describe Toronto. To be, means you’ve arrived somewhere. It also implies a certain stasis. And that’s not what you want when you’re a city. You want a constant flow of news ideas and new energy changing things. It makes me happy to know that Berlin, seemingly, hasn’t lost this.

    Cover photo by Stephan Widua on Unsplash

  • Caffè del Popolo in Córdoba, Argentina

    December 28, 2024 · View original

    Cities should do what they can to allow the smallest of interventions.

    What I mean by this is that — when it comes to our urban environment — small and granular is usually a good thing. It’s why our historic main streets tend to be better urban streets than the ones we are creating today from scratch. They were built at a time when cities were more compact and it was more feasible to build small. Now, intuitively, we know this to be true. It’s why planners will encourage things like “fine-grained retail” and impose maximum areas for each CRU (commercial-retail unit). It’s to try and recreate how things were done before.

    But at the same time, we (as cities) also do lots of things that make it more difficult to go small. Every hurdle means that you need that much bigger of a project in order to make it worth while for a developer or small-business owner. Take for example Toronto’s current debate over allowing small-scale retail shops in residential neighborhoods. This is a perfect place for smaller businesses. The rents should be lower than on any major street. But only if we don’t erect too many barriers.

    To this end, here’s a project and coffee shop in Córdoba, Argentina that I have liked since it was completed back in 2021. Designed by Estudio Rare, which is one of ArchDaily’s Best New Practices for this year, the building is situated on a triangular piece of leftover land created by its orthogonal neighbors. The resulting footprint is only about 4 square meters, which is somewhere around half the size of a typical Toronto condominium bedroom. So it’s the kind of “site” that could have been easily forgotten and left to collect garbage. And yet, the architect, client, and operator made something work.

    Here’s the ground floor plan:

    And here’s a street view image from May 2024:

    Now, I don’t know what hurdles the project team had to jump through to build and operate this coffee shop. Maybe there were very few or maybe there were many. If any of you are from Argentina and familiar with the planning landscape, maybe you can let me know. But for the purposes of this post, it doesn’t really matter. The simple point is that these kind of small-scale developments are a positive thing for cities. It doesn’t matter that the footprint is only half the size of a small bedroom. It’s a place to stop for coffee and a place to linger on the street with others.

    Images via Estudio Rare

  • Two downturns

    December 27, 2024 · View original

    I have been through two major downturns in my real estate career. The first was the 2007-2008 financial crisis. And the second is what’s happening right now. Right before the first one, I was working for a small real estate developer/consultancy in Dublin and, let me tell you, it was an exuberant time. Ireland was at what ended up being the tale end of its “Celtic Tiger” and everything was possible.

    One of the projects I was working on was the proposed U2 Tower at the mouth of the River Liffey in the Docklands area. We were running the international design competition to select an architect and everyone from Foster and Partners to Zaha Hadid was participating. It was going to be the tallest tower on the island of Ireland and in the penthouse was going to be a recording studio for the rock band U2.

    But then, the great financial crisis happened and the tower got cancelled. By then, I had returned from the US (where I was finishing grad school) to work in Toronto. The writing was starting to be on the wall, but I managed to get a summer internship for a developer. By fall, shit had hit the fan and they reneged on my full-time offer, citing that the market was just too bad.

    In reality, though, things were much worse in the US. I vividly remember developers claiming that it would take decades for development to return to feasibility. That’s how bad things felt. In hindsight, this was pivotal timing for me for two reasons. One, it taught me early on in my career just how bad things can get in real estate, and I try to always remember that. And two, it forced me out of the US after graduation.

    I had initially planned to stay and work there for a few years, but there were simply no real estate jobs and, if there was one, they weren’t going to hire a Canadian with a background in architecture. Who knows where I would have ended up had I stayed. Despite it being my plan, it’s possible I may have never returned to Toronto.

    During this period, I remember thinking to myself that development is super risky, it shuts off periodically, and so it’s a good idea to also own long-term assets with long-term leases, like office buildings. And after returning to Toronto, I ultimately went to work for a company that did both development and that owned office buildings, among other commercial assets.

    This seemed like a reasonable approach up until 2020, which is of course when office buildings were negatively impacted by the pandemic. But I don’t know how anyone could have predicted this. It was truly a black swan event that had far reaching implications on real estate beyond just office assets.

    But here’s the thing: I feel lucky with the timing I’ve had. These are the best times to be starting something. During the first cycle, I was just starting my real estate career and it taught me things. And now, during this current downturn, I’m focused on growing Globizen. It’s hard to imagine a better time to find opportunities that the rest of the market may be overlooking or simply can’t execute on.

  • We romanticize walkable communities, while choosing to live elsewhere

    December 26, 2024 · View original

    Tim Hortons is a popular coffee chain in Canada (and elsewhere in the world). And every year, similar to other coffee chains, they adopt special Christmas/holiday cups. In the early 2000s, the designs they used were from an illustrator by the name of Gary Alphonso. His work can be found, over here. Today, his cups and other packaging designs are considered vintage. And so if you search online, I’m sure you can find someone reselling them.

    Here’s what the cups look liked:

    And here’s what this illustration looks like unrolled:

    It’s a romantic notion of winter. There’s kids making a snowman. People skiing and walking with snowboards. People drinking beverages (presumably from the nearby Tim Hortons) while being pulled on horse-drawn sleighs in a large public space. And in the background, there’s a mixed-used main street with Tim Hortons naturally at the center of it. It’s a kind of ideal winter moment. But to what extent is this a fantasy?

    According to the 2021 Canadian Census, approximately 78.4% of the Canadian population living in our 11 largest CMAs (census metropolitan areas) lived in a suburb. Only about 21.6% lived in an urban core (either a downtown or an inner ring). So for the majority of Canadians, it is statistically probable that this an uncommon winter scene (never mind, for a second, the horses and stuff). A more likely scenario might be a suburban Tim Hortons with a drive-thru window.

    I find this ironic. I find it ironic that the places we yearn to visit on vacation and the places we romanticize on coffee cups tend to be different than the ones that the majority of Canadians choose to live in. In fact, if you ask people across North America (this is a survey covering the US), the majority often say that they would prefer to live in a community where the houses are further apart and where you need to travel/drive to things.

    Is it because we all just like fantasies on our coffee cups, or could it be that we’ve simply forgotten how to build walkable mixed-use communities?

    Images by Gary Alphonso via i2i Art

  • Merry Christmas

    December 25, 2024 · View original

    The years seem to only go by faster. December, in particular, is always a hectic month with social commitments. There never seems to be enough time. Then, all of a sudden, everything stops. Billions of people around the world slow down and unplug for the holidays. I’m the kind of person who is allergic to free time. I always want to be doing and accomplishing something, and that has consequences every now and then where I run out of steam. So Christmas is a good time for me in multiple ways.

    It’s been an eventful year. I left Slate to focus 100% on Globizen. Bianca and I got married in the summer, and then travelled around the mediterranean for a few weeks in August. One Delisle progressed substantially (we poured the level 10 slab right before the holidays). Project Bench received its zoning approvals. We completed Parkview Mountain House in Park City (bookings are now open). And we also laid the groundwork for a bunch of new projects and real estate strategies that I’m really excited about for 2025.

    But until then, I’m going to enjoy celebrating Christmas and the holiday season. I’m highly suspect of any religion created by people (I guess that’s all of them), but I do love celebrating Christmas and I do appreciate my upbringing more and more the older I get. Bianca and I went to church when we were in Mallorca in the summer and, even though we understood exactly 0% of the mass and it was a sauna inside the cathedral, we both enjoyed it. Later today, I’ll be going to church with my mom.

    I don’t love the shopping part of Christmas — it can be stressful. A simpler Christmas is probably better. I come back to something that Justin Welsh recently said about modern luxury. He defined it as the ability to “think clearly, sleep deeply, move slowly, and live quietly in a world designed to prevent all four.” These are likely good things to focus on at this time of year with your closest family and friends. Merry Christmas and happy holidays, everyone.

  • Rodeo club

    December 24, 2024 · View original

    For the last few weeks, I’ve been playing around with a new social platform called Rodeo. It runs on the Base blockchain (which is an Ethereum Layer 2 chain), but you don’t really need to be aware of this or understand how it works behind the scenes. If you’ve ever used Instagram, then you will already know how to use this platform. You can upload photos, scroll through photos, and heart photos.

    But what’s unique is that you can also “collect” photos. This requires a very small amount of Ether (0.0001 ETH), which works out to somewhere around ~$0.33 today. But there’s also the option of just buying credits with your credit card and bypassing the need for an external crypto wallet. Whichever option you choose, you are minting an NFT to your wallet every time you “collect” a post. This is whether you are aware of it or not.

    What this then does is send the creator reward money. Every time someone collects/mints a post, the creator of that post earns 0.00005 ETH (~$0.16 today). And already, there are users on the platform who have collected thousands of dollars in rewards as a result of their posts. It is also possible to earn referral rewards. If I collect a post and someone sees that I did it and then collects it, I earn a percentage. I can also send direct referral links (similar to how people on IG share posts via DM).

    So despite looking a lot like Instagram, this is a fundamentally different platform under the hood. There is an embedded economy where artists and creators can get paid directly by collectors. At the same time, the platform itself collects a fee from interactions and transactions and so, in theory, there’s no need for them to turn to advertising and selling our personal information.

    There’s also no reason that any user needs to remain wed to Rodeo. When you collect a post, an NFT is minted and it goes directly into your crypto wallet (assuming you’ve connected your external wallet). That crypto wallet is yours and you can do whatever you want with its contents, including selling the NFTs on some other marketplace or gifting them to a friend or family member for Christmas.

    So other than the fact that the biggest audiences are on platforms like Instagram and X, I’d much rather share my photos on a platform like Rodeo, where I have full control. This is also why I switched my blogging platform from WordPress to Paragraph and why I’ve started using Warpcast alongside X. It’s the same idea. This has always been the promise of blockchains, but it’s amazing to see it playing out with all of these new platforms.

    I have no idea if Rodeo will ever surpass Instagram as the dominant photo sharing platform. But I have a high degree of conviction that our online lives will eventually migrate onchain. It’s for this reason that I largely don’t care about the daily fluctuations of ETH or BTC; I’m far more interested in the software that is getting built out on top of these chains. That is what will generate the demand for these cryptocurrencies long-term.

  • Circles over lines

    December 23, 2024 · View original

    We’ve spoken before about Saudi Arabia’s “The Line” project. At first, I wasn’t sure if it was real, but it is, and it’s now under construction. We then spoke about whether a 170-kilometer line is an optimal urban form for a city, and the answer, according to this study, is that it’s not. The problem with a line is that it actually maximizes the average distance between inhabitants. This makes sense because you could have two people living and working 170 kilometers apart.

    On the other hand, if you maintain the same built-up area and take the opposite kind of geometry — a circle — you actually minimize the average distance between inhabitants. It’s for this reason that older cities (the ones that weren’t masterplanned) have tended to grow radially and not linearly (unless there were geographic features forcing it to grow in a certain way). So there is a strong argument to be made that The Line is a suboptimal plan for a new city.

    But here’s what’s interesting: many cities already follow a somewhat similar approach. They don’t do it as absolutely as The Line, but they do it in the way that they zone for higher densities and a mix of uses only on their main corridors. Example:

    > [Tweet: America vs Europe.

    Concentrating density on just one street creates less livable neighborhoods.

    Medium density projects should be spread over a bigger area. https://t.co/DUvotIAJE3](https://x.com/CompletedStreet/status/1870844749709812183)

    This creates a similar kind of effect when it comes to walkability, ability to support higher-order transit, and overall agglomeration economies. All of the urban activity gets concentrated along one corridor, maximizing the distance between people. In extreme examples, you also get inhabitants that are forced into different mobility options. The corridor is supposed to be transit-oriented, but all of the surrounding areas are really only conducive to driving. This creates a mismatch that is less an ideal for everyone.

    So this post is our regular reminder that, when it comes to planning cities and bringing people together, circles tend to be better than lines. This doesn’t necessarily mean that you need to adopt some sort of radial street network, à la French model. (Although I’m now thinking about the effects of this vs. an orthogonal grid.) It just means that urban density works a lot better when it’s clustered, especially around transit. And generally, circles make for better clusters.

  • How to love winter

    December 22, 2024 · View original

    David Sax is not wrong in this recent opinion piece in the Globe and Mail:

    > Adults suck at winter. We see it as a long, dark, cold, uncomfortable season that we have to endure and survive. The older you get, the harder winter is. But it doesn’t have to be this way.

    There are some cities that do better at winter. For whatever reason, Montreal has always felt to me like a city that embraces it more than say Toronto. Maybe it’s because it’s generally colder and snowier. Maybe it’s because they have mountains nearby. Or maybe I’m wrong. It has just always seemed that way to me.

    The trick, as David points out, is to find something you love that you can only do in the winter. For me, and many others, that thing is skiing and snowboarding. Here is a photo from yesterday afternoon taken from within the trees at Brighton Resort in Utah:

    One of the things I love about Salt Lake City / Park City is how much ski and snowboard culture permeates everything. Drive around and you’ll see people waiting at bus stops with all of their gear on and their skis in hand. The locals also tell me that if there’s an epic storm, you can expect a lot of people to show up in the office around lunchtime.

    This is one way to love winter. Admittedly, it’s harder in a city without mountains and snow accumulation, and only cold winter weather. (Cities like Toronto.) So what are your options then? If you have any ideas or things you love to do, please share them in the comment section below. Us adults should suck less at winter.