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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Author: Brandon Donnelly

  • Fixing the MTA

    Fred Wilson wrote a great post on his blog today about New York City’s “transit mess.” 

    In it he talks about congestion pricing (which, as you all know, I support); the mess that is the Metropolitan Transportation Authority (MTA); and this 37-page report on how to improve the MTA.

    Here is an excerpt from his post that I liked, but that won’t be popular with everyone:

    That is an idea [congestion pricing] that has been proposed a number of times over the years, most notably by Mayor Bloomberg during his tenure. It is a good idea and long overdue. A dense urban environment should have excellent mass transit and incentives to use it and should have disincentives to drive cars. Taxing cars in Manhattan and using the revenues to maintain and improve our subways seems like an obvious thing to do.

    I would encourage you to give his post a read. The New York Times also reported on this topic (and the above recommendations) this week. They called it, 7 ways to fix the MTA (which needs a $60 billion overhaul).

    Photo by Joren on Unsplash 

  • Boring Company ran a Tesla through its test tunnel

    This week Elon Musk’s Boring Company ran a Tesla through its 1.14 mile-long test tunnel in Hawthorne, California. This was accomplished by using a set of tracking wheels that Elon said, “turns a car into a rail-guided train & back again.” Apparently it is safe up to 150 miles per hour. Here is a video from yesterday’s unveiling (click here if you can’t see it below):

    [youtube https://www.youtube.com/watch?v=WQn-D-i5lyM&w=560&h=315]

    Some, or perhaps many, are skeptical of how this could work at scale in a dense urban environment. The company is imagining a world where every house or office building has one of these lifts (shown in the video) in their garage or basement. But there’s no question it is very cool and apparently this test tunnel only cost about $10 million per mile to dig. That’s progress in and of itself.

  • Toronto condo market outlook

    BNN Bloomberg just published this article on the Toronto condo market. It is based on a roundtable discussion that was held at their Toronto office last week with Jim Ritchie of Tridel, Jared Menkes of Menkes Developments, Shamez Virani of CentreCourt, and Jane Renwick of Diamond Kilmer Developments.

    The overarching theme is that, after a couple of frenetic record setting years, the market should settle down in 2019, which is likely a good thing. Hopefully that will also temper construction cost inflation. We have been seeing double digit increases over the last few years (hence some of the cancelled projects).

    But as Jared points out, the fundamentals here are still strong and there are a number of supply constraints creating upward pressure on pricing:

    Jared Menkes, executive vice president of high-rise residential at Menkes Developments was unwavering for the future. “There’s a lot of red tape that’s slowing down bringing more product to market,” Menkes said. “I promise you, pricing is going up.”

    For the rest of the article, click here.

  • Blue lights on train platforms

    Sadly, Japan has one of the higher suicide rates in the world. According to the World Health Organization, the rate from 2000 to 2016 was about 18.5 deaths per 100,000. The only country in Asia with a higher rate is South Korea. They are at 26.9 deaths per 100,000 (an alarming figure). For comparison, Canada and the US are at 12.5 and 15.3, respectively, which also seem rather high to me.

    I was intrigued to learn today that one of the ways that Japan has been trying to combat this high figure is by installing blue LED lamps on some of its railway platforms. Blue lights have been proven to have a calming effect (compared to white light). And since jumping in front of a train is unfortunately a common suicide method, blue lights were thought to maybe be a cost effective alternative to platform screen doors.

    The first blue station lights were installed on Tokyo’s Yamanote line in 2009. And according to this 2013 study – which looked at the possible impact across 71 train stations in Japan – the introduction of blue lights actually resulted in an 84% decrease in the number of suicides. Further studies also showed that there were no corresponding increases at other non-blue light stations. 

    It is an interesting example of “nudge theory”, but does it get at the root of the problem?

    Photo by Athena Lam on Unsplash

  • Average January temperatures by global city

    In Edward Glaeser’s book, Triumph of the City, he argues that the average temperature in January is the single best variable to predict which U.S. cities have grown the most over the last century. Indeed, from July 2015 to July 2016, 10 of the 15 fastest growing large metro areas in the U.S. were in the south. Follow the sun and sprawl.

    Given this phenomenon, I thought it would be interesting to look at the world’s most influential cities (i.e. global cities) through this lens. Because let’s face it, New York and London aren’t all that warm in January. 

    Below are the top 25 global cities (taken from A.T. Kearney’s 2018 Global Cities Report), along with their average January temperature (taken from here). Note, there are two rankings. On the left is their global cities index. And on the right is their global cities outlook, which evaluates current potential. Cities that improved their economics & governance made the biggest leap on the right.

    image

    First of all, it’s interesting to see San Francisco jump so significantly in their outlook ranking. This has everything to do with tech and innovation. It’s also important to note that a handful of the above cities are located in the southern hemisphere, so “average January temperature” doesn’t mean the same thing (probably should have normalized to their winter).

    Montreal wins the award for the coldest city in this ranking. And there’s really only one city, Singapore, with a tropical climate. Though there are others, such as Hong Kong and Sydney, that would fall under subtropical. All of this isn’t enough for us to start inferring anything, but perhaps colder and more temperate climates aren’t such a bad thing for economic growth.

  • The new studio geography

    If any of you have gone to architecture school (or know someone who went to architecture school), you’ll know that everything revolves around something called studio. Studio – that’s really all you need to say – is worth many multiples of your other classes and consumes an even greater multiple of your time. What time will you be in studio? How’s studio going? I was in studio really late last night. This is how the conversations go.

    So I was intrigued by Seth Godin’s post this morning comparing “working in a studio” to working in a factory. The latter, he says, relies on compliance: “More compliance leads to more profits. Do what you’re told, faster and cheaper, repeat.” And this was very much the narrative of the 20th century and was the model that empowered small-town America to thrive (see yesterday’s post).

    However, the studio is different. Here is how Godin defines it:

    The studio, on the other hand, is about initiative. Creativity, sure, but mostly the initiative to make a new thing, a better thing, a process that leads to better.

    It’s peer to peer. The hierarchy is mostly gone, because the tasks can be outsourced. So all that’s left is leadership.

    Initiative plus responsibility. Authority is far less important, as are the traditional measures of productivity.

    It is not difficult to tell the two apart, which is how Godin ends his post. But it is worth noting that the studio model also thrives in a different kind of geography, compared to the factory model. So not only is the studio itself a different place, it also wants to situate itself in a different kind of place. So in a way, what we are seeing today is the new studio geography.

  • Cities are labor markets

    Eduardo Porter recently published this piece in the New York Times on the “relentless economic decline” of small-town rural America. We often talk about rising income inequality, but the greater concern is the alarming rate of joblessness in many of these communities. Earning less than others is not as bad as earning nothing.

    I think the below map from the article, depicting population density by county, starts to show how uneven the economic landscape is across the US. Porter puts it this way: “This is the inescapable reality of agglomeration, one of the most powerful forces shaping the American economy over the last three decades.”

    image

    But, of course, we don’t really have a solution to this problem. Some are suggesting employment subsidies, such as the earned-income tax credit. While others are suggesting that we need to make it easier to build in the large blue spikes shown above. That way we’ll be able to more affordably accommodate the people who will ultimately need to move from rural to urban.

    While this latter suggestion may seem grim for small-town America, it is perhaps a reminder of what cities really are at their core: Cities are labor markets. They are the places where people come to get a job and make money.

  • One Delisle unanimously supported at Design Review Panel

    One Delisle was at the City of Toronto’s Design Review Panel today where it received unanimous support. For those of you who may not be familiar with the process, at the end of every DRP session the panel members – who are all independent design professionals – vote on the project. They can support it, support it with conditions, or they can not support it and send it back for a redesign. One Delisle received 100% support.

    There were a number of positive comments around the need for more projects like this, and for better design in general, here in Toronto. That was really nice to hear. I also liked the comment that One Delisle feels like a tall building that one might find in London. And since every tall building in London has an endearing nickname – Gherkin, Walkie-Talkie, Cheese Grater, and so on – this too deserves one. 

    So let’s find a name. I have one in mind, but I’d love to hear from you in the comment section below.

  • Uber to go public in 2019

    Last week it was announced that Uber had confidentially filed for an IPO (right after Lyft did the same). It could go public as early as Q1 of next year. And supposedly, a valuation of $120 billion is being tossed around. The company last raised money in August of this year (from Toyota) at a $76 billion valuation.

    image

    Here are a few other interesting figures from a WSJ article published in the fall:

    – Uber has indicated that it doesn’t expect to be profitable for at least another 3 years. This year it is expected to hit between $10 and $11 billion in revenue, compared to $7.78 billion last year.

    – First Round Capital invested about $1.6 million in Uber’s first two fundraising rounds (2010 and 2011). If the company does in fact reach a valuation of $120 billion in the public markets, that early investment will be worth $5 billion. (First Round sold some of their shares to SoftBank in January and I’m not sure if the above figure accounts for that.)

    – Over 50 companies have invested in Uber since its founding, not including a slew of individual investments from people like Jeff Bezos of Amazon.

    On a related note, Fred Wilson, who is far more knowledgeable on this topic than I, recently published a post talking about the relationship between the private and public markets and what could happen to (tech) valuations in 2019. 

    It’s a good follow-on read to the above.

    Figure: WSJ

  • Housing supply is like food supply

    A few months ago I wrote about an upcoming book by Alain Bertaud
    called, Order
    without Design: How Markets Shape Cities.     Well the book has just come out
    and CityLab just did an interview with him. 

    Bertaud has worked all around the world from Yemen to China and his experiences, particularly in places that were transitioning to market economies, lend an interesting perspective.

    I like this bit on designing in China:

    I quickly realized that if you do not have prices to guide you, you end up relying on arbitrary norms. For example, in China, the central government decided that every home must have one full hour of sunshine each day. So you would plug in the height, latitude, and angle of the sun at winter solstice for your site, and that would formulaically spit out the permitted density of housing.

    And I like the comparison he makes between food and housing supply:

    I compare it to food: You can’t solve a famine by simply mandating that everyone eat 2,000 calories a day. That’s absurd. You have to bring in more food. In the same way, cities like San Francisco have to increase the supply of floor area, and let consumers determine the size of units.

    So I just ordered a copy of his book. 

    For the rest of his interview with CityLab, click here.