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 Graham Donnelly

  • New York’s first all-electric tower

    Here’s the thing:

    Nationwide, the biggest single source of emissions is transportation, dominated by low-occupancy cars and trucks. But in New York, most people use mass transit instead of driving. That means buildings “are by far the largest source” of climate pollution in the city, said Christopher Halfnight, senior director of research and policy at the Urban Green Council, a nonprofit focused on energy efficiency in buildings. Gas- and oil-burning furnaces and water heaters are together responsible for 40% of NYC emissions, according to Halfnight.

    In response to this, New York City has been passing laws that restrict greenhouse gases and that by and large incentivize electrification. One of these is Local Law 97, which will generally require buildings over 25,000 sf to reduce their GHG emissions by 40% (relative to 2005) by 2030.

    Already the market is responding. Alloy Development has just completed the city’s first all-electric tower at 505 State Street in Brooklyn. Tenants began moving in on April 5.

    When team members asked what the complex would look like absent gas, the answers were fairly straightforward. “Instead of a gas boiler, an electric boiler; instead of a gas cooktop, it was an induction cooktop. And literally that was it,” said Pires, noting that they had to revise the design of the electrical room to allow for higher amperage, since more incoming electricity would be needed for a larger electrical load.

    Some, or perhaps many, in the industry are fighting these new laws. In 2022, a co-op in Queens apparently went to the New York Supreme Court. But directionally, this certainly looks to be where we are headed. So you can either fight it, or you can try and get ahead of it, as Alloy has done here.

    For more information on 505 State Street, go here (Bloomberg) and here (project website).

  • XS in Philadelphia, not Tokyo

    This is the sort of housing project that you’d fully expect to find in Tokyo. Seven homes built on a small urban lot measuring only 11 feet wide by 93 feet deep. But in this case, it’s not Tokyo; it’s Chinatown, Philadelphia, where a residual lot that was created when the sunken Vine Street Expressway was carved through the middle of the city in the 1950s.

    Designed by Philadelphia-based Interface Studio Architects (ISA), the project contains 7 levels of livable space. What’s interesting, though, is that from a building code perspective this is still a 4-story building. There are two mezzanine levels that don’t get counted (and that create some great double-height spaces). This also seems to be what allowed them to get away with a single egress stair in the middle of the building.

    The other technique that was used to maximum density is facade projections. Philadelphia’s zoning code allows for projections up to 3 feet in the horizontal dimension. And if you look at the above plans, you’ll see that these were used to “top up” or extend the site’s 11 foot width to 14 feet, when it made sense to do so from a programming standpoint. The result is some very livable spaces.

    I am endlessly fascinated by these sorts of projects because they demand creativity and because you ultimately end up unlocking something that the market had been overlooking. Here is an example of a small leftover urban parcel that was previously used as surface parking for two cars. Now it’s seven beautiful homes.

    Photos/drawings: ISA

  • Investors vs. end users

    Over the years, we have spoken a lot about the role that investors play in Toronto’s pre-construction condominium market. In the media, they are often spoken about pejoratively. They are seen as being a well-capitalized group that outbids end-users for a limited supply of new housing.

    But on the other hand, we know that (1) they have been a major contributor to new rental housing in this city (they filled the gap after we decided in the 1970s that we didn’t like purpose-built rentals) and that (2) they play an important function in getting new housing financed.

    For better or for worse, we know that, without an investor market, there would have been far fewer new homes constructed over the last cycle. Pre-sales are generally always a prerequisite for a construction loan. And the fastest, and therefore safest, way to get pre-sales is/was to target investors.

    But the world has changed since then. Investor demand has diminished. So much so that you could argue that the opposite is now true.

    I was speaking to my friend Christopher Bibby this morning and he reminded me that end-users, who are passionate about specific projects and neighborhoods, are the more resilient demand base during a downturn. Because if you need a place to live, you need a place to live.

    Perhaps it’s no coincidence that every single sale that we have had at Junction House this year has been to an end-user who moved in.

  • More sellers than buyers

    This week, Urbanation released its condominium market update for Q1-2024. And I’d like to point out two data points. Firstly, across the Greater Toronto & Hamilton Area (GTHA), there were 1,461 new condominium sales for the quarter.

    This is the lowest quarterly total since Q1-2009 (the global financial crisis) and the second lowest total since the mid-1990s. (Remember when we spoke about right now being the toughest market since the early 90s?)

    Secondly, during this same time period, 2,361 new condominiums began construction across the region. This represents a 52% annual decrease. So all in all, fewer people are buying new homes and fewer new homes are starting construction.

    What is obvious is that the market is slow right now. What is not obvious is what happens next. It’s unknowable. There’s risk. My gut is that the market will come back more slowly than many people are expecting, or perhaps hoping. There’s inventory that needs to work its way through the system first.

    But ultimately it will come back. Toronto is one of the greatest cities in the world and there remains a need for more homes. Which is why I continue to believe that, if you are in the market for a new one, now is arguably a wonderful time. You get to buy when most others aren’t.

  • The risk of not taking risk

    One simple definition of risk is that it’s the “possibility of loss or injury.” And that’s generally how most of us think about it — it’s a bad thing that needs to be managed, minimized, and sometimes avoided all together.

    While true, this recent memo by Howard Marks is a good reminder that risk is also indispensable. Or, put differently, there’s risk in not taking enough risk. This is true in business and finance, but it’s also true — as Howard argues — in chess, in sports, and in many other aspects of life:

    The paradox of risk-taking is inescapable. You have to take it to be successful in competitive, high-aspiration arenas. But taking it doesn’t mean you’ll be successful; that’s why they call it risk.

    By definition, it means that you will be wrong sometimes. Because if you couldn’t possibly be wrong, then it wouldn’t be a risk. It would be a known. And known things exist in our world in a very different way than uncertain things. Superior performance, as a gross generalization, demands uncertainty.

    So what’s the solution? Calculated risks:

    You shouldn’t expect to make money without bearing risk, but you shouldn’t expect to make money just for taking risk. You have to sacrifice certainty, but it has to be done skillfully and intelligently, and with emotion under control.

  • Walking back a transit decision

    I take the UP Express train into the office every day (here in Toronto). This is a rail service that we have spoken about many times over the years on this blog.

    It started as an airport link that was too expensive, but was then repriced so that more people would use it, and use it locally. It is now widely used by people like me. I don’t know the exact split, but in the mornings, it feels like majority commuters.

    Then on Monday of this week, the province announced that local service would be reduced from every 15 minutes to every 30 minutes. Supposedly this was in order to improve service between downtown and Pearson airport.

    Commuters immediately reacted. In fact, while riding the train on Tuesday morning, there was quite literally a guy beside me on the phone trying to complain to his local city councillor and MPP. A petition was also started on Monday that, at the time of writing this post, had close to 6,000 supporters.

    And then — some 24 hours after the initial announcement — the Minister of Transportation announced that the province would be walking back this service change and that he had “directed Metrolinx to not proceed.” Boom.

    As a daily rider, this selfishly makes me happy. But more importantly, I think it, once again, shows how quickly voices can get amplified in today’s world and how important good regional express rail is to our city. Clearly we need more of this!

    Sadly, it probably also shows that some people have no idea how lines like these are actually getting used. I have to believe that if anyone had looked closely at ridership and the split between local/airport, that this decision wouldn’t have been made in the first place.

  • Grit and resilience in Detroit

    Earlier this month, the new Hudson’s tower in Detroit “topped out.” Meaning, they laid the last steel beam at the top of building. This, to me, is fantastic news. (Here’s the official project website in case you’re interested.)

    The tower, which was designed by New York-based SHoP Architects, is just over 685 feet tall. This makes it the second tallest building in the state of Michigan, after the Renaissance Center. And when it’s complete, it will house 1.5 million square feet of office, retail, food, residential, hotel, and event space.

    This week it was also announced that General Motors will be moving its headquarters and its 5,000 downtown employees to this new tower. I don’t know who will backfill their old space in the Renaissance Center, but that’s a topic for a different day. Today, I think we should be talking about the grit and resilience of Detroit.

    This is a city that reached a peak population of approximately 1.85 million people in 1950, had its population decline by more than 65%, and then became the largest city in the US to declare bankruptcy (2013). Now they’re building a big ass mixed-use tower in the center of downtown.

    👊

  • More people are cycling in Chicago

    One of the common criticisms of bike lanes is that most people don’t want to cycle in the winter. I mean, just look at Montreal’s winter cycling retention ratio.

    But that doesn’t mean that you shouldn’t invest in cycling infrastructure. Chicago, for instance, has been building out cycling infrastructure over the last few years (2020-2023) at an average rate of approximately 30 miles per year. This is double its rate from 2011-2019. And the results show.

    According to recent data from Replica and the Chicago Department of Transportation (CDOT), Chicago saw the highest growth in cycling among the 10 largest cities in the US between fall 2019 and spring 2023.

    Biking overall was up 119%. Crosstown trips were up 180% (bike trips that spanned across four or more neighborhoods). Trips related to shopping were up 117%. And notably, zero-car households were up 207%.

    Remember, this is a city that basically has the same weather as Toronto. It gets cold in the winter. And sometimes it snows. But clearly if you build good cycling infrastructure, people will use it.

  • Amazon moves away from “Just Walk Out” technology at its grocery stores

    Back in 2018, Amazon opened its first cashier-less grocery store. The technology — which it later branded as “Just Walk Out” — was intended to allow customers to do exactly that. All you had to do was put items into your cart and walk out of the store. And then, through the magic of sophisticated computer vision, machine learning, and lots of sensors, you would be billed and sent a receipt.

    However, this month the company announced that it will be moving away from this technology, and instead focusing on its Dash Carts (more on this shortly). It turns out that the technology wasn’t nearly automated enough.

    Last year, The Information reported that “Just Walk Out” was relying on at least 1,000 off-site workers in India to constantly review video footage and figure out who had bought what. This is why it apparently took so long to receive a bill sometimes; humans far away were working to figure out if that was a persimmon in your hand, or a tomato.

    I’m not an expert on this space, but I’m guessing it is not (yet) feasible to do what Uniqlo and other retailers now do with their supply chains and checkouts. So this was the workaround. Whatever the case, Amazon has now said that it will be focusing on its Dash Carts, which are kind of like roaming checkout counters. They come with screens and scales for weighing things.

    Obviously the ideal solution is to not have to do or scan anything. But being able to avoid check-out lines still feels like meaningful progress. I just wonder if these smart carts will encourage or discourage spending. Because now everyone will have a live receipt in front of them. That might discourage spending unless you can offset it with rewards and/or other incentives.

  • Visual architecture guides by ÅVONTUURA

    “If I’m an advocate for anything, it’s to move. As far as you can, as much as you can. Across the ocean, or simply across the river. The extent to which you can walk in someone else’s shoes or at least eat their food, it’s a plus for everybody. Open your mind, get up off the couch, move.”

    –Anthony Bourdain

    My general recipe for travel is as follows: I want to see cool architecture, I want to eat good food, and I want to get a local sense for the place. Meaning, I’d ideally like to hang out with locals and learn from them. What’s it really like, here?

    Because of this, I’ve never been one to over schedule on trips. There will be things I absolutely want to see and do, but I always want to make sure that there’s time for the unknown.

    I think you want to walk into places that you don’t have on your list, sit at the bar, and have a conversation with the person behind it. You will learn things, and maybe it’ll set you on a travel journey that you couldn’t have possibly planned back home.

    That said, guides are still helpful for things like architecture and food. But I have never found general purpose guides — like the ones from Frommer’s — to be of any use. They have too much information that isn’t curated.

    When I was in my early 20s, I used to use the Wallpaper* City Guides. They were small. I would mark them up as I went. And they gave me the list of must-see architecture. More recently, I’ve been relying on Monocle’s Travel Guides. They’re great too.

    But I am now also a fan of Toronto-based ÅVONTUURA and the architecture guides that they produce. They are simple and beautiful pamphlets that give you a map of each city; a breakdown of contemporary, modern, and historic architecture; a recommended route through the city; and a full list of the important buildings, including their architects.

    The founder of Avontuura, Karl van Es, was kind enough to send me their entire set, which as of this month includes new guides for Amsterdam, Berlin, Singapore, and Toronto. Thank you, Karl.

    I’m now looking forward to trying one of these out on a future trip. I’m going to use it to decide what architecture I want to visit and, for the rest, I’ll just do what I normally like to do — wing it.

    P.S. It took me multiple attempts of tossing these guides onto my kitchen counter in order to arrive at the above photo. I hope you like it.