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.
One of my arguments around return to office is that we have not yet reached a post-pandemic equilibrium. Meaning, we’re still in the process of coming back and it’s probably too early to say where exactly we will end up.
The latest data (above) from the Strategic Regional Research Alliance (which is for Toronto) seems to suggest exactly this. Office occupancy continues to steadily increase from its low point in the middle of COVID.
We are now seeing an average weekly occupancy of 63%, a low day occupancy (Friday) of 40%, and a peak day occupancy (Wednesday) of 73%. All of these figures are relative to the number of people working in offices prior to the pandemic.
It is, once again, hard to say where this will ultimately settle. But my gut tells me that this climb still has a ways to go.
What it shows is the average size of new single-family houses in the US. And what it tells us is that median and average floor areas are falling. They are now roughly back to where they were in 2010, following the 2007-2008 financial crisis. This is noteworthy because it shows that homebuilders are responding to lower affordability. Interest rates went up, buyers can now afford less home, and so the market is responding by shrinking square footages to reduce sticker prices. It is the same reason that condominiums also tend to follow a similar size trendline (at least here in Toronto); it’s about affordability. That said, if you go back even further in the above chart — to 1999 — the trendline is up and to the right. Meaning that when the market allows, the average new single-family house is generally getting bigger. That also tells us something.
The 15-minute city is a popular topic these days. So here is a recent study that used GPS data from 40 million US mobile phones to estimate the percentage of consumption-related trips that actually adhere to this concept. The unsurprising result:
The overwhelming majority of Americans have never experienced anything resembling a 15-minute city. The median resident, we found, makes only 14% of their consumption trips within a 15-minute walking radius.
There is, of course, regional variation. For New York City, the data suggests that 42% of consumption-related trips occur within a 15-minute walking radius. Whereas in more sprawling cities like Atlanta, it’s only 10% of trips. Again, this is not surprising. But it begs the question: What should we do?
The challenge is that 15-minute cities generally require built environments that are dense, conducive to walking, and filled with a concentration of different amenities. And this is more or less the opposite of the prototypical suburban model, where the car and single-use zoning tends to spread everything out.
The good news is that zoning is relatively easy to change. For instance, if we want to allow corner stores in our residential neighborhoods, that is a decision we can make. The greater hurdle will be transforming car-oriented communities into places where people might actually want to walk. This is much more difficult.
If you’re looking to block new development, drive up the cost of housing, and appear “progressive” all at the same time, one generally effective technique is to do it under the guise of historic preservation. San Francisco is really good at this, as are many other cities. And it works because, who doesn’t think that history is important?
This exact thing just transpired in San Francisco, where earlier this year Supervisor Aaron Peskin passed an ordinance enacting new density controls for most development in the Northeast Waterfront Historic District, the Jackson Square Historic District, and the Jackson Square Historic District Extension (solid neighborhood names).
Of course, sometimes you can run into resistance when you’re trying to push through new anti-housing policies. And in this case, San Francisco Mayor London Breed actually vetoed Peskin’s bill. In a letter dated March 14, 2024, she wrote:
Restricting new housing runs counter to the goals of our Housing Element, which the Board of Supervisors unanimously approved just over a year ago. It also runs counter to what we need to do to make this City a place that creates opportunities for new homes for the people who need them today and for future generations growing up in San Francisco.
This ordinance passes off anti-housing policy in the guise of historic protections. Existing rules already protect against impacts to historic resources. I believe we can add new homes while also supporting and improving the vibrancy of our unique neighborhoods. Many areas of San Francisco, including eastern neighborhoods like the South of Market, Potrero Hill, and the Mission, have also already removed density limits to encourage new housing.
However, her veto was ultimately overridden by the Board of Supervisors and so, as far as I understand it, the above density controls stand.
In 2023, there were 379,000 babies born in Italy. This is down from 393,000 babies in the prior year and represents a new record low. Already in 2022, the number of births was noted as being the fewest since Italy’s unification in 1861. The result is a “demographic winter.” Of course, this challenge is not unique to Italy. It is happening in most developed countries. Korea, for example, has a fertility rate somewhere around 0.72 babies per woman. Because of this, there are a lot of people in the world trying to figure out how to encourage more births.
Meloni, herself a mother of a single child, has said it is a priority for her government to increase the birth rate and encourage women to have more babies “for the simple reason that we want Italy to have a future again”.
So what’s causing this?
One seemingly logical explanation could be that the employment rates for women and men are basically the same now. Fewer women are staying at home and so there’s less time to have and raise children. In fact, the opposite is true. If you look at fertility rates across Europe, high birth rates tend to correlate with high employment rates for women. I guess families need to be able to afford children. Here’s an excerpt from a Guardian article (c. 2015) on the topic of fertility:
The map of the fertility rate in European countries more or less overlaps with that of women in work. In countries with relatively buoyant populations, such as France and Scandinavia, women play an important part in the labour market. According to data for 2010 published by the Organisation for Economic Co-operation and Development, the employment rate for women aged 24 to 54 in work was 83.8% in France, 84.4% in Finland, 85.6% in Denmark and 87.5% in Sweden, barely lower than the equivalent figures for men. In contrast, in southern Europe and Japan the share of women in work was much lower: only 64.4% of them had a job in Italy, 71.6% in Japan, 72.2% in Greece and 78.3% in Spain.
Staying on the theme of being able to afford kids, another possible explanation might be that kids are expensive and so you need strong family-friendly government policies to help support them. While this I’m sure helps, there’s data to suggest that the correlation between these policies and birth rates is actually fairly weak. That’s why, even though many developed countries have expanded such policies, birth rates continue to fall. Here’s a graphic by John Burn-Murdoch from FT:
So what the hell is it then? Well there is another possible explanation and it is that it’s more of a cultural thing. In the above article, John makes the argument that a number of other more important factors are leading to declining birth rates. Namely, more people are choosing to live alone, and not as a couple. Priorities have shifted, where family formation is no longer seen as central to a fulfilling life. And more young people are generally anxious. (He doesn’t get into why but I’m sure that it’s possible to blame TikTok.)
But what really stood out to me was this graphic:
Since the 1960s, parenting has gotten systematically more intense for parents. The average number of hours per day spent by mothers on “hands-on parenting activities” has grown significantly in most developed countries. However, there is one clear exception: France. It turns out that the French are, at least based on this data, less likely to be so-called helicopter parents. Parenting is less hands-on, kids get more freedom and — perhaps because of this — France has the highest fertility rate in Europe at over 1.8 babies per woman.
This is not to say that France’s family-friendly policies aren’t doing something as well. I would imagine they are. But the above makes intuitive sense to me. If you create an environment where the threshold to be considered a good parent is constantly becoming more duanting and more life-consuming, it’s no surprise to me that more and more people are simply saying, no thank you.
It seems like just yesterday that I wrote about Canada’s population surpassing 40 million people. Because today, some 9 months later, we’re already over 41 million.
Since 2000, we are the fastest growing country in the G-7:
This is, in many ways, a positive thing. But it’s also a serious problem if, among other things, we don’t build enough new housing (source):
In 2013, Canada ranked 13th out of 170 countries in meeting the basic needs of citizens, according to data tracked by Social Progress Imperative. By 2023, it had fallen to 39th, in large part because of a lack of affordable housing.
For more on this topic, here is a recent article from Bloomberg talking broadly about Canada’s declining social safety net.
If you’ve ever been to Rome, then you’ve probably been to the Trevi Fountain. It is, arguably, the most famous fountain in the world. And if you’ve ever been to the Trevi Fountain, then you’ve probably thrown change into it, over your left shoulder, and hoped for good things. Lots of people do this. I did it when I was there in 2007 as a grad student. And in 2016, the fountain collected nearly US$1.5 million in change, all of which was (and still is) donated to a Catholic charity. But I can’t help but wonder if this number is declining at all. I mean, I couldn’t tell you the last time I handled physical money, especially coins. Though maybe this is such an entrenched tradition that people seek out change for this very purpose. The desire to want to believe things that aren’t true can be a strong one.
The late fashion designer, Virgil Abloh, had a design rule for himself called the “3% approach.” Above is a slide from a presentation that he gave at Harvard back in 2013 where he listed it as item 3 of his “personal design language.” The idea behind this 3% rule is simple: you really only need to change something by 3% in order to create something new.
Case in point:
Given this, it should come as no surprise that Abloh had cited artist Marcel Duchamp as being a source of inspiration. (We’ve spoken about this before.) Duchamp is most famous for his “readymade” sculptures where he took existing objects — like urinals — and transformed them into art by signing them and curating them appropriately. This was obviously controversial, but it made Duchamp one of the most important artists of the 20th century.
Now, 3% seems like an oddly precise number. I don’t know how, for instance, you quantify the amount of change on the above shoe. Is it surface area? In any event, that’s beside the point. What’s most fascinating for me about this approach is that it suggests that small changes are enough to, not just create novelty, but actually establish authorship. Meaning, the shoe on the right is no longer a Converse shoe. It is now an “OFF-WHITE” shoe. They authored it.
Like the work of Duchamp, this was and is controversial. Lots of companies have sued Off-White for trademark infringement. We know, for example, where the above black stripes came from and we know that Off-White’s multi-directional arrow logo is borrowed from Glasgow Airport’s logo c.1960. But that’s clearly the point of readymade reworks. And it’s clearly enough for people to want to pay a lot more for the shoe on the right.
Fascinating.
Do you think that this 3% approach applies (or could apply) to other things outside of fashion, like architecture and buildings? I think so.
We talk a lot about walkable urban communities on this blog, and I’ll be the first to admit that this is my own bias. It’s my preference. But at the same time, we can’t ignore that, as of 2022, there were nearly 280 million registered personal and commercial vehicles in the United States. And that only about 8.3% of households do not have a vehicle. Most households drive in this part of the world.
The result is that lots of people want to regularly wash their car(s). According to Bloomberg, there are some 60,000 car washes across the US, and the overall sector has been growing at roughly 5% per year (I’m not sure over what time period). More thrilling, though, are the stats that the car wash market is expected to double by 2030 and that there were more car washes built in the last decade compared to all prior years combined.
The obvious reason for this is that there are a lot of drivers. But why right now? Apparently, there are other more specific reasons for the recent boom in car washes:
Now, washes can take just 90 seconds, labor costs have been automated down, and recurring revenue from memberships has eliminated weather risks. Plus, the tax reforms enacted in 2017 by former president Donald Trump allowed car wash owners to claim 100% depreciation on new equipment — a generous subsidy to further investment. While that incentive was written to shrink over time, the tax proposal currently in Congress would restore the 100% depreciation allowance.
This has the PE and real estate industries interested:
“If private equity thinks it’s sexy, they’re gonna throw money at it, right?” said Emil Khodorkovsky, founder and CEO of Forbix, a real estate firm that just acquired a car wash in Santa Monica, California. “It’s a basic business. It isn’t complicated finance. Certain actors are getting squeezed but this one still has a much higher-yielding return than an apartment building or a retail center.”
It’s hard to think of a retail use that is more antithetical to walkable urban communities. Even most drive-through places have the ability to service things that aren’t cars. It is also possible to go through a drive-through on a bicycle or other micro-mobility device. I have done this before and it was fun. But going through a car wash on a bicycle is probably a lot less fun.
Intuitively, as long as there are lots of cars, there will be lots of people who want car washes. At the same time, there may even be a more urban use case, here. If you happen to have a garage and a driveway, there is always the possibility that you could wash your own car. But if you live in a walkable urban center and you park your car in a stacker accessed via an elevator, it’s probably a lot harder for you to do that.
Today, let’s take a look at the Iconik Apartments in Prague.
Completed in 2023 and designed by edit!, this mid-rise project is split into two distinct volumes — a 9-story one and an 8-story one. This was done to respond to both the surrounding context and the way that the parcels were divided on the site prior to redevelopment. In total, the building is 5,433 m2 and has 48 apartments.
There are 3 levels of below-grade parking, which are accessed via a single parking elevator (pictured above). Based on the one example parking plan provided (which has 13 spaces), I’m guessing the project has somewhere around ~39 total parking spaces (13 x 3). This is a higher parking ratio (39/48 = 0.81) than I would have expected for what looks to be a central and urban location.
The color of the traffic coating in the garage is nice, though.
The lobby is simple. It contains one elevator and one staircase running up the building. I like how prominent and accessible they made the latter. It encourages you to take the stairs if you live on one of the lower floors.
Above is what one of these lower floors might look like. There are two dual-aspect apartments on either end of the plate, meaning they have windows facing both the street and the rear courtyard. There are also a handful of studio apartments facing this same courtyard.
Finally, above is what the outdoor spaces look like for the penthouses at the top. The clear heights appear a little low, but presumably they were working to an overall building height.
I like studying this scale of project because it is a housing type that we should be building more of in our cities. So it is helpful to see how others are doing it. In the case, there are a number of obvious takeaways: no onerous loading/servicing requirements on the ground floor, a single parking elevator in lieu of a space-consumptive ramp (though less parking would would be even more ideal), and a single means of egress throughout the building.
If you’re looking to build at this scale, these are good places to start.
