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.
Here is an interesting way of looking at risk (via Seth Godin):
If you’re trying to reduce risk, do the hard part first. That way, if it fails, you’ll have minimized your time and effort.On the other hand, if you’re looking for buy-in and commitment so you can get through the hard part, do it last. People are terrible at ignoring sunk costs, and the early wins and identity shifts that come from the easy successes at the beginning will give you momentum as you go.
He’s not wrong. We are generally bad at ignoring sunk costs, which is why they have to tell you in business school that you need to ignore sunk costs. It doesn’t come naturally.
We are also victims of temporal myopia. Meaning, we tend to emphasize short-term items and discount things that are in the future. So if two things are equally risky, we’ll likely perceive the immediate one as more risky than the one that will occur in a few years.
Some things to keep in mind as we go about managing risk.
This morning I did a hard hat tour of the Port Lands area of Toronto. And once again, I was reminded that this is one of the most important projects taking place in the city right now.
When completed at the end of 2024, the $1.25 billion flood protection project is going to create over 60 acres of new greenspace and parkland, and unlock a significant amount of land for development. Already, it’s hard to imagine this part of the city not becoming a desirable new neighborhood and a magnet for recreation.
I was asked not to share any images from within the site (i.e. the non-public areas), so I’m only sharing the above photo taken from Cherry Street. But we did get a chance to stand on the bed of the new river valley that will eventually take flow from the Don River. And I have photos on my phone to prove it. That was almost certainly a once in a lifetime thing.
For the latest on construction progress, check out this video from Waterfront Toronto.
In the second half of the 19th century, the way Londoners had historically lived, started to change:
In the 1870s, a striking change was occurring in the residential habits of London’s elite. After centuries of living close to the ground in houses, Charles Dickens Jr. (son of the famous writer) observed that wealthy residents were starting “to avail themselves of the continental experience … and to adopt the foreign fashion of living in flats.”
The resulting housing typology was something known as the mansion block. And as the name suggests, one of the principal design ideas was that these blocks should, ideally, look like a single giant mansion. In other words, the individual homes were to be obfuscated:
The mansion block was a grand building that borrowed elements of the English terraced house (as a row house is known in British English), particularly the elite “palace fronted” terraced houses designed by Scottish architect Robert Adam and his brothers a century earlier, which concealed individual houses behind a grand facade to resemble a single palatial structure.
It is a design approach that makes sense. I mean, I can see wealthy people wanting to appear as if they’re living in a palatial mansion. That said, it is an approach to multi-family housing that feels somewhat foreign today. Most people don’t look up at tall buildings and wonder if it’s one person’s home.
And we don’t aim for that.
Presumably this is, at least partially, because scales grew, builders were looking for economies of scale, and because modernism told us that mansion-looking structures were outdated. Whatever the reasons, multi-family buildings today are not generally conceived of as sub-divided mansions.
What’s maybe ironic about this shift, though, is that we went from elaborate and varied facade designs intended to communicate single structures, to modern and repetitive facade designs that, somehow, better communicate the individual homes.
I suppose we got used to the “foreign fashion of living in flats”.
This was a big week for construction progress at One Delisle. On Friday, we poured the first bit of our raft slab foundation on the west side of the site. Big concrete pours like this usually take all day and this case was no different. The team was there late into the evening. And then today, the first of our two tower cranes was erected:
The crane going up is always a big milestone because, in my mind, it signals the start of “real” construction. What I mean by this is that all of the stuff that comes before — demolition, shoring, and excavation — is really just to get the site ready for building. Well, now we’re ready, and that means we’re about to go vertical.
A big thanks to the team for working around the clock over the last few days.
The first is that cities need to spend way more time understanding the economics of missing middle housing. As Uytae Lee says in the video, our land use policies need to respond to real math and overall financial viability.
The second is that there’s real potential here. Uytae gives the example of Auckland which, according to the video, managed to deliver 20,000 new missing middle homes in a 5-year time period.
This is meaningful! And, it is suggested that this has reduced rents in the city by somewhere between 13-35% compared to where they might have gone had this new housing not been built.
As I’ve said many times before on the blog, the devil is in the details. The headline may sound really great that some city is now allowing 4 or 6 homes on every single-family lot, but that doesn’t necessarily mean that any new homes will actually be built.
It’s important we change that.
P.S. Thanks to Michael Geller for sharing this video with me.
Back in 2019, Canada’s federal budget allocated $300 million toward something known as The Housing Supply Challenge. The overarching objective was, and still is, to reduce the barriers to housing supply and affordability, and the approach has been to find solutions through a series of “challenges”. So far, they — they being the CMHC Housing Supply Team — have completed four rounds. And right now, they are on round five. This is the challenge:
Increase the adoption of system-level solutions that transform Canada’s ability to produce more community and market housing.
This fifth round represents $65 million of the $300 million total budget. Meaning that $65 million will be awarded to groups and solutions that have the potential to accomplish the above. The funding will be distributed in three stages. First to 20 foundational solutions ($1 million per solution), then to 10 next-level solutions ($3 million per solution), and finally to 3 game-changing solutions ($5 million per solution).
If you have a solution (i.e. something that can be executed on), I would encourage you to check out their site. And if you’d like to apply, you have until December 18, 2023.
Exclusionary zoning is the use of zoning ordinances to exclude certain types of land uses from a given community, especially to regulate racial and economic diversity. In the United States, exclusionary zoning ordinances are standard in almost all communities. Exclusionary zoning was introduced in the early 1900s, typically to prevent racial and ethnic minorities from moving into middle- and upper-class neighborhoods. Municipalities use zoning to limit the supply of available housing units, such as by prohibiting multi-family residential dwellings or setting minimum lot size requirements.
This is a common way to think about it. Prohibiting multi-family residential is a way to try and keep renters away. And mandating minimum lot sizes is a way to ensure that lots don’t get subdivided and that nobody builds homes of, you know, lesser value.
It’s more or less a way of setting a minimum bar, which is why the term exclusionary zoning is used. If you don’t meet this minimum bar, you are excluded.
Many of you will know my views on this (related post, here). But for the purposes of today’s post, consider this question: Should there also be an upper bound? In other words, should there be things like maximum lot sizes?
Manhattan Beach, California seems to think so, which is why when Rob DeSantis bought three adjacent lots in 2000 for $13 million and proceeded to build a 12,640 square foot home — one that is currently on the market for $150 million — the City reacted by forming a “Mansionization Committee.”
And ultimately they decided, through the passing of a new ordinance, that mansions of this fortitude should not be allowed in Manhattan Beach. It’s just too much.
So it turns out that exclusionary zoning actually cuts both ways. You can be too poor for a particular community. Or, you can be too rich.
It won’t surprise many of you that, according to this recent data from Pew, about half of Americans now get their news at least “sometimes” from social media. Meaning, half consume the news either “sometimes” or “often” through social media, and the other half do it “rarely” or “never”.
What may be more interesting, though, is how much TikTok has jumped over the last three years. 43% of its users now “regularly” use it to get the news. This is roughly inline with Facebook and second only to X:
Also interesting:
Different networks seem to have clear gender biases. Facebook is women. Instagram is women. X is men. TikTok is women. Reddit is men. And Nextdoor is men. There also seems to be a racial bias that I wouldn’t have necessarily expected.
If you market on social media, you may want to give some thought to these charts. For the full Pew fact sheet, click here.
In this particular case — Tokyo — the building type is referred to as zakkyo. And apparently, it is something that emerged over time:
Another is the city’s iconic multistory zakkyo buildings covered in neon signs, like those lining the famous Yasukuni Avenue, which house a spectacular variety of businesses. Zakkyo largely started out as office buildings and transformed over time to house everything from mahjong parlors to karaoke boxes. Almazán and McReynolds point out that these buildings offer a density of destinations rarely found in the West because they offer a vertical—not just a horizontal— dimension to walkability, with elevators that open onto the street and take customers directly up to businesses. Zakkyo are on narrow lots that pull pedestrians along the streets that they line. Unlike larger U.S. office buildings, their small lot sizes also facilitate the easy reuse of zakkyo space for different purposes.
Okay, so small lot sizes seem to help. But what else is needed? Is there a world where this is possible anywhere in the West? It’s probably hard to imagine. Conventional real estate wisdom would tell you that multi-storey retail buildings don’t work.
But they work in Tokyo, and probably for two reasons. The first is density. Tokyo is dense and I am told that zakkyo buildings tend to emerge around train stations, where foot traffic is high and people are generally looking for things to do and/or consume.
The second has to do with rules. Tokyo has an overall policy framework that allows for micro-spaces and micro-businesses. Said oppositely, Tokyo hasn’t erected so many barriers that the only way to open a business is with scale and lots of money.
Liquor licenses are a perfect example:
Liquor licenses are one starting point. In US cities, a full liquor license can cost you as much as $400,000! Just absurd amounts of money. And if you're putting in that much cash, you need a large-scale plan to make your money back. In Japan, alcohol is the lifeblood of microbiz
So maybe these are possible in the West, after all. Assuming you have any sort of meaningful pedestrian density, the only real prerequisite might be to just get out of the way of small business.
And I think this is a powerful way to think about cities. We often think about doing new things to elicit certain outcomes. But what outcomes are we missing out on and not seeing because of the rules that we’ve already put in place?
“…he took the department through significant reforms: allowing new houses in back laneways, then garden suites; eliminating minimum parking requirements; even legalizing four-unit apartment buildings on any lot in the city.“
All of this was not easy, as anyone in our industry will attest.
I also got to know Gregg, a little, by way of our development projects. And I can say that he (1) genuinely loved our great city and (2) was always looking for ways to make things better, whether that be through planning policy or through processes internal to City Hall.
