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.
Let’s check in on office utilization (in Toronto). The last time we talked about this was in April. At that time, the average weekly utilization figure was 63%. The peak day — Wednesday — was 73%. And the low day — Friday — was 40%. Today, well as of September 15, these numbers are now 69%, 79%, and 39%, respectively (see above chart). So we continue to climb. The only slight downward trend is Fridays. People don’t like coming into the office on Fridays. Still, the average is up 6% over the span of about 6 months. This makes you continue to wonder: When does this level off? I also don’t know what this index looked like before 2020. Are we back, or not yet?
“Complete streets” are streets that are designed to be safe for all users: people who walk, bicycle, take transit or drive, and people of varying ages and levels of ability. They also consider other uses like sidewalk cafés, street furniture, street trees, utilities, and stormwater management.
Right now, the city is in the public consultation phase. If you’d like to provide your feedback, you can do that here. You have until October 30th. The online tool is also pretty neat. You can drop comments on specific areas of the street. And already the map has been totally filled up.
This is an important and busy artery in midtown. I use it all the time as a pedestrian, cyclist, and driver. It’s not the best street, though. Yesterday it took me 45 minutes to drive from one end of it to the other. Along with better street design, this part of the city could use better transit.
I’m looking forward to seeing how Dupont ultimately gets designed.
The morning I attended the release of Venturon’s 2024 Sustainable Proptech Report. What’s great is that it includes a list of all the (known) companies that are active in this space in Canada. It also summarizes venture funding by region. Interesting to see Alberta punching above its weight and coming in second behind Ontario. It has roughly half the population of Quebec.
As part of the event, the following companies also gave short presentations:
Panergy — they make a prefabricated insulated wall system
Darabase — they are creating an advertising ecosystem around augmented reality; one that will allow building owners to monetize in a new digital world
Axe Buildings — they make simple, prefabricated homes; they are optimizing for speed and price, not quality
QEA Tech — they use drones with thermal cameras to tell you where your building envelope is leaking and wasting energy
I don’t know anything about these companies other than what I heard this morning, but all are working on important problems. Darabase is perhaps the most future oriented in that it appears to rely on AR / spatial computing becoming a thing. I believe this will happen, and so I found it particularly interesting.
This morning I was on site at One Delisle with WZMH Architects (AOR) and Studio Gang (design architect). I aim to visit site at least once a week, but lately it’s been more than that. What’s exciting to see right now is that the geometry of the tower is starting to come through in the slab edges. (The architects also made sure to remind me today that they had to draw each and every one of these.) The above photos were taken from the level 2 retail terrace. We always imagined this space becoming an amazing restaurant overlooking Yonge Street — but we’ll see what happens.
Expect to see a lot more of these fun slab edges over the next few months.
On Saturday, I went on a bike ride all around Toronto. We cut across midtown (checking in on One Delisle), stopped at the Chester Hill Lookout (which if you grew up in the east end is where you probably went as a teenager to make out), shot down the Don Valley, and then turned west along the waterfront. The weather was perfect.
As we were going along the waterfront, we passed the new Aqualuna building that is under construction on Queens Quay East, near Parliament Street. Being the architecture nerd that I am, I immediately noticed that as you pass by — at the speed of a bike — the balconies create this really nice cinematic effect.
So I stopped to take these photos (I probably should have taken a video now that I think of it):
I then tweeted a tweet calling it one of the most beautiful buildings going up in Toronto today. Judging from the responses, most people seem to be in agreement, but a few people questioned the practicality of balconies like this. Namely how private and usable they will be. I don’t disagree, but I still think it’s fine looking building.
Statistics Canada recently published some data (from 2022) looking at investors in the condominium apartment market. Here is what they believe to be the share of condominium apartments used as investment properties in Ontario’s 10 largest census metropolitan areas:
It’s worth noting that this is afterexcluding condominium buildings where every single suite is owned by a single investor. This is/was most prevalent in London, and it’s the result of there being property tax benefits to registering a condominium (individual unit assessments), even though for all intents and purposes it’s a rental building (building in its entirety assessed).
The article goes on to rightly suggest that the prevalence of investors, and the way that condominiums are financed, could be leading to the construction of more buildings with smaller suites. Here’s the proportion of new condominium apartments under 600 square feet by period of construction:
The unsurprising takeaway is that condominium suites have gotten smaller. In the 1990s, the average condominium apartment built in the Toronto CMA was 947 square feet. This is compared to 640 square feet after 2016. And the same thing happened in Vancouver, which went from an average of 912 square feet to 790 square feet.
Investor preferences certainly have something to do with this. But what the article doesn’t specifically mention is that this phenomenon is also a direct response to rising build costs: making suites smaller was how the market tried to maintain some level of affordability. Put differently, imagine how expensive new condominiums would be if the average size was still 947 square feet.
But there are obviously limits to this. I was with one of our architects the other week and he made an interesting comment to me. He said, “Brandon, before when build costs used to go up and things got less affordable for consumers, we could just make the suites smaller to offset the impacts. But I don’t see how we can go any smaller now. We’ve reached the limit.”
This is one of the reasons why I think this downturn is going to ultimately be a good thing for Canada’s housing markets. It’s a reset. It’s forcing everyone out of complacency and, hopefully, it means that when the next cycle begins we’ll be starting from a better foundation.
Here is an interesting chart (source) showing housing starts in Canada, by type, between 2000 and 2023:
As recent as 2000, single-family houses accounted for 61% of total starts and multi-family housing accounted for 39%. This flipped somewhere around the financial crisis and, last year in 2023, the percentages were 23% and 77%, respectively. This is a meaningful inversion which has helped our cities become more vibrant and more conducive to non-car modes of transport.
But in this recent article about Canadian housing, Donald Wright more or less argues: so what? We’ve been densifying our cities for all these years, but it hasn’t helped our affordability problem. Supply must not be the answer to our housing crisis.
I’m not exactly sure what he believes to be the solution, but I don’t think this problem is as simple as “we’ve built some housing, we made our cities denser, and yet housing is still expensive — more supply must not be the answer. Let’s move on.”
Among many other things, it’s important to understand what kind of density we’ve been building. Because up until very recently, we’ve basically taken the position that single-family neighborhoods should never be touched, and that density should only go in very specific areas — and only after a lengthy and expensive rezoning process has been completed.
We’ve designed new housing to be expensive.
But attitudes are changing all across North America. We are now starting to do two very important things: (1) we are opening up more of our cities to intensification and (2) we are now allowing more multi-family housing on an as-of-right basis. Meaning, no lengthy rezoning exercises and no risk of community opposition.
These are two fundamental changes that should alter the kind of density that gets built. And in my view, it’s going to be a positive thing for Canadian cities.
It is maybe comforting to know that even Europe wrestles with the decision of whether a grand urban space should be used for pedestrians, or turned into a parking lot. Take, for example, the Grand-Place in Brussels (pictured above).
Today, it is a UNESCO World Heritage Site and one of the most important tourist destinations in the city. Perhaps its most famous. But during the 1960s, in what Wikipedia calls a “low period of appreciation,” it was a parking lot.
This lasted until 1972, when a bunch of people from the community got together and lobbied for it to, you know, not be a parking lot. Not surprisingly, local shop owners were worried, at the time, that this would hurt their businesses. This is often the concern.
Here in Toronto, where we continue to debate the pedestrianization of Kensington Market, we have surveys showing that 94% of visitors to the area support pedestrian-only zones, but that this number drops to 55% when you narrow to people who live/work/own stuff in the area.
But if your goal is to sell more things to people, then there’s something to be said about listening to what your visitors want. In the case of Grand-Place, pedestrianizing the square made it far more popular as a tourist destination. And I think the same would be true of Kensington Market.
The ease of installation and a potent mix of government policies to encourage adoption has made the wee arrays hugely popular. More than 550,000 of them dot cities and towns nationwide, half of which were installed in 2023. During the first half of this year, Germany added 200 megawatts of balcony solar. Regulations limit each system to just 800 watts, enough to power a small fridge or charge a laptop, but the cumulative effect is nudging the country toward its clean energy goals while giving apartment dwellers, who make up more than half of the population, an easy way to save money and address the climate crisis.
Of course, there’s only so much that panels like these can produce. By some estimates, a “large well-positioned balcony” might only produce 15% of a home’s electricity needs. But hey, that’s still something, and it seems like something that Toronto should be looking at.
One common mistake that people make when it comes to development pro forma is assuming that feasibility is easily attainable. It’s not. In fact, it’s best to think of a pro forma as a fragile object that is liable to break if not handled properly. So to that end, here’s a non-exhaustive list of things you may want to keep in mind when trying to both forecast and create the future as a developer:
As a starting point, you’re safer assuming that your pro forma isn’t going to work. If the numbers look too good to be true or even just really promising — especially at the outset — then there’s a good chance they’re wrong. You’ve likely missed things. Be weary if it feels too easy, especially in our current market, where very little works.
Cheap land isn’t enough. Just because your land cost feels cheap, it doesn’t mean that your development project will end up being feasible. There are instances and entire markets where even free land isn’t enough. You might actually need a negative land value. Meaning, a subsidy is required to reach feasibility. This is the case with affordable housing.
Drill down into as many line items as possible. Back-of-the-envelope math — where you just plug in a few cost per square foot assumptions — is fine for an initial screening. But if you’re really serious, you need to get deep into the weeds. Run through the entire process in your mind and think about what might happen, and go wrong. Even with this, you will still miss things.
Stress test your assumptions. What happens if the city asks you to do X? What happens if the local councillor comes at you with Y? Can your fragile object support them, or will it shatter to pieces? The sensitivity of your fragile object to various stimuli will help you decide whether you want to do the project or whether there’s simply too much risk.
Ultimately, real estate development is a creative act. You’ll need to come up with creative solutions, and then you’ll need to will your project to life. This is one way to tell that you’re on the right path. It needs to feel really hard. So if your pro forma also feels this way, then there’s a higher probability that you’re narrowing in on something close to reality.
