Author: Brandon Graham Donnelly

• Will fourplexes be actually feasible in Toronto?

  Last week I wrote about Toronto’s plan to make fourplexes as-of-right across the city, but also why this form of missing middle housing shouldn’t have a maximum floor space index.

  Today, let’s look at the numbers in a bit more detail.

  If you look at a zoning map of Toronto, you’ll see that many neighborhoods across the city have a maximum floor space index (FSI) of 0.6. What this means is that if you have a piece of land like this:

  • Lot width: 20′
  • Lot depth: 115′
  • Site area: 2,300 sf

  Your total allowable gross floor area would be 1,380 square feet (0.6 x 2,300 sf).

  If you build a laneway suite in this city, that won’t count towards your total allowable GFA (otherwise they’d be very challenging/impossible to build). But if you want to build something like a triplex or a fourplex, it counts.

  The one important caveat is that if you’re building a residential building — that isn’t an apartment building with 5 or more homes — you can deduct the floor area of the basement:

  

  This, of course, helps the situation. But it doesn’t solve all of our problems.

  If you assume that the basement can be one home, that still only leaves 1,380 square feet for the other three, technically permissible, homes. This equals: 3 homes x 460 square feet.

  Another option would be 2 homes x 690 square feet. But still, we’re not exactly making it easy to deliver more “family-sized homes” in the city.

  And herein lies one of the problems (plural, because there are others). We can say that fourplexes are allowed across the city, but it may not actually be technically feasible or practical to build them.

  Note: I am not a planner. If you are, leave a comment below.

  2023.03.13

• Honks against housing in San Diego’s University City

  The University area is one of 53 community planning areas in the City of San Diego. And this one, as the name suggests, houses the University of California, San Diego (UCSD), which is at the northern end of the blue transit line.

  The last time the University Community Plan was updated was in 1987, and so it’s an old plan and it is currently being redone to better align with the City’s current strategic plan — which includes things like “creating homes for all of us” and “championing sustainability.”

  The final draft community plan won’t be available until later this year, but there are two draft scenarios available for download. Here’s what Scenario A looks like:

  

  The “T” circles are transit stops on the Blue Line (which runs south to downtown and then to the Mexico border), the olive green areas are institutional (UCSD, hospital, etc.), and the purple areas are “urban villages” with densities that go as high as 218 dwelling units per acre (darkest purple). For the other areas, please refer to the legend.

  Now let’s put this residential density into some sort of context. One acre = 43,560 square feet. So we’re talking about 218 homes on every 43,560 square feet of land. For context, our mid-rise Junction House project is 151 homes and our site area is approximately 22,000 square feet (about 0.5 acres). That puts us at roughly 302 homes per acre — more than what is proposed here.

  In total the revised plan could allow for somewhere between 35,000 to 56,000 new homes in the University City area. Not surprisingly, the community has reacted by organizing rallies, such as this one, here, called “Honks against housing”:

  

  (I used a screenshot because embedded tweets don’t seem to show up properly in my email newsletter.)

  This is, again, not unexpected. And all of the typical things could be said about incumbent residents opposing new homes on top of an existing transit line, next to a major university. But what stands out to me about this protest is its format.

  These residents are worried that high-rises will destroy their community. So presumably they are looking to get the word out to as many people as possible. And one of the ways they have decided to do that is stand on the side of a busy road and appeal to people in their cars.

  Ironically, I think this actually reinforces the need for an updated Community Plan. Because it speaks to the car-oriented nature of this community and the need for better land use planning around its existing transit stations.

  In my view, the line of thinking here should not be, “this is going to destroy our community. How will our roads ever accommodate 35,000 new homes?” It should be, “how do we better plan this community so that our next generation of residents have the luxury not to have to drive everywhere?”

  If you’d like to offer constructive feedback on this plan, I’m told that you can email Nancy Graham at nhgraham@sandiego.gov.

  2023.03.12

• Sleeper trains — what’s old is popular again

  One of the great promises of autonomous vehicles is that, one day in the future, you’ll be able to get into your car, fall asleep, and then wake up refreshed at your destination. This would be a nice luxury, and it would almost certainly reshape the geography of our cities.

  But at the same time, it’s worth a reminder that “sleeper cars“, or bed carriages as they were originally called, are definitely not a new thing. Possibly the first example of a sleeper car was in England in the 1830s. Trains, of course, don’t take you exactly where you want to go like a car, but a sleeper train does allow you to travel while you sleep.

  And so it is interesting to see that sleeper trains are apparently seeing a resurgence in popularity across Europe. To the point that the trains are full and rail operators can’t seem to get their hands on new carriages. I can’t recall ever travelling in a sleeper train, but I have to say that this looks like a highly civilized way to move around:

  

  Image: ÖBB (Austria’s national rail operator)

  2023.03.11

• Amsterdam wants fewer drunk and annoying people

  Back in 2014, Amsterdam became the first city to have what is referred to as a “night mayor.” And at the time, including here on this blog, this was generally viewed as a pretty progressive thing to do. It recognized that there is an important nighttime economy and that, with the right leadership, it be harnessed for broader economic development purposes. As a result, many cities followed suit and appointed their own night mayors. (Toronto did not, despite my repeated posts.)

  But fast forward to today and things feel different. Night mayors aren’t talked about as much in city building circles. And Amsterdam is actually trying to limit overall tourism growth. It is working to relocate its Red Light District to outside of the city center and it hopes to reduce the amount of people who come to the city just to misbehave. To be clear, it still wants tourists; it just wants more people who do things like go to museums:

  The Netherlands’ capital plans to launch a deterrence campaign later this month aimed at tourists who go wild during their visits. In addition to new ads, the city has proposed rules in its infamous Red Light District, such as a ban on smoking marijuana in the street, earlier weekend closing times for bars, clubs and sex-work establishments and reduced alcohol sales. 

  Amsterdam’s liberal rules for drugs and prostitution have long attracted travelers looking to let loose, but officials say they are taking it too far and harming the quality of life for residents. 

  This is an interesting situation because usually the problem is, “how do we get more tourists to come and visit our city? Should we maybe build a casino or a Ferris wheel or something else equally as big?” Instead, the problem here is, “we have way too many drunk and annoying tourists. How do we swap them for more cultured visitors?” Of course, one solution is to just tell people that they are annoying and that they should stop coming. And that’s generally what the ad campaigns plan to do.

  An alternative approach might be to celebrate all of the other things that one can do in Amsterdam.

  2023.03.10

• Seattle is building more accessory dwellings than single-family houses

  In 2019, Seattle made it easier to build accessory dwelling units (ADUs). Among other things, they started allowing two ADUs per lot, they stopped requiring the owner to live on site, and they stopped requiring off-street parking. The result is that the city is now permitting close to 1,000 ADUs per year (2022 figure). And for the first time ever, this figure now exceeds the number of permits issued for single-family houses.

  

  Part of what’s driving this adoption is that the City created 10 pre-approved plans that owners/builders can choose from. And since they were launched in September 2020, these plans have been permitted 130 times. (Los Angeles did something very similar with its “standard plan program.”)

  In general though, Seattle’s policies seem more permissive than what we have here in Toronto. According to this recent “annual report”, it is estimated that about 12% of ADUs in Seattle are licensed as short-term rentals. About a third are also being permitted as condominiums. In Toronto, any sort of severance is heavily discouraged. The objective was and is to create new rental housing.

  But for Seattle, this seems to be creating more affordable homes for sale. The median selling price for an ADU is apparently $732,000, compared to $1.2 million for a single-family house. This sounds kind of good.

  Image: The Seattle Times

  2023.03.09

• Missing middle housing shouldn’t have a maximum floor space index

  At the beginning of the year, I wrote this:

  The desire to add more housing to single-family neighborhoods will continue to pick up steam across North America. How exactly this plays out will be market specific, but in Toronto I expect to see new planning policies put in place, as well as supportive building code changes.

  And this continues to happen. Right now, the City of Toronto is working on making fourplexes permissible in all low-rise neighborhoods across the city.

  This is exciting. But it’s not done yet. And it’s not perfect.

  The biggest change that I think still needs to happen is around maximum densities. If we actually want to encourage more missing middle housing, we need to increase the permitted FSIs or, better yet, remove them all together.

  Urban planner Sean Galbraith does a good job of explaining this in NRU:

  

  I responded to the city’s multiplex survey last night and this was one of my main comments. If you’d also like to voice your opinion, you have until March 10, 2023. Here’s the link.

  2023.03.08

• More on soft story buildings — a Q&A with structural engineer James Cranford

  As I mentioned yesterday, I am not a structural engineer. However, my friend James Cranford is. He is Principal at Stephenson Engineering and he was nice enough to answer a few of my questions about soft story buildings (storey if you’re Canadian).

  BD: What is a soft (or weak) storey building? And why is it such an important design challenge, even in a very un-seismic city like Toronto?

  JC: A soft storey refers to any level in a building that has LESS capacity than the level above. This means it has both less strength to resist loads and less stiffness so that it will move more than the levels above. Soft stories are one of the most significant challenges that many modern building designers face because they are one of the most likely ways that a building can fail catastrophically if not properly designed. A soft storey failure occurs when the building hinges above the weak level and the columns below can no longer support the load of the building above as they become overstressed and loaded in ways they were never meant to act. This leads to a sudden, often pancake type collapse that is likely to bring down the entire building.

  

  We see potential soft storey issues most commonly in mid to high-rise residential buildings that have either amenity or retail spaces at the ground floor. These are spaces that by nature are large and as open as possible. During design, the structural engineer needs to recognize this and compensate for the lost capacity in other ways. This is usually done through a combination of increasing the capacity of the remaining walls and adding new walls at the weak level that fit with the building layouts.

  BD: What does the Ontario Building Code mandate in terms of soft storeys?

  JC: The OBC generally does not permit soft stories in any form for buildings where people are likely to live, work or play. In critical infrastructure like hospitals which must remain fully functional in the event of a major earthquake, the OBC goes further and does not permit any ‘lateral force resisting elements’ like shear walls or steel frames to be discontinuous below. This means that if you have a wall on the 5th floor of a hospital, that wall must exist with equal or greater capacity on EVERY level below, without exception.

  BD: How much more stringent is British Columbia, where there is greater seismic risk?

  JC: The requirements in the British Columbia Building Code (BCBC) are almost identical to those in Ontario in this case. However, the seismic design forces will be much higher based on the potential for much larger earthquakes, so while buildings will generally be designed for a higher seismic capacity, they must be proportioned similarly to prevent soft stories.

  BD: Speaking generally, what is usually required structurally in order to retrofit an existing soft storey building so that it can properly withstand things like earthquakes?

  JC: The most common way to retrofit a soft-storey is to increase the capacity of the weak level. In smaller buildings this can usually be achieved by adding new ‘lateral-force-resisting elements’ like shear walls or moment/braced frames until the overall storey capacity matches or exceeds the capacity of the levels above. On larger buildings this becomes more complex, as the loads are much higher and simply adding capacity may not be either feasible or practical. Therefore a full structural analysis is usually required to find a solution that can be tailored to the unique structural and architectural conditions. This often involves a combination of increased capacity and the introduction of ductile detailing which will allow the building to dissipate seismic energy. This can be roughly thought of as a ‘bend but don’t break’ approach to surviving an earthquake.

  In some jurisdictions, the extreme risk caused by (many) homes built with soft stories has prompted local governments to intervene. The City of San Francisco (as well as many other municipalities in California) have enacted ordinances requiring home owners to assess and upgrade their properties, including single family home with garages a the lowest level, to reduce the risk of soft-storey failure in an earthquake.

  BD: Thanks for this, James.

  I don’t usually do Q&As on this blog, so let me know in the comment section below if you found this one valuable and if you’d like to see more of them.

  2023.03.07

• Soft story collapses

  I am not a structural engineer (or an architect for that matter). But one of the things that has come to greater light as a result of the devastating earthquake that hit Turkey & Syria last month is the number of “soft story buildings” throughout these countries.

  Technically, a “soft story building” is exactly what the name suggests. It is a building where one floor is less than 70% as stiff as the floor above it, or less than 80% as stiff as the average of the three floors above it (source).

  The typical application of this is a ground floor that has less structure (missing shear walls for example) and is more open. And it is usually done to accommodate things like parking and retail uses, and to, of course, build more cheaply.

  However, there is a massive problem in that they are often structurally suboptimal! (Again, not a structural engineer.) This is why we saw so many of the buildings in Turkey “pancake” during its earthquake. The ground floor failed and then it brought down the rest of the building.

  I can appreciate that retrofitting older buildings is both difficult and expensive; but it is inexcusable to not work toward that and it is certainly inexcusable to not mandate that every new building meet whatever building codes are required to save lives.

  2023.03.06

• Real estate developers are stupid

  Big Ben Myers of Bullpen Consulting doesn’t usually have strong opinions on Twitter (obviously joking), but I did see him respond to this tweet this morning:

  During significant downturns, developers can’t sell the units, and can’t get financing to build rentals. It has nothing to do with their intelligence. https://t.co/7G7n4B65CI

  — Benjamin 🐂✒️ (@benmyers29) March 5, 2023

  The assertion he is responding to is basically this: “developers are stupid because they tend to hold onto land during downturns, instead of building through them.” On some level, I think I know where this line of thinking is coming from. It’s the whole Warren Buffet philosophy of “being fearful when others are greedy, and greedy when others are fearful.”

  But what it ignores is development feasibility. Developers typically rely heavily on the availability of debt financing. First you need land financing in order to acquire the land, and then, once you have your entitlements, condominium pre-sales and/or any other requirements in place, you move onto a construction loan (which often “takes out” your land loan).

  Maybe you have deep enough pockets to fund everything with cash, but most of the time that is not the case. And so if these debt facilities are not available to you, then you are not building.

  The other part of this equation is that, during downturns, it can be harder to forecast your future revenues. What can I sell/rent this space for, and how long will it take to absorb? These are difficult questions in the best of times, but they’re even more difficult when you don’t have a lot of market activity/comparables to point to.

  All of this contributes to debt being less available, especially for smaller developers. It also makes new sites difficult to underwrite. Because as we have talked about many times before on this blog, land should be the residual claimant in a development pro forma. Revenue minus development costs equals how much you can afford to pay for land.

  If the math doesn’t work and if you can’t get financing, it almost certainly doesn’t matter how much “leading” you feel like doing. You’re not building.

  2023.03.05

• The first vacation rental REIT

  This is a fascinating interview with John Andrew Entwistle, the founder of vacation rental company Wander. The way to understand Wander is that it is a vertically integrated travel company. So unlike Airbnb, for example, Wander owns all of their real estate (vacation homes in top destinations), they property manage, they asset manage, and they are building out the technology required to connect all of this stuff.

  They have also created what they are calling the first ever vacation rental REIT, which means that you can buy a piece of their real estate portfolio (currently 13 properties). In addition to being a source of cash, this creates an interesting flywheel effect where maybe you stay in a Wander and then decide to become an investor in their REIT, or vice versa.

  Eventually though, Wander hopes to be just as asset light as Airbnb (which again, doesn’t own any real estate; they’re a booking platform). The idea is that REIT unit holders will ultimately own the real estate and they will be the asset manager / technology platform that sits on top. But that they will still control the entire travel experience.

  John also gets into some of the specifics of how they run their business. For example, in each destination, they hire local cleaning crews and handy people (who are not Wander employees). They typically spend about 7% of the value of a property to furnish it (which is typically around $80-150k per property right now). And their average order size is around $4.5k, which suggests that people are willing to pay a premium for this vertically integrated travel experience.

  If you can’t see the video above, click here.

  2023.03.04