This is an aerial photo of the construction site at One Delisle:
Currently, we are on hold and waiting to pour a number of columns on the ground floor because the city has not yet issued our above-grade building permit. And the reason the city has not issued our above-grade building permit is because we have not yet conveyed our parkland dedication land to the city. Frustratingly though, we have been ready to convey this land for over a year! We simply need the city to allow us to give them this free land. To date, we have meticulously documented at least 3-pages of follow-ups and back-and-forth emails as we try our best to do this.
I’ve been doing this long enough that this isn’t surprising or unusual. But it remains deeply maddening. Younger people on the team can’t believe that this is par for the course. On top of this, the city continues to charge interest on the fees that are payable upon issuance of the first above-grade building permit. The result is an insane dynamic where the city can delay things as long as it wants and then charge us, and all other developers, interest on its own delays! I mean, is it any wonder that housing keeps getting more expensive in this city?
During the last mayoral election, some candidates were quick to promise that, if elected, the city itself would start building affordable housing. This, I'm sure, sounded good to most. Toronto needs more affordable homes. But for all of us involved in the building of buildings, it was frankly impossible to imagine. If the city takes this long to accept free land from developers, how could it possibly build anything?
Resonance Consultancy, which is a placemaking firm that we have spoken about before on the blog, is working on a new America's Best Cities report. And as part of this, they've been surveying Americans about which cities they would most like to live in and visit. The result is a list of the most "desirable" US cities that looks like this:
New York
Miami
Los Angeles
Las Vegas
San Diego
Chicago
Seattle
San Francisco
Houston
Denver
The long and the short of it seems to be that people generally want to live in the places where they like to travel. But what's interesting is that if you look at the US cities that have actually grown the most in absolute numbers over the last few years (specifically April 2020 to July 2023), the list transforms into this:
Dallas (+462,639)
Houston (+360,649)
Phoenix (+219,008)
Atlanta (+200,414)
Austin (+189,896)
Tampa (+167,672)
San Antonio (+145,884)
Charlotte (+144,767)
Orlando (+144,542)
Jacksonville (+107,396)
The only city that shows up on both is Houston.
What this suggests is that cities very much have brands. And when you ask people where they'd ideally like to live, they think of the sexiest ones. Places like New York, Miami, Los Angeles, and so on. But it when it comes to actually moving somewhere and paying for a home, there are clearly other realities to consider -- the most important of which is probably affordability.
I was out for drinks recently with a friend of mine who is a developer in California and she mentioned a few things to me that I thought were really interesting.
First, she talked about how virtually nothing gets built in the Bay Area “as of right.” And so the market is hugely supply constrained. She said, you’re lucky if you can get your entitlements in 2 years. It’s starting to take longer. I immediately said: “That’s Toronto.”
Second, we talked about Proposition 13, which was timely given this recent post. One of the consequences of Prop 13, beyond helping golf clubs survive, is that longtime homeowners seem to be highly incentivized not to move.
Their property taxes are so below market that it can be more cost effective for them to stay put as opposed to downsize – even if they have too much house. This means far less turnover in the housing market.
Third, there really does seem to be a feeling in the Bay Area that it’s at a breaking point in terms of affordability. When a successful software engineer making $200,000 a year can’t afford housing, people naturally start to look to other cities.
We hear this refrain all the time in the media, but because I’m not active in that market, it was far more impactful hearing it from a friend.