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 a report that was just published looking at the feasibility of a fixed transport link between Great Britain and Northern Ireland across the Irish Sea. It is part of a study known as the Union Connectivity Review, but according to the report, this idea has been floating around since at least the middle of the 1800’s. This recent report claims to be the most rigorous of the bunch though.
What they discovered is that it would be — you guessed it — super expensive. Somewhere in the range of £209 billion for a tunnel crossing and £335 billion for a bridge crossing. And it would take some 30 years before something like this could be operational when you consider planning, design, construction, and the various legal processes that something like this would require.
So the recommendation was to stop and do nothing. But if any of you are curious about what it would take to build across the Irish Sea, here’s your chance.
We talk a lot on this blog about laneway housing and ADUs, including, of course, the one that Globizen built earlier this year. But beyond being exceedingly cool (see above), what has this policy change meant at the macro level? To what extent is it actually helping housing supply? Let’s consider Toronto.
As a reminder, “laneway suites” became permissible in the former/old City of Toronto in 2018. The policies where then expanded to the entire city of Toronto in the summer of 2019. So we’ve had just over 2 years of this housing type being fully allowed city-wide.
Though it’s worth keeping in mind that there are only so many laneways in Toronto (which is why “garden suites” are going to be important and may actually end up being more impactful):
Between the introduction of laneway suites and June 2021, the City of Toronto received 306 permit applications to construct, of which 238 were associated with a unique address (the same address can have multiple permit applications).
During this same time period, 183 permits were issued. 107 were still under review at the time this report was written. 15 were refused. And 1 was classified as “unknown”, which I guess means it got lost in the ether or under someone’s desk.
Some of you will probably argue that this isn’t enough new housing for a city of 3 million people with high home prices, high demand, and high immigration. And I would agree.
But it’s still early days, there will be an adoption curve, and the policies are still being tweaked to further remove some of the barriers associated with delivering this housing type. Of the 238 unique addresses that submitted a permit application, just over a quarter of them had an associated minor variance application, which means that they did not fully conform to the current laneway suite by-law.
The most common obstacles appear to be the 1.5m laneway setback, the soft landscaping requirements, and the required fire access. But I know that there are others too. I could have used another foot or two in height on mine.
But as I mentioned before, there are more areas in this city without laneways than with. And so garden suites are going to be an integral component of city-wide ADUs. This will certainly help the adoption curve.
I continue to believe that these are all steps in the right direction and that this is an exciting time for Toronto. We are in the midst of transforming our laneways. But we’re not done yet. We’re going to have to make many other tough decisions in order to further increase housing supply. I’m positive we’ll get there.
I was having a conversation this week with a few friends in the industry about the future of parking. We were specifically talking about Toronto, but I would imagine that much of this holds true for many other cities around the world.
Here in Toronto, it’s not uncommon to see new parking spaces in central locations selling for upwards of $200k. For those that are not in the industry and not seeing the work and immense costs that go into building parking, this often comes as a surprise.
But as I have said many times before on the blog, parking is often a significant loss leader for new developments. Even at relatively high prices, most developers aren’t covering their costs. So developers naturally aren’t racing out to build more of it. They’re trying to build just what is absolutely necessary for the market.
Given the strong incentives to build less parking, it’s no surprise that parking ratios continue to decline. But consider some of the other parking headwinds:
Push toward watertight undergrounds across the city (higher costs)
Tipping fees for disposing of contaminated soil (higher costs)
Increasing development charges / levies (higher costs)
Introduction of inclusionary zoning (higher costs)
Inflationary construction cost environment (again, higher costs)
There is a lag between changing cost structures and what the end consumer sees and feels. Junction House, for example, is fully tendered from a construction standpoint and so we are building with a kind of historic cost structure that would be impossible to replicate today. When the next project comes around, they’ll have higher costs and will have to price their homes accordingly.
As rising costs and new policies (like the ones I mention above) begin to work their way through the system, I think it’s fairly obvious that parking ratios will continue to be one of the first things that gets looked at and ultimately chopped down. This will make parking even more scarce in the city and surely far more expensive.
But as I have argued before, I am of the opinion that building around the car is not the way to build big and well-functioning global cities. Many of us recognize that we need to focus on alternative forms of transport — everything from public transit to new micro-mobility solutions. And given where costs are going, I don’t think we’ll have much choice.
Hedge fund manager Bill Ackman is a pretty wealthy guy and so it is fairly safe to assume that he could choose to live almost anywhere. For some people the ideal might be a low-rise house with a backyard in the suburbs.
But since 2018, Ackman has chosen a kind of penthouse apartment on the roof of a 1920’s co-op building in Manhattan’s Upper West Side. It was formerly the home of author Nancy Friday and Ackman supposedly purchased it for $22.5 million.
He is now looking to demolish the penthouse and build a new two-storey residence designed by architect Norman Foster. The design looks like this, which kind of reminds me of Philip Johnson’s The Glass House:
Today it was in the news that Ackman has been having a fun time trying to convince his co-op board that a new set of glass boxes on the roof their building is a good idea. FT reported that the project has created “an atmosphere of fear and distrust among residents in the building.”
I’m not exactly sure what it is about this proposal that is causing fear and distrust but Ackman is on record saying that he thinks this isn’t about heritage preservation or architectural integrity; it’s about people not wanting the disruption that comes along with construction. Fair.
One way to test this, I suppose, is to propose something more traditional or similar to what’s already there. But I suspect that the other dynamic at play here is simply that he is a rich guy with a starchitect trying to build something cool.
A few of us are in Ireland right now visiting with the suppliers who will be providing the windows, sliding doors, louvers, and glass for One Delisle. Thank you for the hospitality Flynn, Duggan Systems, and Carey Glass.
Below is a video showing a weather test that was done this morning. If any of you have been to the One Delisle Sales Gallery, you will probably recognize these sliding doors. They are fantastic.
Many of us probably don’t think about the supply chain that exists behind the products and services that we consume. But it is there and there are lots of smart people working “behind the scenes” to make everything happen.
One of the co-founders of Juno — a new mass-timber and modular housing company — was recently interviewed by Dezeen. Prior to cofounding Juno, BJ Siegel was Apple’s design director and spent 19 years designing and working on their stores. And so this is the lens that he and his partners are bringing to the real estate development space. (I also just learned this morning that their head of real estate is a former classmate of mine from Penn.) Here is an excerpt from the Dezeen article that speaks to their goal of productizing the delivery of new housing:
The third is Apple really challenged us to think about the way we deliver the project more like the way they deliver products through a kind of owner-furnished direct source supply chain model.
And that actually spurred a lot of investigation as to how to translate that work from a product into this industry [real estate development], which is really kind of not focused on that.
So that really was a big, big focus.
The company recently announced that they have broken ground on their first project in Austin, Texas. It is a five storey 24-unit residential project that is being positioned as “middle-income, market-rate” housing. They’ve reduced the building down to about 33 standardized parts and are using a secret type of mass timber that is manufactured in the US. Supposedly it’s better than cross-laminated timber, but the company is keeping it as part of their secrete sauce right now.
Juno is not the first company to identify this gaping problem in the development and construction space. The typical construction process is antiquated, inefficient, and filled with far too much waste. Which is why modular / pre-fabricated housing has been a goal of architects, builders and others for generations. Eventually we will figure out how to better productize the delivery of new housing and bring down its costs. And in my view that will be a great thing for consumers.
Last week I wrote about a project in New York by DDG Partners called 100 Franklin. If you missed it, go here.
I didn’t, however, say much about the developer. Though at the time I was wondering why their website was no longer up.
DDG Partners is a firm that I have written about several times over the years. They are a firm that I have always admired because of 1) their commitment to design and 2) their vertically-integrated approach to development. They do things like design, construction, and asset management all in-house.
So I was interested to learn that back in May they announced a merger with French real estate firm, GS Invest. Prior to the union, GS had a portfolio of more than 3 million square feet across Europe. The new investment and development company is called Azur.
Also interesting is the fact that Azur has started making proptech investments. Their first investment is in a company called Whiterock AI.
London has a breed of specialist developers that are known as rooftop or airspace developers. What these developers do is build on top of existing and occupied buildings — mostly residential. Firm examples include Upspace and Apex Airspace. According to this recent WSJ article, the city is also making moves to relax regulations so that more of these top-ups can be completed.
Brokerage Knight Frank estimates that in central London alone there are probably 23,000 buildings that could support a few extra floors, resulting in upwards of 41,000 new homes. I have done early feasibility studies for similar projects here in Toronto and they’re not simple to execute. But building structures are typically constructed with a factor of safety and so, in some/most cases, you can build a little on top without doing any additional reinforcing. (Note: I am not a structural engineer.)
In any case, the benefits of airspace projects are obvious. You’re creating additional supply in a tight housing market like London. Similar to Toronto’s laneway housing program, it’s not going to completely solve the larger problem of affordable housing. But every bit of new housing helps, regardless of where it lands on the spectrum of affordability.
One of the drawbacks, which is the headline of the above WSJ article, is that penthouse residents are getting demoted in the process. They’re going from penthouse to sub, or sub-sub, or sub-sub-sub penthouse. They also need to endure a bit of construction right above them. Cry me a river?
But what is also important to point out is that there are lots of buildings out there which are facing capital expenditure shortfalls. They have maintenance and repair demands that simply aren’t adequately funded. Adding additional floors can be a way for these buildings to generate that cash and, in some cases, residents are even partnering with airspace developers to share in some of the profit upside.
Not surprisingly, these sorts of arrangements are seemingly being met with a fair bit of support. Because in these instances, your options are basically as follows: Either you cut a repairs and maintenance check right now or you support a bit of development and then hopefully you’ll be the one receiving a check in the future. I suspect we’ll be seeing a lot more of this, not just in London, but in cities all around the world.
It was recently reported that Jimmy Fallon and his wife are selling their New York City Penthouse in Gramercy Park. It’s listed for $15 million. In looking at the photos, it’s pretty much what I would have expected. It’s fun and quirky. And they have a “saloon room” that looks like it could be in Wyoming. But what I also find interesting is how they assembled this apartment over time.
It started in 2002. Jimmy Fallon was single and he bought his first place in the building — a one bedroom for $850,000. According to the article, he couldn’t really afford it. But as he was nearing the end of his run on SNL, Lorne Michael encouraged him to buy his own place. So he went and did that in Gramercy Park in a building that dates back to the 1800s.
As life evolved and as Jimmy got married, he and his wife started buying contiguous apartments — three more to be exact. Their penthouse apartment is now about 5,000 square feet and spans three floors in the building. It’s an interesting case study in the flexibility of multi-family buildings. Here is a building that was built in the 1800s and has probably seen a myriad of changes over its lifetime.
Future flexibility is something that is talked about here in Toronto in the context of new construction. We talk about “knock-out panels” so that someone like Jimmy can grow into a larger suite. I’m not sure how often this actually happens, but I would imagine the frequency is relatively low. But it’s very possible and not just in older buildings like The Gramercy Park.
Toto announced a new product this month at the Consumer Electronics Show (CES) called the Wellness Toilet. It won’t be available to consumers for at least several years, but the plan is for it to do two key things to improve overall health and wellness. It will scan your body when you sit on it and it will analyze your poop. (Not urine?) It will then make recommendations via your smartphone about how you might start to make better life decisions. Presumably this will include being more active and eating better. This, to me, feels like an obvious way to innovate around the toilet. If it were available today and it actually worked, I would likely be an early adopter. Either way, I look forward to hopefully including this in future development projects.
The WELLNESS TOILET uses multiple cutting-edge sensing technologies to support consumers’ wellness by tracking and analyzing their mental and physical status. Each time the individual sits on the WELLNESS TOILET, it scans their body and its key outputs, then provides recommendations to improve their wellness. There is no additional action needed, so people can easily check their wellness throughout their daily routine, every time they take a bathroom break. They will see their current wellness status and receive wellness-improvement recommendations on a dashboard in an app on their smartphones.
The residential bathroom is the perfect place to support people’s wellness for a variety of reasons. First, although there are a number of other products that track individuals’ wellness (e.g., wearable devices), it is more convenient to monitor and analyze the body as a part of the everyday routine act of using the WELLNESS TOILET, to which individuals are accustomed. Second, toilets and people have two unique touchpoints that cannot be found elsewhere – the skin and human waste. The WELLNESS TOILET is in direct contact with individuals’ skin when they are sitting on it, and it analyzes the waste they deposit — a wealth of wellness data can be collected from fecal matter.
