Brandon Donnelly

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.

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Category: Housing

  • Sidewalk Labs, Uber, Lime, and the demise of urban density

    Today I am going to talk about 3 things that recently happened and/or that are on my mind.

    Sidewalk Labs pulled out of Toronto. I think this is sad. A lot of people have said that they’re surprised, but not surprised. The official reason is that this unprecedented environment has made it financially infeasible for them to develop the 12-acre site, while still adhering to their core principles. I don’t have any inside knowledge of the situation, but I can’t help but think that this is probably just an opportune excuse. They were getting beat up pretty badly by Toronto on all fronts, even though they had put forward an incredibly ambitious development proposal. As I said before, I can’t imagine many (or any) “conventional” developers coming forward with something like this. The last plan I saw was 1/3 non-residential, and 40% of the residential component was to be priced below market. And never mind all of the other innovations that were being contemplated.

    In other tech news, Uber just led a $170 million investment in Lime (the micromobility scooter company). I think this is smart — both from an overall mobility standpoint and, selfishly, as a shareowner of $UBER. It is being reported that this round of investment values Lime at about $510 million. This is a 79% decline from April 2019 when it raised its last round. So presumably, Uber is getting a pretty good deal here. The bet is that the urban landscape demands multi-modal transportation solutions, everything from bikes and scooters to cars and public transit. There is also an argument to be made that in the short-term, our post-pandemic world is going to gravitate toward individual mobility and away from things like public transit. I’ve heard a few people say that, as we re-open the global economy and try to maintain social distancing, we’re going to face two major mobility bottlenecks: transit and elevators. Sounds like more testing would be a prudent idea.

    Above, I was very careful to say “in the short-term” because I think the narrative that is emerging around the demise of urban density is entirely overblown. Few of us are clamoring to jump back into a mosh pit right now (perhaps a metaphorical mosh pit), but I also don’t believe that we will suddenly look to sprawling Brasilia as a source of urban inspiration. While it is true that “disease did shape architecture in the 20th century” (Alex Bozikovic wrote a good piece on this over the weekend) and that there have been oscillations in terms of how we view urbanity, I also know that this isn’t the first pandemic that our cities have lived through. The Hong Kong flu of 1968 is thought to have killed one million people around the world after, allegedly, emerging in one of the densest cities ever created. Hong Kong’s relationship with Beijing is a tenuous one right now, but it still remains one of the world’s most important global cities.

    Perhaps cities are more resilient than we give them credit for.

    Photo by Touann Gatouillat Vergos on Unsplash

  • The redevelopment of Toronto’s residential market

    Somehow — even after I sarcastically put out the above tweet — I ended up on a BISNOW panel next week about the impact of COVID-19 on Toronto’s residential real estate market.

    When I was asked if I would do it, I replied with: “Does this mean I will need to put on pants?” That was interpreted as a, “yes, I will join the panel.” And so here we are.

    It’s on Wednesday, May 13 at 2:30pm. Steve Keyzer of Gin & Sonic fame (Colliers International) and Kevin Stark (Trinity Development Group) are also speaking on the panel. To register, click here. I’ll do my best to be as controversial as possible.

  • A YouTube channel about simple living and small homes

    I just subscribed to Kirsten Dirksen’s YouTube channel. She makes videos about simple living, self-sufficiency, and small homes, among other things. She has nearly 1.3 million subscribers and her videos have almost 500 million views. I think many of you will really enjoy her channel.

    The above video is about an apartment in Lapa, Lisbon that was renovated by architect João Gameiro. Originally constructed in 1819, the top floor space had been pretty badly neglected. João renovated it by striking, what seems to me like, the right balance between old and new.

    Some of the other homes featured on her channel include a laneway house in Toronto, a tiny floating home in Berlin, and an off the grid cabin in Joshua Tree.

  • Koto Design announces prefab partnership and two new house designs

    Koto Design, which I have written about before on the blog, has just announced both a partnership with Plant Prefab and two new home designs. Koto is based in the UK and is a designer of small and energy neutral homes and cabins. Plant Prefab is based in the US and is, according to Koto, the first prefabrication company entirely dedicated to sustainable building practices. This partnership — called Koto LivingHomes — now means that Koto’s designs are available for delivery in the US.

    The smaller of the two new designs is the Yksi House. It consists of two stacked volumes (pictured above) and is about 1,000 square feet. The ground floor has two bedrooms and the second floor houses the main living area. This allows the exposed roof areas of the lower volume to serve as outdoor spaces. You also naturally get better views from up top, which is one of the reasons why this configuration is so common across many vernaculars.

    If you’d like to play around with the Yksi House in 3D (directly in your browser), you can do that over here. It’s a wonderfully simple design. I know that the building industry has been talking about and experimenting with prefabrication for many generations (and it has never stuck), but I can’t help but think that as beautiful products like these become far more accessible and affordable, we might finally make it happen.

    Image: Koto Design

  • Jason Statham’s home is on the market for $6.995 million

    I keep coming across actor Jason Statham’s homes (or former homes) in design publications. At the beginning of this year, he and model Rosie Huntington-Whiteley sold their Malibu beach house for $18.5 million. It was beautiful. And last month, he listed a home — he seems to have many — near LA’s Sunset Strip for $6.995m. (Pictured above.) A renovation of an existing 1957 house, Statham purchased the house in 2015 for $2.7mm and completed a meticulous renovation with Standard Architecture. Look at that roofline! For those of you in the market, here’s the listing.

    Photo: ©Benny Chan | fotoworks

  • 9 square meters

    Before bed last night, I was was reading about a Tokyo-based real estate company called Spilytus. They have an apartment brand called Ququri (pronounced ku-ku-ri) that specializes in tiny apartments, which I suppose isn’t all that novel for Japan.

    Since the brand was launched in 2014, they have developed over 70 buildings and now manage about 1,200 micro apartments across the central wards of Tokyo (~17 units per project if you do the math). We are talking about apartments in the range of 9 square meters (plus sleeping loft) for somewhere around ¥75,000 per month.

    Not surprisingly, their projects seem to lease up right away. And supposedly there’s a long wait list for future projects. People are clearly looking for affordable housing in the neighborhoods in which they want to live. It’s about lifestyle and location, and living a large portion of your life within the public domain.

    This housing typology isn’t for everyone. But it’s great for some people. And I have no doubt that demand for it will only continue to grow in big global cities. However, for what we are all going through right now, I can imagine that it would be nice to have a bit more than 9 square meters to roam around in.

    Image: Spilytus

  • A dumpster fire in San Francisco

    This past week, San Francisco’s Proposition E was approved by 55% of voters. The measure works by limiting new office development if (or when) the city falls short of its affordable housing target for the year.

    If the city only builds 25% of its housing target (currently set at 2,042 affordable units per year), then only 25% of its annual allocation of office space can be built the following year. (I just learned that large scale office development in San Francisco has been limited to 875,000 sf per year as a result of a Proposition dating back to 1986.)

    San Francisco currently skews heavily in favor of jobs. The city creates about 8.5 jobs for every unit of new housing. And over the last decade, SF has only averaged about 712 affordable housing units per year and has never once met its target.

    So at the moment, San Francisco looks destined to start building a lot less office space. And considering that new office space actually helps to fund affordable housing, I am struggling to understand why the goal seems to be to constrain job growth.

    California State Senator Scott Wiener called Prop E a dumpster fire:

    Call me old fashioned, but I tend to think that if the goal is to build more affordable housing, you should do things that, you know, encourage the actual construction of affordable housing.

    Photo by Eduardo Santos on Unsplash

  • Floodplain homes in the US are overvalued by a total of $34 billion

    This recent paper by Miyuki Hino (University of North Carolina) and Marshall Burke (Stanford) makes the case that US homes situated within floodplains are currently overvalued by a total of $34 billion. And that’s because the associated risks are not being properly accounted for in the value of these homes.

    The problem, it would seem, comes down to information. Because the discount for flood risk was found to be higher (1) for commercial buyers (presumably because they’re more sophisticated and/or have better access to information) and (2) in states where sellers must disclose flood risk (Louisiana is probably the most stringent about this).

    This feels a bit like one of those realtor commercials that tries to scare you into using one. But it does appear to demonstrate just how opaque the market can be and how information asymmetries potentially distort asset prices. Perhaps most importantly, I wonder when climate risk will get fully valued.

  • A study on expanding housing options in Toronto

    The City of Toronto is currently studying ways to increase housing options/supply and planning permissions in areas of the city that are designated as Neighbourhoods in the Official Plan.

    These are areas that are sometimes referred to as the “Yellowbelt”, because they are seeing very little intensification and, in a number of cases, actually losing population. (They’re also colored yellow in Toronto’s land use map.)

    Ultimately, the goal is to encourage more “missing middle” type housing forms; housing that is denser than single-family homes but smaller in scale than say mid-rise housing like Junction House.

    Here are a couple of interesting charts from the City. Based on Toronto’s Official Plan, “Neighbourhoods” make up 35.4% of the city’s land area.

    In Toronto’s Zoning By-law, the “Residential” category makes up 47.1% of the city’s land area.

    Digging deeper, 31.3% of Toronto’s total area is zoned for only detached houses — which would mean no missing middle type housing. But 15.8% of the city’s total area is already zoned to permit other types of low-rise residential buildings, such as duplexes and triplexes.

    So why isn’t more of that happening?

    As we’ve talked about before on the blog, the problem is that it is exceedingly difficult to make the math work on projects of this scale, which is why most developers don’t want to do them. The web of bureaucracy that you need to navigate in order to build anything in the city is also imposing for non-developers (and developers really).

    But to be a developer, I think you need to be an optimist. So I am going to remain hopeful that this study — and the pilot they want to do in Ward 19 — will result in a streamlined solution for housing of this scale.

    Images: City of Toronto

  • The future of central London

    The Centre for London has just published an interesting report called, Core Values: The Future of Central London. Like most city centers, Central London (or the Central Activities Zone as the report calls it) punches well above its geographic weight.

    Central London occupies about 0.01% of the UK’s total landmass, but is responsible for about 10% of its economic output. It represents about 2% of London’s total footprint, but is responsible for about 40% of total employment and about 45% of economic output.

    Here’s another interesting stat:

    From 1961 to 1983, the residential population of CAZ boroughs in London fell from about 2.5 to 1.7 million. And things really didn’t begin to turnaround until the late 1980s. It took until 2018 for the population to return to 2.5 million. Makes me wonder: How concerned do you think people were in the late 1970s about housing affordability in Central London?

    To read the full report, click here.

    Chart: Centre for London