One of the questions that came up after my recent post about land pricing was: what is it going to take to develop underutilized land on the outskirts of city centers?
So today I thought I would talk about a new development project that was also discussed at the Land & Development conference I recently attended. I think will begin to answer this question.
The project today is known as the Rockport Weston Community Hub & Rental Building. And it’s going to include a community cultural hub, 26 live/work artist spaces, and 300 rental apartments.
It’s located in the Weston neighborhood of Toronto, which is designated as a “Neighborhood Improvement Area.” These are lower-income areas that the city considers to be “at-risk.”
Given this, rents are naturally lower here than in other parts of the city, which means that it’s basically infeasible to develop here. There has been no large scale development in this community since the 1970s!
To put some numbers to this, the developer said they were projecting rents somewhere around “two and a quarter.” So let’s assume for a second that the average apartment rents will be $2.25 per square foot.
At this rate, it means that a 600 square foot one-bedroom apartment will have a face rent of $1,350 per month. This may seem fairly high, but it almost certainly wouldn’t be enough to get a project like this off the ground under normal market conditions. At least, that’s the case here in Toronto with current cost structures.
So what had to happen was a fairly complicated public-private partnership, which you can read all about here. But at a high level, there seems to have been 3 main economic factors that allowed this project to move forward:
1) The developer was able to acquire the land for cents on the dollar. As I said in this post, land is expensive. So this helps a lot.
2) The developer was able to make use of extra parking in an adjacent building. Assuming that underground parking could cost around $50,000 per stall, this is a huge cost savings.
3) Lastly, the project is benefiting from the public invest made in the airport rail link that now quickly connects this site to both Pearson International and downtown Toronto.
The moral of the story is that infeasible sites require some sort of subsidy or top up to make them work. Or, there needs to be an exceptional circumstance. Because if the rents aren’t there, nobody is going to build. It’s as simple as that.
That said, here’s one idea…
This discussion reminds me of a post I wrote a while back called, The hypocrisy of parking minimums. Frankly, I don’t understand why a city like Toronto still has parking minimums. If anything, we should have parking maximums.
Underground parking is a huge cost that has to get carried by purchasers and renters in a new building. For example, let’s assume that 300 apartment suites would require 180 parking stalls (ratio = 0.6). Assuming $50,000 per stall, that’s a $9 million cost.
So the second takeaway is that it’s probably time we took a good hard look at how we think about and plan for parking in our cities. Especially since the entire mobility space is being quickly disrupted.
Image: Rockport
One of the things that’s becoming a lot more common in Toronto is parking stackers. For small infill sites there’s simply no other way to fit in the parking. You can’t lay out a traditional parking garage.
But while it’s still relatively new for Toronto, I think many of you would be surprised by how many projects there are in the pipeline right now that plan to use parking stackers. In the next 5 to 10 years, they are going to be quite common.
Some of you might be wondering how they work. There are a bunch of different solutions, from stackers to elevators and palettes, but here’s an example of a triple car stacker:
In this case, there’s a below grade pit and an open space that goes up into the second floor. This way each car remains accessible without having to move any of the others. If you want the car on the top shelf, just lower the other 2 into the pit. If you want want the car on the bottom shelf, just raise the other 2 into the second floor space (which is what’s shown above).
But here’s what I’m really curious about: How do you feel about parking stackers? Would you live an apartment or condo where that was how you had to park your car? Or would it be a deal breaker? Please let us know in the comment section below.
My friend Evgeny published a great blog post today called, On Car Ownership And The Future Of Transportation.
And in it he made the argument that instead of buying a car and an expensive downtown Toronto parking spot (average price: $40,000 - 60,000), most of us urbanites would be better of just taking a taxi or Uber.
This got me thinking: At what point does it really make sense to completely forgo owning a car? (Full disclosure: I own both a car and a downtown parking spot.) So I decided to dig into the numbers a bit more and compare 4 mobility options:
Owning a car ($25,000 upfront) + downtown parking spot ($40,000 upfront) and driving yourself everywhere
Taking a regular taxi exclusively ($3.25 base + $1.75 per km)
Taking an UberX exclusively ($2.50 base + $1 per km)
Or, taking a futuristic driverless car everywhere (here I assumed $1.50 base + $0.25 per km)
With the above numbers, I then assumed 15,000 km traveled per year and an average trip length of 15 km (so 1,000 trips per year). The trip length and number of trips per year matter because of the “base fare” that is charged when you take a taxi or Uber.
I also assumed that the cost of owning a car is $0.60 per km (estimated from this Globe and Mail article) and that there is an opportunity cost to NOT renting out your downtown parking spot ($200/month). That is, every month that you spend driving yourself around and parking your car, you are forfeiting parking revenue.
Finally, I looked at a 10 year time horizon and then “discounted” all the costs back to today’s dollars so that I could compare each mobility option.
So what did I find?
What this says is that if you’re driving 15,000 km per year (average trip length 15km), then you’re better off taking UberX everywhere, as opposed to going out, buying a car and parking spot, and driving yourself around.
But does this hold true at different travel distances?
Based on my model, once you hit around 18,000 km per year, then you’re better of with option 1 (owning a car). That’s because the per km savings associated with driving yourself around are enough to offset the upfront costs of the car and parking spot.
On the flip side, when you drop below 7,500 km traveled per year, even a regular taxi starts to make sense. That’s because you’re simply not traveling enough to reap the benefits of owning a car/parking spot. Again, high upfront costs; lower per km operating costs.
Of course, there are a number of things I didn’t consider in my model. For one, most people finance their car and parking spot (it is bundled into their home mortgage). So I’m sure there are ways that you could change the above outcomes using leverage.
At the same time, I didn’t account for the fact that when you’re being driven around (as opposed to driving around) you have the flexibility of doing work, responding to emails, and so on. If you want to attach a value to your time, then the scale would tip back in favor of taxis and Uber.
But all of this was really just to make one point: look how cheap it could be to ride around in a driverless car. When that becomes the reality in our cities, which it will, it’s going to completely transform our current beliefs around cars, parking, and many other things.
I guess that’s why General Motors just invested $500 million in the peer-to-peer ridesharing company, Lyft. They know the shit is coming.
One of the questions that came up after my recent post about land pricing was: what is it going to take to develop underutilized land on the outskirts of city centers?
So today I thought I would talk about a new development project that was also discussed at the Land & Development conference I recently attended. I think will begin to answer this question.
The project today is known as the Rockport Weston Community Hub & Rental Building. And it’s going to include a community cultural hub, 26 live/work artist spaces, and 300 rental apartments.
It’s located in the Weston neighborhood of Toronto, which is designated as a “Neighborhood Improvement Area.” These are lower-income areas that the city considers to be “at-risk.”
Given this, rents are naturally lower here than in other parts of the city, which means that it’s basically infeasible to develop here. There has been no large scale development in this community since the 1970s!
To put some numbers to this, the developer said they were projecting rents somewhere around “two and a quarter.” So let’s assume for a second that the average apartment rents will be $2.25 per square foot.
At this rate, it means that a 600 square foot one-bedroom apartment will have a face rent of $1,350 per month. This may seem fairly high, but it almost certainly wouldn’t be enough to get a project like this off the ground under normal market conditions. At least, that’s the case here in Toronto with current cost structures.
So what had to happen was a fairly complicated public-private partnership, which you can read all about here. But at a high level, there seems to have been 3 main economic factors that allowed this project to move forward:
1) The developer was able to acquire the land for cents on the dollar. As I said in this post, land is expensive. So this helps a lot.
2) The developer was able to make use of extra parking in an adjacent building. Assuming that underground parking could cost around $50,000 per stall, this is a huge cost savings.
3) Lastly, the project is benefiting from the public invest made in the airport rail link that now quickly connects this site to both Pearson International and downtown Toronto.
The moral of the story is that infeasible sites require some sort of subsidy or top up to make them work. Or, there needs to be an exceptional circumstance. Because if the rents aren’t there, nobody is going to build. It’s as simple as that.
That said, here’s one idea…
This discussion reminds me of a post I wrote a while back called, The hypocrisy of parking minimums. Frankly, I don’t understand why a city like Toronto still has parking minimums. If anything, we should have parking maximums.
Underground parking is a huge cost that has to get carried by purchasers and renters in a new building. For example, let’s assume that 300 apartment suites would require 180 parking stalls (ratio = 0.6). Assuming $50,000 per stall, that’s a $9 million cost.
So the second takeaway is that it’s probably time we took a good hard look at how we think about and plan for parking in our cities. Especially since the entire mobility space is being quickly disrupted.
Image: Rockport
One of the things that’s becoming a lot more common in Toronto is parking stackers. For small infill sites there’s simply no other way to fit in the parking. You can’t lay out a traditional parking garage.
But while it’s still relatively new for Toronto, I think many of you would be surprised by how many projects there are in the pipeline right now that plan to use parking stackers. In the next 5 to 10 years, they are going to be quite common.
Some of you might be wondering how they work. There are a bunch of different solutions, from stackers to elevators and palettes, but here’s an example of a triple car stacker:
In this case, there’s a below grade pit and an open space that goes up into the second floor. This way each car remains accessible without having to move any of the others. If you want the car on the top shelf, just lower the other 2 into the pit. If you want want the car on the bottom shelf, just raise the other 2 into the second floor space (which is what’s shown above).
But here’s what I’m really curious about: How do you feel about parking stackers? Would you live an apartment or condo where that was how you had to park your car? Or would it be a deal breaker? Please let us know in the comment section below.
My friend Evgeny published a great blog post today called, On Car Ownership And The Future Of Transportation.
And in it he made the argument that instead of buying a car and an expensive downtown Toronto parking spot (average price: $40,000 - 60,000), most of us urbanites would be better of just taking a taxi or Uber.
This got me thinking: At what point does it really make sense to completely forgo owning a car? (Full disclosure: I own both a car and a downtown parking spot.) So I decided to dig into the numbers a bit more and compare 4 mobility options:
Owning a car ($25,000 upfront) + downtown parking spot ($40,000 upfront) and driving yourself everywhere
Taking a regular taxi exclusively ($3.25 base + $1.75 per km)
Taking an UberX exclusively ($2.50 base + $1 per km)
Or, taking a futuristic driverless car everywhere (here I assumed $1.50 base + $0.25 per km)
With the above numbers, I then assumed 15,000 km traveled per year and an average trip length of 15 km (so 1,000 trips per year). The trip length and number of trips per year matter because of the “base fare” that is charged when you take a taxi or Uber.
I also assumed that the cost of owning a car is $0.60 per km (estimated from this Globe and Mail article) and that there is an opportunity cost to NOT renting out your downtown parking spot ($200/month). That is, every month that you spend driving yourself around and parking your car, you are forfeiting parking revenue.
Finally, I looked at a 10 year time horizon and then “discounted” all the costs back to today’s dollars so that I could compare each mobility option.
So what did I find?
What this says is that if you’re driving 15,000 km per year (average trip length 15km), then you’re better off taking UberX everywhere, as opposed to going out, buying a car and parking spot, and driving yourself around.
But does this hold true at different travel distances?
Based on my model, once you hit around 18,000 km per year, then you’re better of with option 1 (owning a car). That’s because the per km savings associated with driving yourself around are enough to offset the upfront costs of the car and parking spot.
On the flip side, when you drop below 7,500 km traveled per year, even a regular taxi starts to make sense. That’s because you’re simply not traveling enough to reap the benefits of owning a car/parking spot. Again, high upfront costs; lower per km operating costs.
Of course, there are a number of things I didn’t consider in my model. For one, most people finance their car and parking spot (it is bundled into their home mortgage). So I’m sure there are ways that you could change the above outcomes using leverage.
At the same time, I didn’t account for the fact that when you’re being driven around (as opposed to driving around) you have the flexibility of doing work, responding to emails, and so on. If you want to attach a value to your time, then the scale would tip back in favor of taxis and Uber.
But all of this was really just to make one point: look how cheap it could be to ride around in a driverless car. When that becomes the reality in our cities, which it will, it’s going to completely transform our current beliefs around cars, parking, and many other things.
I guess that’s why General Motors just invested $500 million in the peer-to-peer ridesharing company, Lyft. They know the shit is coming.
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