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.
A few days ago I tweeted this chart out (from Statistics Canada):
It is a list of the densest downtowns in Canada (people per square kilometer). But to be more precise, it is a list of the densest primary downtowns for each census metropolitan area.
In the case of Toronto, for instance, it considers downtown Toronto, but it does not consider downtown Mississauga, downtown Brampton, or any other “downtowns” across the CMA. And in the case of Vancouver, it ignores important centers such as Burnaby.
Many were quick to point this out on Twitter and it is a fair comment. Our cities are often more polycentric than a chart like this might make it seem.
The other thing to consider is that these density numbers are dependent on what you assume as the boundary for each downtown. For downtown Vancouver it’s a fair bit easier because it is a peninsula surrounded by water.
But for downtown Toronto, it’s more nebulous. Where do you draw the line? In this case, Statistics Canada is using the same downtown boundary as what’s in our Official Plan, but that happens to include the lower-density University of Toronto lands. So are we comparing apples to apples?
Between 2016 and 2021, and according to this recent report from Statistics Canada, the population of the Toronto CMA (Census Metropolitan Area) grew by over 274k people:
The population of the Montréal CMA grew by nearly 188k people:
And the population of the Vancouver CMA grew by over 179k people:
These are the three largest CMAs in the country and they, not surprisingly, also have the three largest “downtowns.” As of the spring of 2021, the most populated downtowns were as follows: Toronto (275,931 people), Vancouver (121,932 people), Montréal (109,509), Ottawa (67,169 people), and Edmonton (55,387).
In this exercise, Statistics Canada breaks down each CMA into 5 categories, which are generally based on two things: (1) your typical monocentric city model (downtown in the middle with a declining gradient of surrounding sprawl) and (2) how long it takes to commute — by car during non-rush hours — from downtown to the surrounding areas.
The good news in all of this is that Canada’s downtowns seem to be doing just fine. Broadly speaking, they are growing at a faster rate than their respective CMAs and growing at 2x the rate of the previous census cycle. Halifax’s downtown grew at 26.1% from 2016 to 2021 and Calgary grew at 21%, to give two more examples. So I think you can safely ignore what you may have heard about a pandemic exodus. Those people are now returning from the country after realizing that there aren’t any pretentious coffee shops and expensive butcher shops.
But something else is also going on in Canada’s largest urban centers. The concurrent trend is continued urban sprawl. The biggest downtowns are growing quickly, but so are the distant suburbs (30 minutes or more from downtown). And they are growing at a faster rate than everything in between. This is not entirely surprising, but it is obviously concerning from a climate change perspective and because it suggests that people are being forced to do the old “drive until you qualify” thing.
These two phenomena are the most pronounced in the Toronto CMA. If you scroll back up to the top of this post, you’ll see that downtown absorbed a decent chunk of the population growth (about 14%), particularly considering its small footprint. But then if you look at the distant suburbs (the mustard color), you’ll see that it’s where 72% of new entrants went!
The question I like to ask with all of this is, “are people choosing to move to the distant suburbs because that’s the housing and location that they truly want, or are people choosing it because it’s all they can afford?” There is an argument out there that sprawl is a natural market outcome and that we shouldn’t be forcing people to live in higher-density housing. And I am certainly sympathetic to giving people as much choice as possible.
But how much choice are we really giving people in our biggest cities? We have figured out how to intensify our downtowns through mid- and high-rise development. And evidenced by the growth rates, many people are enjoying this form of housing and the kind of urban lifestyle that comes along with it. But if it happens to not work for you, our current solution is, “either be rich so you can remain close to downtown or go for a drive.”
What is clear from this latest census data is that we haven’t yet figured out the in-between. The missing middle is still missing. And that’s because we have clear mechanisms in place to more or less ensure this is the case: (1) We restrict meaningful growth from taking place in our single-family neighbourhoods and (2) we have made a habit out of shifting some of the incumbent tax burden to new entrants through things like development charges.
Overall, it’s a devilishly clever system where two things happen: “Sorry, you can’t build that kind of housing here. Build it somewhere else. By the way, I’d like to keep my property taxes as low as possible, so not only do I not what you close to me, but I’d also like you to help pay for some things. Cool?” This is the arrangement that we are seeing playing out in these charts. It can be easy to ignore, but it’s there.
Of all the world’s housing crises, Hong Kong’s may be the most formidable. The city of 7.3 million leads the world in housing prices and inequality, with 125,100 millionaires and 1.6 million people living in poverty. Home prices have rocketed by 187% over the last decade. In May, the number of public housing applicants hit 245,000, with an average wait time of 6.1 years — the highest in over two decades. According to lawmaker Scott Leung, a shortage of 30,000 units in the next five years means that the public housing queue will soon stretch to 6.5 years.
So let’s take a look at overall housing supply (source):
What this chart tells us is the following:
For the five-year period from 2017 to 2021, Hong Kong built about 173,900 housing units. That’s somewhere around 34,780 per year.
Of these units, 60,700 were subsidized public rental housing units (~35%) and 25,500 were subsidized sale units (~15%). So overall, about half of Hong Kong’s housing supply over the last five years was some form of subsidized housing. That said, the number of public rental housing units has been declining. It was about 70,800 units between 2007 and 2011.
Looking at private residential units during this same five-year period, about 35,200 of them (20% of total supply) can be classified as “small units.” These are units with an area less than 40 square meters and, based on the above chart, they obviously represent a rapidly growing market segment.
Adding all of this up, we get to 70% of Hong Kong’s housing supply being either (1) a subsidized unit or (2) a small unit under 40 square meters.
This is how Hong Kong builds, and it clearly isn’t enough to meet demand.
Following my recent post about cycling to the office, Richard Witt of BDP Quadrangle suggested that I do a post on the West Toronto Railpath and use the little influence that I have to try and encourage further expansion. I thought this was a reasonable idea and so here I am writing about it today.
For those of you who may not be familiar, the WTR is a multi-use trail that can be used for “human-powered activities” such as biking, running, or unicycling. And as the name suggests, the path runs on an old rail line on the west side of Toronto. Here is the current route map (we’re talking about the dark orange line):
And here’s what it looks like today:
It’s an incredible amenity and piece of infrastructure on the west side of Toronto, but it’s probably also a little underrated. I think of part of this has to do with it being somewhat hidden. And I think another part of this has to do with it being too short.
Right now the WTR runs from Cariboo Ave in the north — which is around the corner from Junction House — down to Dundas Street West & Sterling Road in the south. But according to the City of Toronto, an expansion phase has already been funded and construction will start next year. This will take its southern terminus down to Queen Street & Sudbury Street:
All of this is, of course, excellent news. But you and I both know that the WTR needs to be further extended to Union Station, then up north, and probably elsewhere too. So I am here today to advocate for that to happen. If we can find a few billion hanging around to rebuild the Gardiner East (ugh), then surely we can scrape together a few more million for this.
There is a growing trend in Toronto right now where people want to build on top of existing buildings. We are proposing to do this in midtown at 1 St. Clair Avenue West and, this week, this proposal was announced for the Cambridge Suites Hotel in the Financial District (shout out to Len Abelman).
Generally speaking, this is something that an owner and/or developer might want to do when you have an older building and there is now “unused” density on the site. By “unused” I mean that if you were developing the land for the first time today, the resulting density would be higher than what is currently on the site.
Alongside this, it can also be a way to reposition the existing asset. In the case of the Cambridge Suites site, it sounds like the existing 231 hotel keys will be converted to residential.
At some point in the process you will probably also look at whether it is “better” to tear down the existing building and build new, or whether you should try and build on top. The former is obviously very bad from an embodied carbon perspective but, for whatever reason, this may be the preferred option.
If you decide to build on top, your structural engineer will love you because the result — for them — will be a far more interesting project compared to a typical high-rise. But interesting comes with its challenges. Here’s how your structural solution might work:
It’s a complicated project that will require a 10-metre-high bridge structure to be built atop the existing hotel where the roof is removed. The bridge will help bear the weight of the new tower, explains Len Abelman, principal at Toronto’s WZMH Architects, the firm designing the redevelopment for the property’s owner, Centennial Hotels Ltd.
“It’s not a common technique, it’s challenging. We worked with a firm called RJC Engineers to do simulations of the massing and loading of weight and the lateral forces the building will face, to make sure it will work,” Mr. Abelman says.
“Other projects in Toronto have added floors before, but it’s usually done with a big exoskeleton that goes over the entire building. This one uses technology that transfers some of the weight to the columns and the floors of the existing structure below,” he says.
This is similar to what we are doing in midtown, except that we are proposing to retain all of the the existing facades along with the building. It is certainly not the easiest way to build. But we are likely to see more, not less, of it in the city.
It is evidence of the immense development pressures that certain areas of our region are facing. When you restrict new supply, the market will find somewhere to build, even if it involves a lot of structural gymnastics.
In 2021, San Jose had the least affordable housing among the 92 major US housing markets, with a median multiple of 12.6. San Francisco had a median multiple of 11.8, Los Angeles was at 10.7, followed by San Diego, at 10.1).7 Housing was severely unaffordable even in the interior markets, with Riverside-San Bernardino at 7.4 and Sacramento at 6.7.
And there are some explanations for why that is the case:
Dartmouth economist William Fischel published an early seminal review 9 of housing affordability in California (1970 to the 1990s). Fischel suggested that regulatory research should look for major changes that “are adopted in some places but not in others.”
Fischel examined the higher house price increases that occurred in California compared to the rest of the nation between the late 1960s and late 1980s. Fischel cites various possible causal factors. He found that the higher prices could not be explained by higher construction cost increases, demand, higher personal income growth, the quality of life, amenities, Proposition 13, land supply or water issues.
Instead Fischel cites stronger land use restrictions — There were two principal issues, the California Environmental Quality Act (CEQA) and local growth management restrictions.10
We have discussed this issue many times before on the blog, but Wendell Cox’s article is helpful in pointing out that zoning in and of itself wasn’t the problem. The problem arose, at least according to Fischel’s research, when these policies went from “ordinary zoning” to something that became a tool to restrict growth.
The illustrate what “ordinary zoning” means, Cox uses the idiom, “a place for everything, but everything in its place.” And I think this is an interesting way of putting it. Part of the reason why we have zoning is that it is a way to organize uses. It is a way of saying that sex shops and cannabis shops can’t go here, but they can go over there.
But the key part of this idiom is its first part: a place for everything. What this implies is that the answer should never just be, “no, sorry, you can’t build this.” At most, it should be, “no, sorry, you can’t build this here, but you can over there.” There is a place for everything.
Of course, this is much harder to do when you flip from sprawl development to infill development. Because now there are fewer places “over there.” You really have to figure out “here.”
So, I of course think this is silly. But here’s a claim that living in high-rises — that is, buildings with elevators — is bad for people’s physical and mental health:
In the midst of a Vancouver civic election where housing is a hot issue, Vancouver councillor and mayoral candidate Colleen Hardwick stated that “highrises are not good for people’s physical and mental health.”
Last week we asked Hardwick to expand further on her views about health and building types. She told The Tyee she believes highrises radically reduce chance encounters between people because they separate people from the street and from each other.
“Ground-oriented housing typologies are ideal,” she said, referring to housing that allows a resident to reach their place of residence using stairs, perhaps, but not an elevator.
Apparently what happens when you get into an elevator is that you immediately lose your ability to interact meaningfully with other humans. Yeah, I’m not the only one who disagrees:
“Coun. Hardwick is cherry-picking her data” about highrise living and the isolating effects of structures with elevators, accused urbanist and author Charles Montgomery. A six-storey building with an elevator, he told The Tyee, is “the most social place I’ve ever lived.”
Cities, it turns out, are complicated. And there are always trade-offs to be made. During the pandemic, some people thought it would be nice to live in a ground-oriented home in the country and now they are realizing that the country lacks things like amenities and, you know, other people.
Personally, I will happily take an elevator over a soul-crushing commute to a home without one. I also agree with Charles that multi-family buildings can be very social.
Neon signs exploded in popularity in Hong Kong after World War II, when the city’s economy started to take off led by its manufacturing industry. As consumerism grew, neon signboards became the go-to format of advertising for all kinds of businesses ranging from restaurants to mahjong parlors to pawn shops. In an era where shopping mostly took place on the street level, the biggest and brightest signs got the most attention.
But this component of Hong Kong’s aesthetic is rapidly fading. As recent as 2016, it was estimated that there were some 120,000 outdoor signboards, including neon signs, in the city. Today, thousands of neon signs are being removed each year in an effort to “clean up” the city. The result is that about 90% of the city’s neon has now been removed. (Here is an interesting visual essay from Google showing how the city has changed over the years.)
However, it is also partially a case obsolescence. Neon is a dying craft now that we have technologies like LED. And so as sad as it may be, it’s hard to imagine a world where Hong Kong ever returns to its former glory as a capital of neon.
Neon signs exploded in the post-war years, but most of them were illegal and I guess some were dangerous by virtue of there being no real enforced standards. But the British clearly didn’t care. Signs were good for business and good for capitalism. And so they let them proliferate. But then the handover to China happened, and it would seem that the Chinese care a little more about neon signs.
But I think my favorite part of this story is that the origin of these signs is, of course, informal and utilitarian in nature. It was a case of one person erecting a sign and then a neighbor saying, “hey, your big neon sign is blocking my big neon sign, so I’m now going to make an even bigger and bolder neon sign. Maybe I’ll even hang it in the middle of the street.” The result was a self-organizing system that ended up creating, through no overarching plan whatsoever, a unique visual language for Hong Kong.
That system is now being systematically erased. But lots of people are working to preserve its various artifacts and to celebrate its cultural legacy. These are all good things. But of course, there are other options. At the end of the day, Hong Kong’s visual language is not disappearing because neon is disappearing. It’s disappearing because we’ve decided that is what should happen.
Last week, Axios revealed that TikTok is looking to hire a bunch of people that can help the company build out fulfillment warehouses and an entire e-commerce supply chain system for its users. All of this was discovered through various job listings that the company has posted to LinkedIn.
Broadly speaking, this is I think interesting for two reasons. Firstly, it is an atypical approach compared to other social networks. Instagram allows people to sell stuff via its platform, but it’s done through an asset-light approach. What TikTok is doing is more Amazon meets social. (Though this is not my area of expertise and I’m going to need someone like Ben Thompson to do a deep dive into TikTok’s business model.)
Secondly, I like to think about the physical spaces that service our online activities and what any changes might mean for our cities. Today if you order something from UberEats, it may come to you from a ghost kitchen that is servicing multiple restaurant brands and various food apps, and has no front-of-house operations. Tomorrow if you order something you see on TikTok, it may come to you from one of their warehouses.
This is not any different than how Amazon works today, except for the fact that TikTok has this incredibly powerful and sticky social layer. If you take this to an extreme, it’s almost as if our physical spaces are slowly becoming back-of-house providers to front-of-house spaces that only exist somewhere online. Who needs Zuck’s metaverse, we may already be living in one.
This Twitter thread by Richard Wittstock of Domus Homes (developer out in Vancouver) is a timely follow-on to yesterday’s post about housing supply, land-use regulations, and specific policies such as inclusionary zoning. What Richard clearly describes in his thread is the economic impact of a Community Amenity Contribution (CAC) that requires developers to provide 20% social housing.
Quick dev't economics thread: Just looked at a beautiful Broadway Plan site. It's a strata wind-up in Mount Pleasant. For owners to vote in favour of wind-up, they'd need to receive a premium over their individual suite values. Otherwise it won't get redeveloped.
The thread will walk you through all of the specific numbers, but I think there are three important takeaways:
Everything has a cost. It is entirely disingenuous for anyone to refer to inclusionary zoning or other similar policies as a mechanism for “no-cost” affordable housing. Even if you believe it is the right public policy approach, there is still a cost. Social housing doesn’t just appear out of thin air.
In Richard’s thread, the remaining market rate condominiums end up needing to be sold for $1,750 psf in order for the entire project to pencil. This is a significant number. But in this case, it is a result of these homes needing to shoulder the cost of the social housing. It is basically saying “housing is too expensive, so let’s make it more expensive so that we can use some of the incremental proceeds to finance less expensive housing.”
If the math doesn’t work, developers will not build new housing.
P.S. Thank you Volodya Gusak for pointing out Richard’s thread to me.
