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: Paris

  • Call with a Paris developer

    I had a call with a developer in Paris earlier this week and it was interesting to hear him talk about the new home market over there. It sounded a lot like Toronto. Higher interest rates cooled demand. Individual investors largely disappeared. And now developers are having to rethink their strategies and floor plans (including suite sizes).

    But in his view, this isn’t necessarily a bad thing. It now means that you actually have to be a reasonably good developer in order to have a chance at succeeding. You have to design thoughtful floor plans and build great housing. It’s a return to fundamentals, and I would argue that the same thing is happening here in Toronto.

    My other noteworthy takeaway was around social housing. All new developments in the Île-de-France region are subject to inclusionary zoning. I believe the requirement is 30% of the suites. These suites are then purchased by social housing operators, and it is one of the ways that new supply is created in the market.

    We talk a lot about IZ on this blog, but what’s interesting about this approach is that it becomes a forward sale for the developer. Meaning, it helps to de-risk projects. Before doing anything, you know you’ve sold 30% of your inventory, and somehow the numbers all work. European social housing math is baffling to me.

    I am now wondering if this creates some kind of incentive to keep development costs in check. Because if social housing operators are expected to buy 30% of all new homes, then they too are going to want them to be as cost effective as possible. I’m speculating though; I don’t know that this is the case.

    If you’re a developer or real estate person in Paris, please get in touch. I’d love to learn more about your market and trade notes.

  • Paris introduces new limited traffic zone

    As counterintuitive as it may sound, one way you could try and improve traffic congestion is to discourage people from riding their bikes and instead encourage them to drive more. That’s what’s happening in Toronto right now. Another way is to dramatically restrict car usage. And starting this Monday, that’s what Paris will be doing with its new limited traffic zone (zone à trafic limité) in the center of the city:

    This new ZTL is approximately 5 square kilometers. About 100,000 people live within its boundaries, and it is estimated that somewhere between 350,000 to 500,000 vehicles enter it each day. But according to the city, it is estimated that only around 30% of these trips are absolutely necessary (because of a lack of alternatives, for example). The purpose of the ZTL is to reduce the unnecessary ones.

    The way it will work is that drivers will no longer be allowed to drive through this zone. You’ll only be able to enter if you plan on stopping for a legitimate reason. It’s not yet clear what this exact list of approved reasons will be, but the general idea is that if you want to drive in for dinner or to attend a meeting, that’s fine. What you can’t do, though, is just drive around in a souped-up Honda Civic blasting Taylor Swift.

    The next 6 months are planned to be a period of education. Drivers exiting the zone are just going to be told that there’s this new ZTL and that they better have stopped somewhere. But eventually there will be a 135 euro fine and eventually drivers will be expected to furnish some sort of supporting evidence for their stop, such as a restaurant receipt. There’s also talk of adding automatic cameras.

    Of course, this creates a lot of gray areas. What about if you’re just going over to a friend’s place for dinner? Will they then need to write you a note saying that you went over for some homemade bouillabaisse? Yeah, I don’t know the answer to this. But you have to admit that this is a bold city-building move, and a far more effective way of improving traffic flows.

    Unlike removing bike lanes, this plan will actually work.

  • Map of every development project in Paris

    It is surprisingly difficult to find good real estate and development information about a market that you’re not familiar with. So I was pretty excited when I came across this map of every development project in Grand Paris (Greater Paris) created by Arthur Weidmann.

    It’s in Google My Maps and what he has done is pin every project according to status: under construction, under renovation, approved, proposed, and recently delivered. For each pin, you’ll also find information like the expected completion date, the use(s), the area, the architect(s), and photos. It is unbelievably detailed and, according to Google, it was last updated 8 hours ago.

    Here’s the full map with all statuses shown:

    And here’s what it looks like if you filter by only projects under construction:

    It’s interesting, but not surprising, to note that the majority of construction projects seem to be taking place outside the boundaries of Paris proper. However, if you alternate to projects under renovation, it more or less flips, with most of the projects being within Paris:

    This tells you something about the city.

    Sometimes when I’m looking at or for information like this, I think to myself that I must be in the minority of people who are interested in tracking development projects with this level of detail. So I find it interesting that this map has been viewed nearly 300,000 times. Clearly, I’m not actually alone.

  • European office vacancy rates: La Défense vs. the Paris-CBD

    The first thing that stands out to me in this European office vacancy rate chart from Savills is the difference between Paris-La Défense (~15%) and Paris-CBD (2%).

    For those of you who maybe aren’t familiar, La Défense is the largest purpose-built business district in Europe. It houses upwards of 40 million square feet of office space and covers about 1,400 acres. It’s also more or less where Paris decided to allow and put tall buildings. Though, it is about 3 km west of the city limits.

    The Paris-CBD, on the other hand, is within the city limits and I’m assuming it refers to the quartier central des affaires (QCA). But regardless of the exact boundary definitions, what we are comparing here is a purpose-built business district to an older supply-constrained central one. And clearly there are, right now, meaningful differences in demand for the offices in these two areas.

    What’s also interesting is that there’s a meaningful difference in the rents. According to Reuters, office space in La Défense is on average about 50% cheaper than the QCA. This, to me, is a reminder that monofunctional urban areas tend to be less resilient over time. And that’s why La Défense is actively working to add additional uses, such as more residential.

    But it’s not just about uses. The area will also need to contend with the fact that it has a vastly different kind of built form; one that isn’t fine-grained and walkable like the QCA. This matters.

  • 10 years of radical change in Paris

    I know that many of you already know this, but it’s pretty remarkable what Paris has been able to achieve over the last 10 years:

    Paris has closed more than 100 streets to motor vehicles, tripled parking fees for SUVs, removed roughly 50,000 parking spots, and constructed more than 1,300 kilometers (800 miles) of bike lanes since Mayor Anne Hidalgo took office in 2014.

    The result is that, according to city officials, air pollution in the capital has declined by about 40% since 2011. And bicycle usage has increased by some 70% — this is since 2019.

    Now, Paris does happen to be blessed with a dense urban fabric. But that doesn’t necessarily mean that this transformation was simple or easy. The difference is will. Most Parisians seem to support these actions.

    So the next time you’re stuck in traffic and cursing some scapegoat, maybe consider what you would be willing to do to dramatically reduce traffic congestion. Would you be open to radical change in your city?

  • France’s rental ban on energy-inefficient homes

    One of the things that you’ll notice on real estate listings in France is an Energy Performance Diagnostics (EPD) rating. In French, it gets reversed, and so it’s a DPE (diagnostic de performance énergétique). What it tells you is how much energy the dwelling (or building) consumes and how much greenhouse gas it emits. And it is a requirement on all real estate listings and for all dwellings, except those that are occupied for less than 4 months per year. The output of this diagnostic is a rating from A (best) to G (worst).

    According to FT, this is how primary residences in France rank today:

    Less than 5% of homes are rated A and B (the most energy efficient). And many more are rated G and F. Beyond just being energy inefficient, this is potentially a problem because there are penalties and restrictions for the lowest rated homes, one of which is that you are not allowed to rent out the property. Right now and as of January 1 of this year, the upper consumption limit is 450 kWh per square meter per year. Go above this and the home becomes ineligible.

    This number is also planned to reduce over time:

    • January 1, 2023: Rental ban on properties with G+ energy label
    • January 1, 2025: Rental ban on all properties with G energy label
    • January 1, 2028: Rental ban on all properties with F energy label
    • January 1, 2034: Rental ban on all properties with E energy label

    Now here’s what this is thought to mean for overall rental supply:

    By 2028, 5.2mn homes rated F and G, or 17 per cent of total housing stock, will become ineligible for rental. By 2034, all E properties will also be excluded, amounting to about 40 per cent of homes.

    This raises an interesting question: Is it more important to have energy-efficient homes or to have greater overall supply? Now obviously the goal and ideal scenario is both; lots of affordable homes that are also energy efficient. And presumably, one of the objectives of this rental ban is to stick/carrot owners into investing in energy measures. But it’s not exactly obvious as to how many owners will be able to renovate their homes in time, and how many homes will become ineligible for rent. This will be an interesting policy to watch as it plays out.

  • CryptoParisian #112

    I have written about Bright Moments before. They are a digital art company exploring the intersection of NFTs and real-world experiences. It started as a popup gallery in Venice Beach California, where artists could show new work and where collectors could buy IRL. They then created their own pixel art collection called CryptoVenetians. It included 1,000 different people-centered NFTs by artist QianQian. Since then, they have gone on to host events and create new CryptoCitizen collections in New York, Berlin, London, Mexico City, Tokyo, and Buenos Aires. And this week they were in Paris.

    (I don’t know why they skipped over Toronto!)

    Their end goal is to create a complete collection of 10,000 NFTs, most of which are tied to a specific city. (The only one that isn’t is their CryptoGalacticans collection.) What’s obviously great about this approach is that it’s a way to promote digital art and onboard new users into the crypto space. They are literally going around the world, throwing parties, and saying “look how cool and fun this whole crypto thing is.” At the same time, it also links the digital and the physical, which I believe is fundamental. We’re social beings and web3 will never change that.

    The other interesting thing about Bright Moments is that they are structured as a decentralized autonomous organization (or DOA). That’s like a company, except that governance is distributed to its tokenholders and it’s all managed on a blockchain. But it still operates as a company and it can raise money like one too. In 2021, Union Square Ventures invested 500 ETH into the DOA through a blockchain transaction that would naturally be public if you cared to look it up. Based on today’s spot price of about CA$4k per ETH, that was a CA$2 million investment.

    In the case of Bright Moments, its tokenholders are the people who own a CryptoCitizen. These are the people who get to vote on how the organization is run. They can also earn money if they do things like host a community dinner or organize a local meetup, with the idea being that, as an organization, you want to encourage this sort of bottom-up participation and innovation. I find it fascinating to watch this new governance and entity structure emerge, and it will only continue to evolve.

    I’ve been following Bright Moments more or less since they dropped the CryptoVenetians. I thought about jumping in then, but I figured I would wait to see if there would be a CryptoTorontonian. That would obviously be my number one choice. But once they announced their final list of cities, and Toronto wasn’t on it, I grumpily decided I would instead wait for a CryptoParisian. And since this week was Paris, it was time.

    I now hold CryptoParisian #112:

    I like that it has the Pont Neuf and that the human is wearing sunglasses.

    This means that I now have a small ownership stake in the Bright Moments DOA. So presumably I’ll soon have a say in important and serious matters! It also means that when they launch their final CryptoCitizen collection in Venice, Italy this spring (nice work going full circle here), there is a chance I might get airdropped a CryptoVenetian. It’s a random process, so whatever. I also know that it’s easy to look at this pixelated Parisian and think, “WTF, Brandon.” But something new is building here. And I’m sure that all of the folks who were in Paris this week can testify to that.

  • An overview of rental housing in France

    Rental housing in France is both heavily regulated and supported through dedicated public funds. Here’s a high-level overview of what that means (via this 2021 Brookings case study by Arthur Acolin):

    • Homeownership rates in France went from 35% in 1954 to 56% in 2001
    • As of 2018, 58% of French households own, 40% rent, and the remaining 2% supposedly get free housing from either their employer or a family member
    • Not surprisingly, younger households are most likely to rent (the figure is > 60% for people aged 18-29)
    • Household size seems to play a major factor in how likely people are to live in public housing
    • France has some 4.5 million public housing units and 17% of all households live in them (which represents about 43% of all renter households)
    • Within the unsubsidized rental market, 93.5% of households live in homes owned by individual investors (this is as of 2013) and only about 3.5% live in homes owned by institutional investors
    • This is pretty typical of Europe, where multi-family isn’t an established real estate asset class like it is in North America; so for those of you who like to hate on individual condo investors, check out France
    • In the decade between 2010 and 2020, 28 metro regions in France adopted some form of rent control and, in a few markets, like Paris and Lille, there are also maximum rents that can be charged for specific housing types

    If you’re interested in rental housing, Brookings also has articles covering the US, Germany, Spain, Japan, and the UK. They can be found here.

  • Paris on top of Toronto

    There are about 2.1 million people who live in Paris (2023 figure).

    The metro area is, of course, much larger with over 13 million people. But if you look at Paris proper — that being the 20 arrondissements within the Boulevard Périphérique — it’s the 2.1 million number.

    The footprint of this area is 105 km2, and so that means that Paris has an average population density within its administrative boundaries of just over 20,000 people per km2.

    This is about 4.5x more dense than the City of Toronto as a whole. Which is why if you overlay the outline of Paris on top of Toronto, as Gil Meslin has done over here, you get this:

    To be fair, there are pockets of Toronto that are very dense, even by Paris standards. North St. James Town, for example, was estimated at over 44,000 people per km2 back in 2016. But generally speaking, Toronto is not that.

    And Gil’s maps do an excellent job of demonstrating it.

  • Paris in August 🇫🇷

    We’re no longer in Paris. We’ve been back in Toronto for about 3 weeks now. But the pictures live on and I finally got around to processing all of the ones that I took on my Fujifilm X-T3 (23mm f/2).