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.
The Wall Street Journal reported today that the median home price across the United States rose 8% year-over-year in March to $280,600. One explanation for this is that while, yes, demand did drop off, so too did supply and that has led to a shortage of available housing. The other possible explanation is that these March deals were papered earlier in the year (or late last year) when most of us were blissfully unaware of what was about to happen and so the real impact of this pandemic isn’t yet showing up in these numbers.
Let’s drill down.
The Toronto Regional Real Estate Board also released numbers today, but for the month of April. Not surprisingly, residential resales across the region are down by 67% compared to April 2019. The number of listings is also down by a similar amount (-64.1%). Overall though, pricing remained relatively flat (0.1% increase). And by overall I mean for all housing types and for all areas of the region. There are larger variances within specific areas and for certain types. See below.
Drilling down even further, my friend and agent Christopher Bibby noted in his monthly newsletter over the weekend that transaction volumes in the central (resale) condominium market are down some 85-90%. So the market is effectively at a standstill. Those who do not need to sell or move are justifiably deciding not to right now. But just as Warren Buffet got on stage over the weekend — with some great flowy hair, I might add — and told us in Times New Roman never to bet against America, I am not about to bet against Toronto. This too shall pass.
The below press release went out this morning. It’s a good news story that shows the resiliency of grocery and food logistics.
On a related note, Slate Retail REIT also recently announced that, as of April 14th, it had already collected 80% of April rents and was outperforming the industry. At that time and based on industry feedback, the REIT estimated that a number of retail strip center landlords were seeing April rent collections in the range of 40-50%.
TORONTO and LONDON, April 23, 2020 /CNW/ — Slate Asset Management (“Slate”), a leading alternative asset management platform with a focus on real estate, announced today the final close of its Slate European Real Estate Fund III (“Slate Europe III”). Consistent with its predecessor funds, Slate Europe III will target grocery real estate assets in Europe. The oversubscribed closed-end fund exceeded its target size of €200 million and closed at its hard-cap of €250 million.
“During this unprecedented time of market disruption, we are pleased to close Slate Europe III at its hard-cap and are thankful for the confidence investors from diverse geographies continue to place in us as Slate expands its presence across Europe,” said Brady Welch, Slate’s London-based Founding Partner. “We have been investing in last-mile logistics for some time and are proud to launch our third fund in the European grocery real estate space since 2016, a feat that underscores our commitment to the sector and validates the importance of last-mile solutions in the grocery real estate market.”
Since December 2016, Slate has completed a total of 250 grocery property acquisitions in Europe comprising over 450,000 square meters of gross leasable space. Slate has European offices in London, Frankfurt, Dublin and Luxembourg.
About Slate Asset Management
Slate Asset Management is a leading real estate-focused alternative investment platform with over $6.5 billion in assets under management. Slate is a value-oriented manager and a significant sponsor of all of its private and publicly traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm’s careful and selective investment approach creates long-term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a demonstrated ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more.
For Further Information Investor Relations +1 416 644 4264 ir@slateam.com
LSE Cities has just published a new report called, Living in a denser London: How residents see their homes. The goal of the research project was to better understand how modern housing projects are working (or not working) for Londoners. And so they connected with over 500 residents from 14 completed housing projects and got their feedback on everything from built form to community engagement. Most of the housing projects were completed in the last ten years, but they also surveyed projects from 1980, 1947, and 1902. If you don’t feel like going through the full report, there is also this website and this short film.
In the fall of 2016, Lucas Manuel (Partner at Slate) and I traveled to Chicago in order to meet with Jeanne Gang and the rest of the studio. Our objective was simple: We were looking to find an architecture firm that we could partner with and do something very special with at Yonge + St. Clair. We wanted to start from first principles and rethink what a tall building could be in Toronto.
During our meeting and studio tour, Jeanne and her team asked a number of poignant questions about our vision for the area, our goals for the project, and our commitment to sustainable design. So much so that when Lucas and I left the meeting we both looked at each other and said: “That wasn’t us interviewing them. That was them interviewing us.”
It was obvious that they were committed to high quality architecture, environmental sustainability, and overall community building. And it was equally obvious that if we, Slate, weren’t committed to the same, then we weren’t the client and partner for them.
It has turned out to be a great partnership. Over the last three plus years, the team has remained committed to living up to the promises we made to each other in that first meeting in Chicago. And on many occasions, that has meant taking the more difficult path and fighting for what we believe is great design and great city building.
Since 2016, we have held and/or participated in multiple community visioning sessions with Councillor Josh Matlow and key stakeholders from the community. Two pre-application meetings with City Planning. Two big and public community meetings. A design charrette for the Yonge + St. Clair area. And five meetings with a local “community working group” that was formed following the bigger community meetings. Our application was also before the City of Toronto’s Design Review Panel (DRP) at the end of 2018, where it was unanimously supported (though with some constructive feedback).
It has been a long road working to create Studio Gang’s first project in Canada. One that I like to think started in a jazz bar in downtown Chicago (it actually started much earlier). And so I am thrilled to announce that City Planning, City of Toronto, are now recommending approval of One Delisle! Their report is public and the project will be considered by Toronto and East York Community Council this Thursday, March 12, 2020.
If you would like to speak at or submit a comment to Community Council — ideally in support of the project — please email the City Clerk at teycc@toronto.ca. Myself and the team hope to see many of you at City Hall this Thursday morning at 10:00AM.
For those of you who aren’t familiar with the project, here is a summary from City Planning:
This application proposes to amend the Official Plan and Zoning By-law to permit a 44-storey (143 metres plus a 7-metre mechanical penthouse) mixed use building with 293 dwelling units and 159 parking spaces within a 4-level below ground garage at 1-11 Delisle Avenue and 1496-1510 Yonge Street. A 2,506 square metre public park will be secured off-site on the rear portions of 30 and 40 St. Clair Avenue West. The Official Plan Amendment also redesignates a portion of the subject site from Apartment Neighbourhoods to Mixed Use Areas.
The proposed development is consistent with the Provincial Policy Statement (2014), conforms with the Growth Plan for the Greater Golden Horseshoe (2019), conforms with the applicable policies of the Official Plan and the Yonge-St. Clair Secondary Plan, and is consistent with the Yonge-St. Clair Planning Framework and Tall Building Guidelines. The proposal also meets a number of significant public realm and built form objectives, some of which are outlined in the Yonge-St. Clair Planning Framework, including: securing a 2,506 square metre public park in close proximity to the Yonge-St. Clair intersection; wider sidewalks along both Yonge Street and Delisle Avenue; enhanced street landscaping; restoration and relocation of an existing Art Deco façade; a pedestrian scale base building in keeping with the main street character of Yonge Street; a north/south midblock connection between St. Clair Avenue West and Delisle Avenue; high quality architecture; and consolidated access and servicing for the block.
This report reviews and recommends approval of the application to amend the Official Plan and Zoning By-law.
Images: Design by Studio Gang. Renderings by Norm Li.
I love this article in Designlines Magazine about how Lawrence Blairs (owner of Atomic Design) has setup his 65 square meter one bedroom condo to serve as both a place to live and an art gallery.
The main living area is equipped with white vinyl screens that pull down to conceal the kitchen and other private areas, and make it feel like a white-walled gallery space. There’s naturally also a projector on the ceiling.
Supposedly it takes him about 30 minutes to prepare the space before an event. Here is a photo by Arash Moallemi via Designlines:
You don’t necessarily need a lot of space to do the things that you may want to do. You just need to be creative. Do you think that developers should offer more creative space solutions as part of their standard offering?
Every quarter, Apartment List publishes something that they call their Rental Migration Report. What they do is use search data from their website to determine where their (registered) users are hoping to move to and from. Their first report of 2020 is now out and below is their list of the most attractive US metros. It is based on search data from June to December, 2019.
Now, it’s important to note that this is really only a form of intent — taken from one particular website. This list may not, and probably doesn’t, accurately mirror how and where people are actually migrating within the US. But it is still interesting to see what is top of mind for Apartment List’s users. (If there were multiple search inquiries during a visit to the site, they counted the first metro area.)
Beautiful mountains. Great snowboarding/skiing. And a burgeoning tech ecosystem. I am not at all surprised to see Denver at the top of this list.
Earlier this week I wrote about the age groups that are most likely to live in an urban neighborhood in the United States. It was people in their 20s and, to a lesser extent, baby boomers. The data I was relying on used population density to measure urbanity.
Interestingly enough, the demand for co-living seems to mirror this. (Feel free to disagree.) From what I’ve been told, the fastest growing co-living segments are young people recently out of school and retirees. Intuitively this makes sense to me.
If we think back to teachings of Clayton Christensen (another recent post), we “hire” products and services because we have “jobs” that need to be done. In the case of a McDonald’s milkshake that job might be a breakfast that’s appropriate for a long and boring commute.
In the case of co-living, and in urban neighborhoods in general, one of those jobs has got to be social connections. (Again, feel free to disagree.) We do also know that single person households are increasing in many cities. Are these phenomenons related? How big could co-living get?
Note: This post was written on my phone on a flight, which is why there are no links or images.
Feargus O’Sullivan is doing a series in CityLab right now on the “home designs” that define four European cities: London, Berlin, Amsterdam, and Paris. The first one is on London’s classic “two-up, two-down” design, which refers to a two storey home with a living room and kitchen on the ground floor and two bedrooms on the second. It’s a simple design, but one that has supposedly endured.
O’Sullivan argues that for many, or perhaps most in Britain, this is what a “home” feels like. It’s grade-related and there are two floors. Indeed, only 14% of British people live in an apartment, compared to 57% in Germany (a majority). This percentage is much higher in London, with about 43% of people living in an apartment. But about 25% of the population still lives in some sort of attached house.
Home equals house. And for us North Americans, this is of course relatable. But the Germany example is a reminder that this is not necessarily universal. Attitudes toward housing are cultural. And cultures can and do change. I am seeing that happen right now in Toronto. Some of us are becoming less like the British and more like the Germans.
The Nib’s recent comic about Jane Jacobs vs. The Power Brokers (i.e. Robert Moses) is a good little overview of her lessons and legacy. But I don’t understand the claim that developers co-opted her ideals in order to exploit and gentrify urban neighborhoods. According to the comic, gentrification is always a top-down affair by developers, and never a spontaneous emergence as a result of other humans and/or industry wanting to be in a particular place.
I can think of many neighborhoods that have seen investment from groups other than traditional developers, including from individual homeowners. Take, for example, Cabbagetown in Toronto. There was never a top-down developer moment. It was individuals who saw beauty (and also opportunity) at a time when others were scared of the area. Is that acceptable? Perhaps more importantly, did these people wear black suits?
The other missing piece is the fact that desirable urban neighborhoods are, today, in incredibly short supply. During the reign of Robert Moses, Jane Jacobs had a view of cities that was in opposition to the planning zeitgeist of the time. But over time, she went from controversial to enlightened, and alongside this we saw a return to cities.
Combined with strict land use policies, this rising demand for Jacobian-style neighborhoods has meant that many/most dense urban centers operate with a perpetual housing supply deficit. There’s not enough cool urban housing to go around. Add in the current low interest rate environment, and you then have even more money searching for that perfect home in the West Village. That tends to do things to prices.
Algorithmic home buying companies (or iBuyers) have now started to expand into Los Angeles. If you recall, most of these companies started in smaller markets where the homes are more homogenous, relatively inexpensive, and generally less liquid. Places like Phoenix.
By tackling the second largest housing market in the US (after New York City), the algorithms of Opendoor, Redfin, and Zillow will now need to content with an older housing stock, greater variability, and higher values.
All of these companies have increased their maximum offer price. The sweet spot for algorithmic home buying has typically been in the $150,000 to $300,000 range. Last year, two-thirds of all homes bought by iBuyers were in this range. I can’t imagine that gets you very much in LA.
I keep expecting these companies to scale into something more beyond just iBuying and flipping. Perhaps we will see that happen once they establish themselves in country’s biggest markets.
