We have spoken many times before about the fact that Japan is built around rail-oriented urbanism. But if you have the time right now, I'm going to suggest that you read this longish article by Matthew Bornholt & Benedict Springbett called "Why Japan has such good railways," because nowhere else in the developed world uses rail for passenger kilometres more than Japan, and they explain why.

One common hypothesis, which is mentioned in the article, is that it's largely cultural. The Japanese are rule-abiding collectivists who are more willing to take public transit compared to us selfish and individualistic North Americans. But this doesn't seem right. In fact, one could argue that the Japanese solution is actually more free-market oriented.

The Japanese rail model seems to work so well because (1) most of the network is private, (2) liberal land-use policies have allowed Japan's urban centres to develop enough density to properly support the use of rail, and (3) the rail operators make money in a bunch of other ways beyond rail. They're typically also in the business of real estate.

Here's a quote from the article by the president of the Tokyu Group that I absolutely love:

I think that though we are a railway company, we consider ourselves a city-shaping company. In Europe for instance, railway companies simply connect cities through their terminals. That is a pretty normal way of operating in this industry, whereas what we do is completely different: we create cities and then, as a utility facility, we add the stations and the railways to connect them one with another.

This is a fundamentally different model that allows rail companies to capture some of the value that they inherently create. To use the example of Toronto's Eglinton Crosstown line, it's the difference between saying, "I'm going to build a rail line and then, presumably, other stuff will happen," and, "I'm going to develop this midtown corridor and then I'm going to run rail underneath it to maximize value creation."

If Japan can do it, so can we. Ironically, a big part of it means easing land-use controls and allowing transit-oriented development to simply be what it wants to be — dense and proximate to rail.

Cover photo by Mylène Larnaud on Unsplash

Charts from Work in Progress

One of the fundamental principles that we espouse on this blog is that land use and transportation planning are integral to one another. This matters if you're trying to build a big, bad global city because there are limits to what you can accomplish with car-oriented planning. Eventually traffic congestion becomes unbearable and the model starts to breakdown (consider Toronto and Atlanta right now).

This means that, if you'd like to continue scaling, eventually you'll need to start getting serious about transit-oriented development and other forms of mobility. Japan is one of the best examples of this. But the key prerequisite for this is urban density. This is the unlock that makes transit practical and convenient for people.

That's why this week's planning announcement is a big one for Toronto. On August 15, the Government of Ontario (through the Ministry of Municipal Affairs and Housing) approved, with some modifications, 120 Major Transit Station Areas and Protected Major Transit Station Areas in the City of Toronto. Here's a summary of the MMAH's decision via the City's website, and below is a map of the transit station areas. (Note that some station areas are missing from this map and are still under review.)

At a high level, these are areas that fall within an approximately 500-800 meter radius of transit stations, and would therefore be less than a 10-minute walk for most people. It's land that is best suited to transit-oriented development and that would strengthen any new/existing transit investments. For example, if you have an existing station that is underperforming from a ridership standpoint, the best solution is more density within its immediate catchment area.

Because of this, Ontario's Provincial Planning Statement prescribes the following minimum density targets for MTSAs:

• 200 residents and jobs per hectare for subways

• 160 residents and jobs per hectare for light rail or bus rapid transit

• 150 residents and jobs per hectare for commuter or regional rail

And to satisfy these requirements, cities need to demonstrate how they have planned for these minimum targets.

PMTSAs are a subset of MTSAs and come with some additional features, such as minimum unit counts and/or floor space indexes (floor area ratios). These are also the only transit areas where cities have the option of enabling Inclusionary Zoning, which is something they may do when the market rents in an area are high enough that the subsidies required to build affordable housing can be shifted onto the tenants paying market rents. (My views on inclusionary zoning can be found, here.)

Over the coming weeks, everyone in the industry is going to be analyzing the implications of this new approval. Overland (which is a legal firm that we work with) just posted on their blog that their review is underway and that they'll be posting something shortly. But in the meantime, I'd like to say that this is meaningful progress (and one that has been a longtime coming).

It acknowledges the important link between land use planning and mobility, and it better aligns our policies to support a post-car city. Of course, in many ways, this is an obvious thing to do. I started this post by calling it a fundamental principle of city building. But city planning happens slowly and incrementally. If you're following along, you'll see that Toronto is in fact growing up as a big, bad global city.

Cover photo by Andrii Khrystian on Unsplash

Since 2009, policymakers in Minneapolis having been implementing land use changes to encourage more housing supply. Some of these changes have included eliminating parking minimums, encouraging multi-family buildings up to 6 storeys on commercial corridors, establishing height minimums in high-density zones, and permitting triplexes on all residential lots. It's, from what I can tell, the type of stuff that many cities have now done or are looking to do. But it seems to have worked remarkably well in Minneapolis. According to The Pew, between 2017 and 2022, the city issued permits for nearly 21,000 new homes and nearly 87% of them were for homes in buildings with 20 or more suites.

This is interesting. It tells us that the triplex policies don't seem to be doing all that much, but that the market has certainly taken to larger multi-family projects. This is an accomplishment. Even more importantly, though, is that it seems to be having a measurable impact on average rents. During the same time period as above, Minneapolis increased its housing stock by 12% and average rents increased by only 1%. Whereas the rest of Minnesota only increased its housing stock by 4% and, maybe as a result, average rents went up by 14%. Changes in homelessness also look dramatically different.

It looks to be a similar story to what's playing out in Austin: increased housing supply is tempering rent growth. (Okay, in the case of Austin it seems to be causing rents to fall.) What I would be interested in seeing now is a further breakdown of this 87% share. Because 20 suites is a different kind of build than 300 suites. It's different for developers and it's different for cities. And I'd like to know if the market is favoring one over the other, or if it's building apartments at all scales. If the city is in fact building lots of new apartments at multiple scales, then this is even more of an accomplishment. It means there might be no "missing middle."

Cover photo by Eastman Childs on Unsplash