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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  • Massive transfer slabs

    Sometime next month we’re going to be pouring a large concrete transfer slab at the second floor of One Delisle. Its function is to take the loads coming down from the entire tower above it and “transfer” them onto new structural elements, before being brought down to our mat foundation at the bottom of the parking garage.

    Put differently — and, as always, I should warn you that I’m not a structural engineer — a transfer is used whenever you have a change in your structural grid and the loads don’t have a straight path down to your foundations. Because whenever this happens, you’re now introducing moment forces and those need to be dealt with structurally.

    Transfer slabs are relatively common here in Toronto (which isn’t the case in every market), but they are expensive and they consume a lot of depth. In the case of One Delisle, our level two transfer slab is 1.8 meters deep and it’s going to contain about 1,200 m3 of concrete. (Some of you might also recall that One Delisle’s mat foundation is over 4m deep.)

    We were reviewing this with the team today and we think that we’ll be able to pour about 100 m3 of concrete per hour. That means that this slab will take about 12 hours to pour! This requires a lot of coordination. Neighbors need to be notified, pumps need to be on standby in case of a breakdown, and so on.

    Another major consideration is heat. When concrete cures it generates a lot of it. And with a thick slab like this one, I am told that we run the risk of the middle starting to overheat (especially with the hot weather that we’ve been having lately). The guideline limit is 60 degrees Celsius, so we’ll be monitoring it for probably about 1-2 weeks following the pour.

    I find these details fascinating. Maybe some of you do too. So once it’s poured, I’ll share a few photos.

  • Writing business memos

    One of the important things that I remember them drilling into our heads in business school was about how to write a business memo. This might not seem like a big deal, but it is. Emails, decks, and recommendations are ubiquitous in business.

    I remember three main points.

    One, use clear and concise writing. If you can use fewer words, do that. Two, be decisive. In fact, they used to tell us that being decisively wrong was always better than being vaguely correct. And three, be as quantitative as possible.

    If you can replace words with numbers, you should do that. For example, instead of saying that something recently increased significantly, it is far more effective to say that something increased by 27% over the last 18 days.

    I was reminded of this earlier today when I came across this:

    Supposedly, it is what Amazon used to tell its employees back in 2018. I don’t know the source, but the tips sound right and make sense. Be concise. Use data. Eliminate weasel words. And make sure you’re communicating a “what”. In other words, be decisive.

  • Happy May long weekend

    This morning, I went cycling with my good friend Austin Kjorven up in Milton. And it was a stark reminder that he is an athlete and holds a Guinness World Record, and that I spend the vast majority of my days sitting at a desk.

    I’m excited for more riding this summer. Happy May long weekend, everyone.

  • More people are cycling in Chicago

    One of the common criticisms of bike lanes is that most people don’t want to cycle in the winter. I mean, just look at Montreal’s winter cycling retention ratio.

    But that doesn’t mean that you shouldn’t invest in cycling infrastructure. Chicago, for instance, has been building out cycling infrastructure over the last few years (2020-2023) at an average rate of approximately 30 miles per year. This is double its rate from 2011-2019. And the results show.

    According to recent data from Replica and the Chicago Department of Transportation (CDOT), Chicago saw the highest growth in cycling among the 10 largest cities in the US between fall 2019 and spring 2023.

    Biking overall was up 119%. Crosstown trips were up 180% (bike trips that spanned across four or more neighborhoods). Trips related to shopping were up 117%. And notably, zero-car households were up 207%.

    Remember, this is a city that basically has the same weather as Toronto. It gets cold in the winter. And sometimes it snows. But clearly if you build good cycling infrastructure, people will use it.

  • Visual architecture guides by ÅVONTUURA

    “If I’m an advocate for anything, it’s to move. As far as you can, as much as you can. Across the ocean, or simply across the river. The extent to which you can walk in someone else’s shoes or at least eat their food, it’s a plus for everybody. Open your mind, get up off the couch, move.”

    –Anthony Bourdain

    My general recipe for travel is as follows: I want to see cool architecture, I want to eat good food, and I want to get a local sense for the place. Meaning, I’d ideally like to hang out with locals and learn from them. What’s it really like, here?

    Because of this, I’ve never been one to over schedule on trips. There will be things I absolutely want to see and do, but I always want to make sure that there’s time for the unknown.

    I think you want to walk into places that you don’t have on your list, sit at the bar, and have a conversation with the person behind it. You will learn things, and maybe it’ll set you on a travel journey that you couldn’t have possibly planned back home.

    That said, guides are still helpful for things like architecture and food. But I have never found general purpose guides — like the ones from Frommer’s — to be of any use. They have too much information that isn’t curated.

    When I was in my early 20s, I used to use the Wallpaper* City Guides. They were small. I would mark them up as I went. And they gave me the list of must-see architecture. More recently, I’ve been relying on Monocle’s Travel Guides. They’re great too.

    But I am now also a fan of Toronto-based ÅVONTUURA and the architecture guides that they produce. They are simple and beautiful pamphlets that give you a map of each city; a breakdown of contemporary, modern, and historic architecture; a recommended route through the city; and a full list of the important buildings, including their architects.

    The founder of Avontuura, Karl van Es, was kind enough to send me their entire set, which as of this month includes new guides for Amsterdam, Berlin, Singapore, and Toronto. Thank you, Karl.

    I’m now looking forward to trying one of these out on a future trip. I’m going to use it to decide what architecture I want to visit and, for the rest, I’ll just do what I normally like to do — wing it.

    P.S. It took me multiple attempts of tossing these guides onto my kitchen counter in order to arrive at the above photo. I hope you like it.

  • Housing follows money

    One argument that you might be able to make is that home prices follow urban density. New York City, for example, is dense. And homes in New York City tend to be more expensive than those in, oh I don’t know, rural Canada. So with this, you might conclude that development and density are bad — it makes housing more expensive. But then there’s places like San Jose, California. It’s not very dense, and yet it has some of if not the most expensive housing in the US.

    Well, it turns out that housing density and median housing values don’t actually exhibit a particularly strong correlation. A better and much stronger relationship can be found in what Kasey Klimes explains, here, in this excellent post, which is that home prices more accurately follow incomes. In other words, the more high paying jobs that exist in a market, the more likely that housing will be expensive.

    Here is what that looks like for US metros over 1 million people:

    The above chart compares median home value to aggregate income per unit of housing. And here, Kasey discovers an r-value of 0.9, which suggests that “over 81% of median home values in large metros can be attributed to aggregate income per unit of housing.” This explains why San Jose, and San Francisco, are such outliers. They have very high incomes for every unit of available housing, despite the former being not all that dense.

    Okay, so now that we know this, how do we make housing more affordable? One option is to just make people poorer. If you reduce incomes per unit of housing, then home prices will, almost certainly, go down. And this is why poorer cities tend to have more affordable housing. But this is obviously suboptimal. The better option is to keep people wealthy and simply increase the denominator in “aggregate income per unit of housing.”

    Meaning: build more housing!

    Chart: Kasey Klimes

  • How the ski industry price discriminates

    Snowboarding in Europe, of course, sounds really fancy. And don’t get me wrong, it can be fancy if you want it to be. But the reality is that it’s also a cheaper option. And that’s because the price of a single day lift ticket at most resorts in America is now many multiples of what it costs in Europe. Think $250 vs. €50.

    North America has become the expensive destination.

    According to a recent Economist article titled “the economics of skiing in America,” resorts in Europe are often owned by local or national governments. This is not the case in America, and it’s why the lift tickets in Europe seem, by comparison, cheap. But this price differential is also the result of an evolving business model.

    Historically, owning a ski resort has never been a stable business in the US. And this makes sense. Most resorts make their money on lift ticket sales. However, sales are dependent on snowfall. If you get a lot of snow, then you make a lot of money. If the planet starts warming up and you don’t get a lot of snow, then you don’t make a lot of money. Vail has since changed this.

    What they have done is made it so punitive to buy a single day lift ticket in North America, that even if you’re an occasional skier, the only sensible thing to do is buy a subscription-like pass in the spring — well before the next season starts.

    This is what I have started doing and it gives you unlimited skiing for less than the price of a few days. It also gives Vail a source of revenue that isn’t so dependent snowfall. Season passes now make up about 61% of their lift-ticket revenue, according to The Economist. At the same time, it is a model that relies on being able to price discriminate against single-day, non-pass users:

    In basic economic theory, excessive market power reduces the efficiency of an industry. Firms reduce output so as to be able to charge more. There is, however, an exception: if a monopolistic firm can charge different prices to different customers, it need not reduce output to increase its profit. The skiing industry shows the truth of this. As the industry has consolidated, daily prices have soared, extracting more cash from price-insensitive skiers.

    But this isn’t the only way to do it. There’s also the whole real estate thing. Last year, Reed Hastings, cofounder of Netflix, became the majority owner of Powder Mountain. And here, they’re trying out a different business model:

    This December, Powder Mountain in Utah announced that it would be moving to a model where only local property-owners are allowed to ski certain chairlifts. The idea is to profit from real-estate sales, by offering private skiing without the crowds. “To stay independent and uncrowded, we needed to change,” says Reed Hastings, the firm’s boss.

    Even still, neither of these approaches is making snowboarding and skiing more accessible. Which is why it’s not uncommon to come across stickers and t-shirts at local ski shops that say, “Vail — ruining ski towns since 1966.” People are missing the old days when lift tickets were cheap and the lines on powder days weren’t so long.

    What skiing needs is in fact much of what the economy more generally needs: supply-side reform, and especially the construction of new housing and transport in the most popular spots. Though there are more skiers than ever, there are in fact fewer resorts than there were a few decades ago.

    This sounds familiar.

    All quotes are from The Economist.

  • 41 million

    It seems like just yesterday that I wrote about Canada’s population surpassing 40 million people. Because today, some 9 months later, we’re already over 41 million.

    Since 2000, we are the fastest growing country in the G-7:

    This is, in many ways, a positive thing. But it’s also a serious problem if, among other things, we don’t build enough new housing (source):

    In 2013, Canada ranked 13th out of 170 countries in meeting the basic needs of citizens, according to data tracked by Social Progress Imperative. By 2023, it had fallen to 39th, in large part because of a lack of affordable housing.

    For more on this topic, here is a recent article from Bloomberg talking broadly about Canada’s declining social safety net.

    Chart: Bloomberg

  • The Aluminaire House finds a permanent home in Palm Springs

    In a few days, a new exhibit, called the Aluminaire House™ Exhibit, will open in a parking lot of the Palm Springs Art Museum. It will form a new part of their permanent collection. Now, museum goers won’t be able to go inside of the house due to accessibility limitations, but they’ll be able to look at it from the outside. And this alone is a big deal because this house is a big deal.

    Initially constructed in 1931, the house was designed by A. Lawrence Kocher (then the managing editor of Architectural Record) and Albert Frey. Albert was a Swiss-born architect who had just immigrated to New York from Europe, after having worked for the famous Le Corbusier in Paris. And so he was a practitioner of the International Style and this house was a clear representation of that.

    Erected in only 10 days, Aluminaire House is thought to be the first all-metal house ever constructed in the United States. Well, metal and glass. And at the time, the overarching objective was to build something cheap, modular, and durable. Something that many are still trying to accomplish to this day.

    Not surprisingly, the house was polarizing. Supposedly, architect Philip Johnson picketed in front of it. But this house would go on to become an icon, and it was eventually featured in MoMA’s 1932 exhibition, “The International Style — Architecture Since 1922” — an exhibition that has been largely credited with introducing European-style modernism to the US.

    Albert also ended up moving to Palm Springs later in life, and became known for pioneering something known as “desert modernism.” So it’s only fitting that this house ultimately end up here. Even if all-metal maybe isn’t the best choice of material for a hot desert. If you find yourself in Palm Springs, you should definitely go check it out, or picket in front of it.

    Images: Surface Magazine & Palm Springs Art Museum

  • Wonderful real estate

    At the highest level, I agree with the premise of this tweet from The Real Estate God. The overarching argument is that one’s main criteria for selecting a real estate market in which to enter should be “the place with the least competition.” And the reason for this is that less competition equals less price discovery, which then equals more mispriced assets and more opportunities to generate outsized returns.

    Going even further, the argument here is that you’re actually taking on less risk by buying mispriced assets in less competitive markets because you can model reality (things like in-place cash flows and market rents) as opposed to betting on the future (things like rental growth and/or cap rate compression). Said in a different way, it’s easier to find deals and “make money on the buy”; and, once again, I would mostly agree with this.

    But in my mind there’s a very important caveat. And it’s akin to the advice that the late Charlie Munger supposedly gave to Warren Buffet: “Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.” While it is true that you might find wonderful pricing in less competitive markets, there remains the question of whether you’re also buying wonderful real estate.

    And I think that’s an important consideration.