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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  • A non-zero probability of copycats

    Software businesses are generally high margin businesses. But along with this feature comes some risks. Here’s an excerpt from a recent post by Scott Galloway (which is actually about FedEx):

    With any software start-up, there is a non-zero probability that you wake up the next day and find that a better-resourced firm (Microsoft, Oracle, Salesforce, Adobe) has deployed 200 engineers to copy your product, bundle it with their stack for free, or near free, and … welcome to zero. I believe this is happening to Slack, but more slowly than Netscape, as Microsoft’s General Counsel has likely coached Satya to charge a nominal fee for Teams and let Slack bleed out, instead of putting a bullet in its head and stirring the DOJ from a 3-Ambien slumber.

    Real estate, by comparison, doesn’t get disrupted in quite the same way. A location/city can lose its economic purpose (Great Grimsby is just one example), but as long as there are growth tailwinds the real estate should do well.

    Venture capitalist Fred Wilson has on many occasions written about how he (and his firm) made a fortune in the dot-com era, only to lose it all and have to remake it again over the subsequent decades.

    One the lessons learned from that experience (according to his blog), was to take some of that second tech fortune and invest it into hard assets — namely real estate. That feels right to me.

  • Missing middle on Toronto’s collector roads

    This recent Spacing article by Geoff Turnbull and Laurence Holland makes a compelling case for “missing middle” type development along Toronto’s collector roads. The idea being that we are already focusing on (and have policies for) infill along our Avenues and within our single family neighborhoods, but we have yet to pay attention to the scale of street that sits somewhere in between the two. Streets such as Hallam that were once commercial spines, but lost their economic purpose for a variety of reasons.

    Here’s a map, from the article, of Toronto’s collector roads:

    There are almost 800 kilometers of collector roads in the city. As the name starts to imply, these streets are designed to collect vehicles and funnel them toward arterial roads and “Avenues.” But this scale difference changes things and creates a kind of in-between condition. They’re less desirable from a residential standpoint (because they’re not as quiet and secluded), but they’re also not designed to become strong retail/commercial streets (despite the odd retail remnant). In fact, retail is probably prohibited on most. Which is why I like the idea of thinking of these streets differently.

    Of course, we have work to do in order to make this scale of development economically feasible, and the authors do acknowledge that. But the more we continue to talk about the future of our low-rise neighborhoods, the more that intensification starts to feel inevitable.

  • Glass curtains in Amsterdam

    For the same reasons that I liked the Interlock in London, I am a big fan of this storefront in Amsterdam by UNStudio. It is contextual, but it also something entirely new. To me, it resembles a triptych of curtains being pulled to the side, which is probably a fitting metaphor for a high fashion street. The developer is Warenar and it looks like the space is still available. So if you’re in the market for a retail storefront on Amsterdam’s PC Hooftstraat, here you are.

    Photos by Evabloem

  • Current state of Toronto’s new condo market

    Ben Myers of Bullpen Research & Consulting was recently interviewed by Newinhomes.com about the state of Toronto’s new housing market. Ben is always interesting. And these are the sorts of things that I read in my spare time. So here’s an excerpt:

    The average price of popular new condo floor plans in the City of Toronto in October 2019 was approximately $1,275 per-square-foot (psf) and with growth of 3% a year, prices would hit $1,475 psf in 2024. I wouldn’t be surprised to see annual average growth of 4%, which would get you to $1,625 psf in five years in Toronto.

    This data was taken from BuzzBuzzHome and — by “popular new condo floor plans” — I believe he means that these are the floor plans that buyers tend to click on and review when they visit the site. So it’s a good indication of buyer demand.

    Here’s another quote that stuck out:

    Part of the reason that price growth has spiked is a rise in construction costs, development charges, and land prices – this cost-push inflation is passed on to consumers.

    That sounds right. And I have been writing about this phenomenon all year. Most of us can probably remember when $1,000+ psf was a high water mark for new construction condos. Now it’s pretty much a floor.

  • Vancouver approves new rental housing policy

    New rental housing measures were approved by Vancouver City Council this week. I haven’t gone through the policies in the detail (you can do that here), but they aim to increase rental housing supply by doing things such as “pre-zoning” for 6-storeys on main streets and by allowing rental apartments to be built on some side streets (up to 150m away from arterial roads).

    Here’s an excerpt from the staff report:

    Enabling new rental housing in all neighbourhoods would support an increase in supply and choice. The incentive programs have concentrated secured market rental development in selected neighbourhoods and along arterial streets. This has been effective at creating larger multi-unit projects, but has created an inequitable environment, where renters have limited housing choice. Expanding program coverage into low density areas, areas zoned for single detached housing and non-arterial locations to allow for a greater mix of structure types and densities (e.g. townhouses, small apartment buildings) are important considerations moving forward.

    It is yet another data point for what I wrote about here — the loosening of single-family zoning. Turns out, it can be difficult to meet the demand for new housing when you set aside a large part — or most — of your land for low-rise single-family homes. And there seems to be growing acknowledgement of that on the part of cities.

    Photo by Aditya Chinchure on Unsplash

  • Architectural ambition

    Alex Bozikovic’s review of the book Canadian Modern Architecture: 1967 to the Present raises something potentially troubling. Here’s what I’m talking about:

    It is by turns an exhilarating and depressing narrative: Canada, in this book, appears as a country that announced itself on the world stage in the 1960s and 1970s with incredible ambition but, since then, has retreated toward the mean.

    It is potentially troubling not only because I believe in the value of good design, but because I believe that architecture embodies the ethos and cultural context in which it was created.

    And so if you believe that our architectural ambitions have retreated toward mediocrity, you might also surmise that our overall level of ambition has retreated toward the same.

    That should be viewed as a serious problem.

  • Who is going to buy the homes vacated by Baby Boomers?

    The Wall Street Journal estimates that, from now until about 2037, roughly 21 million homes in the United States will be vacated by seniors. To put this number into perspective, it’s about 25% of the US for-sale housing stock and more than double the amount of new homes that were sold during the 1998 to 2008 housing boom. That number was about 10 million (see below).

    This is part of the normal cycle of housing, but in this particular instance, there’s concern that the new generation won’t be there to backfill these homes, or least not in the same way. For one, there are more boomers than there are Gen Xers. So right away there’s a potential gap. But on top of this, the next in line don’t appear to necessarily have the same preferences in housing type and location.

    As someone who would fall into the 65.9 million birth bucket highlighted in deep mustard (had I been born in the US), I can tell you that I am far less interested in many of the housing products (real estate speak) / typologies (architect speak) popularized by the generation ahead of me. Whether my opinion is representative is, of course, debatable.

    Anecdotally, I can also say that I know many boomers who have started making real estate decisions based on the assumption that demand for certain types of housing will be tepid going forward. This is not to say that some of these communities won’t be able to reposition themselves if it comes to that. But there is uncertainty.

    Images: WSJ

  • birdO, StreetARToronto, and Slate unveil new 10-storey mural at Yonge and St. Clair

    This blog has been a little too serious as of late. So here’s something fun. Last week, Toronto street artist birdO, StreetARToronto, and Slate Asset Management unveiled the new 10-storey mural that I wrote about last month. The large-format art piece is part of the City of Toronto’s StreetARToronto Monumental Program and our (Slate’s) ongoing effort to do things that are great and remarkable at Yonge and St. Clair. Below are some photos of the mural by Riley Snelling. I love how these turned out (birdO in his bird mask, of course, helps make them).

    For the full press release, click here.

    Photos: Riley Snelling

  • EV and ICE vehicles expected to reach price parity by mid-2020s

    Each year, Bloomberg NEF (New Energy Finance) publishes a long-term forecast of how electric vehicles and shared mobility will/might impact our cities. Predicting the future is never easy. And forecasts are never right. But they’re valuable to do.

    By 2040, BNEF believes that 57% of global passenger vehicle sales and 30% of the global passenger vehicle fleet will have some form of an electric drivetrain. Either full battery electric (BEV) or plug-in-hybrid electric (PHEV). Looking at this another way, we have about 17 years (2037) until ICE and electric vehicles are expected to intersect and hit 50/50 in terms of global sales.

    A big part of what is driving the adoption of electric vehicles is that the price of lithium-ion batteries keeps coming down. Assuming this trend continues, the price of EVs and ICE vehicles (in most segments) should reach parity sometime in the mid-2020s. Meaning, yes, it’s more expensive to produce an EV today.

    All of this will also impact mobility services (ride-hailing and ride-sharing). Today, less than 5% of annual kilometers traveled by passenger vehicles around the world is thought to be done through some form of a ride-hailing app. That’s still a pretty significant number, actually. Though only about 1.8% of this fleet is electric.

    By 2040, shared mobility services are expected to rise to 19% (see above) and — because their costs are coming down — 80% of this fleet is expected to be electric. Autonomous vehicles are not expected to meaningfully impact global mobility until the 2030s. But the growth in shared mobility services is still expected to reduce the demand for car ownership, and likely parking.

    Other high-level findings from BNEF’s 2019 Electric Vehicle Outlook can be found here. If you want to access the full report, you’ll need to be a BNEF client.

    Images: Electric Vehicle Outlook 2019 (BNEF)

  • A comparative analysis of global cities

    Since 2005, LSE Cities (London School of Economics) has been collecting comparative data on how global cities perform in terms of key spatial, socioeconomic, and environmental indicators.

    This is their latest data matrix:

    To be clear, it is not a ranking of cities. It is intended to help us better understand how different cities around the world are performing.

    Depending on how you’re consuming this post, the text may be difficult to read. So here’s what each column represents, moving from left to right:

    • Current population in the administrative city (millions)
    • Current population in the urban agglomeration (millions)
    • Average hourly population growth of urban agglomeration 2015 to 2030 (people per hour)
    • Administrative city area (km2)
    • Average density of built-up administrative area (people/km2)
    • GDP per capita in urban area ($, PPP)
    • Percentage of country’s GDP produced by the metro region
    • Population under 20 (%)
    • Murder rate (homicides per 100,000 inhabitants)
    • Percentage of daily trips made by public transport
    • Percentage of daily trips made by walking & cycling
    • Car ownership rate (per 1,000 inhabitants)
    • CO2 emissions (tonnes per capita)

    If you’d prefer to download a full PDF of the chart, click here.