Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
Building on yesterday's post about inclusionary zoning, below is a telling diagram from the Urban Land Institute showing which areas of Portland can support new development and which areas cannot. To create this map, ULI looked at achievable rents in each US census block to determine, quite simply, where rents will cover the cost of new development (all types of construction).
However, in their models they are also assuming a land value of $0. And typically people want you to pay them money when you buy their land. So in all likelihood, this map is overstating the amount of blue -- that being land where new development is feasible.
But it does tell you something about developer margins. A lot of people seem to assume that the margins on new developments are so great that things like inclusionary zoning can simply be "absorbed" without impacting overall feasibility. The reality is that there are large swaths in most cities where development is never going to happen even if you were to start handing out free land.
This map is also helpful at illustrating some of the impacts of IZ. If you assume that rents are the highest in the center of the city and that they fall off as you move outward, then the outer edge of the above blue area is going to be where development is only marginally feasible. And so any new cost imposed on development would naturally start to uniformly eat away at the blue feasible area -- that is, until rents rise enough to offset it.
Of course, this is a simplified mapping. Land usually costs money. Land values might also be highest in the center and fall off as you move outward, or there could be pockets of high-cost land. There may be more price elasticity in certain sub-markets compared to others. So the impacts of a new development cost may not play out as neatly as I outlined above.
Regardless, there will be impacts, which is why I find this map telling even if it isn't fully accurate or up to date. Maybe some of you will as well.
During the recent election here in Toronto, mayoral candidate Jennifer Keesmaat raised the idea of this city region, maybe, becoming its own province. It wasn’t the first time this idea has been floated, but it once again didn’t stick.
Earlier this week, Richard Florida spoke at the Urban Land Institute’s Toronto symposium and he brought up a similar issue: Toronto is a ‘city state’ and needs to start acting like it. Here is an excerpt from a recent Star article about his talk:
He also noted that in terms of total economic output, the GTA [Greater Toronto Area] — he included the Golden Horseshoe — is responsible for about “$700 billion” (U.S) in economic output.
“Which means our … region is equivalent to that of Sweden. So we are a city state, a mega region.”
He later added: “we are a powerful global city with lots of assets to build on,” he said.
But he went on to say that despite all of these successes there’s a “sense that something is amiss, something is wrong.”
I have long supported the notion that city regions need to see and think of themselves as one united and contiguous economic landscape. In our case, it is not about, for instance, Hamilton vs. Toronto. This is about our entire region vs. New York or Singapore (a city-state) or the Pearl River Delta megalopolis.
The headlines coming out of Amazon’s recent announcement are clear: In Superstar Cities, the Rich Get Richer, and They Get Amazon. This is winner-take-all urbanism where you need to be a “superstar” in order to compete.
For those of you who aren’t going to be in Toronto next week, you can stop reading now and check back tomorrow. For the rest of you, next week is The Future Cities Canada Summit, which will be taking place from November 7 - 9. Full schedule, here.
Day 1 equals the Urban Land Institute Symposium 2018, which is all about Toronto urbanism. The tagline is: “Explore the urban frontiers of North America’s fastest growing, and the world’s most diverse city-region.”
A big part of day 1 will be bus tours around the city. And one of those tours is going to be focused on Toronto’s laneways. I am a speaker on that tour and the bus will be stopping at Junction House to talk about the laneway houses that we plan to release as part of the project.
But there’s much more to this summit than just laneway housing.
Building on yesterday's post about inclusionary zoning, below is a telling diagram from the Urban Land Institute showing which areas of Portland can support new development and which areas cannot. To create this map, ULI looked at achievable rents in each US census block to determine, quite simply, where rents will cover the cost of new development (all types of construction).
However, in their models they are also assuming a land value of $0. And typically people want you to pay them money when you buy their land. So in all likelihood, this map is overstating the amount of blue -- that being land where new development is feasible.
But it does tell you something about developer margins. A lot of people seem to assume that the margins on new developments are so great that things like inclusionary zoning can simply be "absorbed" without impacting overall feasibility. The reality is that there are large swaths in most cities where development is never going to happen even if you were to start handing out free land.
This map is also helpful at illustrating some of the impacts of IZ. If you assume that rents are the highest in the center of the city and that they fall off as you move outward, then the outer edge of the above blue area is going to be where development is only marginally feasible. And so any new cost imposed on development would naturally start to uniformly eat away at the blue feasible area -- that is, until rents rise enough to offset it.
Of course, this is a simplified mapping. Land usually costs money. Land values might also be highest in the center and fall off as you move outward, or there could be pockets of high-cost land. There may be more price elasticity in certain sub-markets compared to others. So the impacts of a new development cost may not play out as neatly as I outlined above.
Regardless, there will be impacts, which is why I find this map telling even if it isn't fully accurate or up to date. Maybe some of you will as well.
During the recent election here in Toronto, mayoral candidate Jennifer Keesmaat raised the idea of this city region, maybe, becoming its own province. It wasn’t the first time this idea has been floated, but it once again didn’t stick.
Earlier this week, Richard Florida spoke at the Urban Land Institute’s Toronto symposium and he brought up a similar issue: Toronto is a ‘city state’ and needs to start acting like it. Here is an excerpt from a recent Star article about his talk:
He also noted that in terms of total economic output, the GTA [Greater Toronto Area] — he included the Golden Horseshoe — is responsible for about “$700 billion” (U.S) in economic output.
“Which means our … region is equivalent to that of Sweden. So we are a city state, a mega region.”
He later added: “we are a powerful global city with lots of assets to build on,” he said.
But he went on to say that despite all of these successes there’s a “sense that something is amiss, something is wrong.”
I have long supported the notion that city regions need to see and think of themselves as one united and contiguous economic landscape. In our case, it is not about, for instance, Hamilton vs. Toronto. This is about our entire region vs. New York or Singapore (a city-state) or the Pearl River Delta megalopolis.
The headlines coming out of Amazon’s recent announcement are clear: In Superstar Cities, the Rich Get Richer, and They Get Amazon. This is winner-take-all urbanism where you need to be a “superstar” in order to compete.
For those of you who aren’t going to be in Toronto next week, you can stop reading now and check back tomorrow. For the rest of you, next week is The Future Cities Canada Summit, which will be taking place from November 7 - 9. Full schedule, here.
Day 1 equals the Urban Land Institute Symposium 2018, which is all about Toronto urbanism. The tagline is: “Explore the urban frontiers of North America’s fastest growing, and the world’s most diverse city-region.”
A big part of day 1 will be bus tours around the city. And one of those tours is going to be focused on Toronto’s laneways. I am a speaker on that tour and the bus will be stopping at Junction House to talk about the laneway houses that we plan to release as part of the project.
But there’s much more to this summit than just laneway housing.
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