Last week it was announced that Allied Properties and Westbank have acquired 19 Duncan Street in Toronto for $47 million.

The property sits at the southeast corner of Adelaide Street West and Duncan Street (shown above), and includes an existing 61,911 square foot (GLA) office building, 36 surface parking spots, and a laneway (it was specifically called out in the press release).

The plan is to restore the existing heritage building, as well as build additional retail space, office space, and rental apartments. Given the nature of this site and the team behind it, I have high hopes that it will end up a remarkable development project.

It’s interesting to see the continuing interest in rental apartments here in Toronto – which is something I’ve written about before. Up until recently, the development community had almost zero interest in purpose built rental apartment buildings. Now they’re coming back in fashion.

But the other piece that’s interesting to me is the laneway. Below is a photo from Google streetview, showing what I believe is the laneway that the press release is referring to.

As many of you know, I’m involved in a non-profit here in Toronto called The Laneway Project (advisory role only). We want to transform Toronto’s underutilized laneways. And this strikes me as a perfect opportunity to do something really exciting at the corner of Adelaide and Duncan in the Entertainment District.

So if the new owners have any interest in things that are exciting, I would encourage them to get in touch with me or one of the founders of The Laneway Project.

Earlier this week Richard Florida published on article on CityLab talking about the relationship between tech innovation (in cities) and inequality. Specifically, the article deals with the correlation between venture capital investment and a variety of factors, such as monthly housing costs, wage and income inequality, and so on.

The intent of the piece was to address the growing backlash against tech workers – in places like San Francisco – who have become the symbol for the growing gap between the rich and poor.

The strongest correlation appears to exist between venture capital investment and housing costs. As the amount of venture capital goes up, so do housing costs – which probably shouldn’t surprise you. The rich start outbidding the poor for housing. Note: The two outlying dots at the top right, in the graph below, are Silicon Valley and San Francisco.

But when it comes to inequality, the relationship isn’t so clear. For wage inequality, there seems to be a relationship. But for the broader income inequality measure, the relationship is fairly weak. Here’s the graph:

So this is not as black and white as it might seem. Regardless, Florida ends the piece with the following statement (that I think is spot on):

It’s time to stop pointing fingers and get on with the far more important task of harnessing the urban tech revolution to create a new urban middle class and a more inclusive urbanism—one in which many more workers and residents can participate, and one from which many more can benefit.

The answer is not to stop innovating. That would be counterproductive. We should be be encouraging innovation, but at the same time figuring out how best to harness it for society as a whole.

Tomorrow, I’ll touch a bit more on how we might go about doing that. I have a post planned that I think will tie in really nicely to this discussion. So stay tuned.

Yesterday Opendoor.com finally launched their product in Phoenix. If you’re a regular reader of Architect This City, you might remember that back in July of this year I wrote about how they had just raised $10M of funding to make selling your home as easy as a few clicks.

Well, since then, I’ve been following them like a hawk. I had all the founders on Twitter notification (so I got notified every time they tweeted) and I was eagerly anticipating their launch.

Now that they’ve launched, we have a much better idea of how their business model is going to work. I say “better idea” only because there’s still portions of it that are a question mark for me.

In any event, Opendoor basically provides instant liquidity to homeowners. You go on, tell them about your home, and they then make you an offer to buy, which looks like this and lasts for 3 days. The offer they make you is calculated using comparable sales and adjustments based on your home’s unique characteristics.

Upon accepting their offer, they then schedule a home inspection (at their cost) to confirm your home’s condition. Once this is done, you just select your move out date and Opendoor handles the rest. The fee for all this is 5.5%, which the company claims is less than the 6% that realtors typically charge (this would be high for Toronto).

After buying your home, Opendoor plans to turn around and resell it.

What this reminds me of is a “bought deal.” In the world of investment banking, a bought deal is when the bank itself agrees to buy the entire offering of a particular security, as opposed to going out to the market and trying to raise the money. The advantage to the company (offering the securities) is that there’s no financing risk. They know they’re going to get their money. But it usually means the company gets a lower price.

So what I wonder, is if this is what’s going to happen here. Since Opendoor is effectively taking on the selling risk, does that mean their offers will be lower? Or are all their costs built into that 5.5% and that’s truly their core business model? I’m sure some of this will surface in the coming weeks.

I do, however, think they are smart to be focusing on the supply-side of the marketplace and offering virtually perfect liquidity to homeowners. Real estate is a unique asset in that it’s difficult to bring supply to the market. And so if control the supply-side, I think you have a pretty good shot at controlling the market as a whole.