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October 3, 2014

How technology could completely change the real estate development industry

If you’re involved in the built environment in any way, shape, or form – as a developer, architect, policy maker, and so on – I would highly recommend you watch the video below. My friend Candice Luck, who I went to Rotman with, sent it to me this morning with a link starting at the 24 minute mark. I haven’t yet watched the whole thing, but given how interesting this short section was, I plan to.

The video is a talk by Steve Jurvetson, who is a venture capitalist with DFJ. He was one of the founding investors in Hotmail and currently sits on the board of companies like SpaceX and Tesla Motors. At the 24 minute mark he talks about a startup called Flux.io that hasn’t yet launched their product, but is working towards “reimagining building design”. They’re a spin-off from Google X and plan to officially launch in early 2015.

Rather than try and describe the video here, I will just say that it’s an incredible example of how technology and digitization could completely change the real estate development industry. If you can’t see the video below, click here. The video starts at the Flux.io section.

[youtube https://www.youtube.com/watch?v=IPgyb6euISs]

October 3, 2014

Don't forget that this is about people

Yesterday I wrote about the High Line Park in New York and the tremendous success that it has seen since the first section opened in 2009. It attracts somewhere around 5 million visitors a year and is thought to be responsible for over $2 billion a year in economic activity.

But the economic activity it’s generating and the future tax revenues it’s creating are really a byproduct of the fact that people, quite simply, love the High Line. It attracts people. And that reminded me of a short post I wrote earlier this year called: It’s all about people. Because if you think about it, that’s really the key metric for a lot of things in life and in business.

When you build a park like the High Line in New York or Millennium Park in Chicago, you’re designing it to attract people. When you build a mall, you seek out anchor tenants, because you know they drive foot traffic. When you build a new neighborhood, you’re trying to create street life from scratch. When you run a bar, you want headcount. And when you build a web or mobile app (or write a blog for that matter), you want registered users and eyeballs on your platform.

And you want these things because foot traffic, street life, eyeballs, impressions, users, and headcounts ultimately generate revenue. But here’s the thing: if you focus directly or too much on that end goal, you run the risk of missing an important step along the way, which is simply to delight real people.

In his most recent essay, startup guru Paul Graham put it perfectly when he said:

“The way to succeed in a startup is not to be an expert on startups, but to be an expert on your users and the problem you’re solving for them.

He’s obviously talking about technology products, but the same could be said for parks, streets, malls, plazas, and so on. To design and build better cities, we need to be experts on people. And we need to create spaces and environments that people actually want to occupy. Spaces that improve people’s lives.

Now, this may sound fairly obvious to some of you. But quite often I feel like we get sidetracked by things that don’t matter as much as people do.

Image: Flickr

October 2, 2014

Learning from, but not copying, New York's High Line

In 1980, the last train ran on an elevated corridor on the west side of Manhattan known as the High Line. Originally built in the 1930s, the trucking industry had made these trains obsolete and service was halted.

At this point, neighboring property owners began to lobby for the demolition of the High Line, as they no doubt saw it as an opportunity to increase the value of their land holdings. But thanks to local residents – most notably a man by the name of Peter Obletz – the 1.45 mile-long elevated rail corridor was saved from demolition.

In 1999, Joshua David and Robert Hammond then decided to form a non-profit with the goal of both preserving and reusing this unused rail corridor. The group was called Friends of the High Line.

By the early 2000s, Friends of the High Line had successfully made an economic case for transforming the rail line into a public open space and things started moving forward. Initially, it was thought that a public park of this sorts would attract about 400,000 people annually and generate upwards of $286 million in new tax revenues over the following 2 decades (Globe and Mail).

With these expectations in mind, construction on the new High Line Park began in 2006. The first section opened in 2009 – a decade after Friends of the High Line was formed. And the third, and last section, opened just two weekends ago at the end of September.

Today the High Line Park attracts 5 million visitors a year and is believed to be directly responsible for about $2.2 billion in new economic activity. The increased tax revenues over the next 2 decades are expected to reach about $980 million. Without a doubt, the High Line has been a huge success. It has become the 2nd most visited cultural attraction in New York (Globe and Mail).

Which is why every city now wants their own High Line. Philadelphia wants one. Chicago wants one. Mexico City wants one. Seoul wants one. And the list goes on. Here in Toronto, we’ve recently proposed one called the King High Line, which will connect the Liberty Village and West Queen West neighborhoods across a rail corridor.

While I do believe that this is an important connectivity problem to be solved, I worry about how explicit the references are to the actual High Line. Even the street furniture is the same in their promotional video.

I worry not only because it means we’re clearly taking on the role of follower, as opposed to leader, but because an elevated park isn’t going to work in all urban contexts the same way that the High Line worked in Chelsea. This is similar to how Frank Gehry can’t magically turn your city into the next Bilbao. 

So while I have shown my support by becoming a “Friend of the King High Line” (and I would encourage you to do so as well), it’s important to keep in mind that the problems we’re trying to solve here aren’t necessarily the same ones that New York had to deal with.

The High Line – from the start – was designed to have an intimate relationship with its surrounding buildings. The tracks rain directly through them so that the trains could easily load and unload their cargo – that was the whole point. So when the High Line was redone, all of a sudden these buildings were able to reconnect themselves to the park in a way that they were already accustomed to doing.

But in Toronto’s situation, and perhaps in your city, that’s not the case. We’re talking about stitching together two completely disconnected neighborhoods. It’s a noble goal and certainly one that I wholeheartedly believe we should pursue. But I don’t think we should assume that it’s a problem that has already been completely solved for us.

Image: Flickr

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Brandon Donnelly

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Brandon Donnelly

Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.

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