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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Category: Urbanism

  • The great reopening: Planet Fitness vs. Peloton

    I came across this chart in Charlie Bilello’s latest newsletter. It was under the heading “the great reopening in 2 charts.” The other chart was live nation (so concerts) vs. zoom. Both are showing returns over the last year. And both are showing a similar divergence between in-person and online activities.

    Now, I’m not a Peloton guy.

    But I know many people who swear (or swore) by them. Maybe it’s because I’ve never been a class guy. I prefer to self direct myself at the gym and I like doing lots of different things. So I have a hard time believing that connected at-home gym equipment can completely supplant traditional gyms. There’s also a social aspect to in-person workouts that I think a lot of people value. I personally find it more motivating to be working out around others.

    But this wasn’t the narrative last year. We were all going to move to the country, zoom into our meetings, and then switch to another sitting device and another screen so that we could connect with our trainers. For me, this chart is yet another reminder that 1) cities are resilient and 2) there are always opportunities in the midst of short-term market dislocations.

  • Largest US cities grew faster and became more diverse over the last decade

    The last decade has been pretty good for many cities. Recent 2020 Census data tells us that of the 50 largest cities in the US, 46 of them grew their population over the last 10 years. On average, these 50 cities grew by about 8.5%, compared to 5.6% for the decade between 2000-2010.

    As you might expect, the fastest growing cities tended to be in the south and the west. The top 3 fastest growing cities over the last decade were Fort Worth (24%), Austin (21.7%), and Seattle (21.1%). The cities with the biggest population declines were Detroit (-10.5%), Baltimore (-5.7%), Milwaukee (-3%).

    It’s important to keep in mind that city boundaries can skew these numbers depending on how they are drawn. A declining “city” population doesn’t necessarily mean that the broader urban area is losing people. Though it does still tell you something about the “city.”

    Another thing that happened over the last decade is that most of the largest US cities continued to become more diverse. In 2000, white populations were a majority (>50%) in 25 of the 50 largest cities. This dropped to 17 cities in 2010 and then 14 cities last year (2020). Meaning that 36 of the largest cities are now “white minority” cities.

    For more data check out this recent article from Brookings.

  • The real smart city is going to be a crypto city

    Vitalik Buterin — who is best known as the cofounder of Ethereum — recently penned this post on his blog where he argues that “crypto cities broadly are an idea whose time has come.” (Credit to Shamez Virani for sending the post to me this morning.) There has been a lot of discussion over the years about the rise of smart cities. I for one am not really sure what that means besides the fact that it sounds good and it likely involves a bunch of tech and data collection. But maybe crypto can help.

    What Vitalik argues in his post is that we are now at a point in time where blockchain technologies have the opportunity to do two things for cities. One, we can take existing systems and processes and use blockchains to make them more “trusted, transparent, and verifiable.” That would be a very good thing. But the more interesting one is number two. We have the opportunity to use blockchains to create radically new forms of asset ownership (land and other scarce assets) and municipal governance.

    One specific example is that of a “city coin”, which cities like Miami are already experimenting with. Supposedly they are one of the first, which of course aligns with Mayor Suarez’s vision to position Miami as a preeminent tech and crypto hub. Though as Vitalik points out in his post, it’s important to maintain some optionality, especially since we are still very much in the early innings of this new frontier. (This recent episode on the Tim Ferriss Show had a great analogy in saying that the anthem at the beginning of the game isn’t even over yet.)

    So how might a “city coin” living on a blockchain work?

    Well let’s imagine that there are incentives in place for all of us who live in Toronto to own the Toronto coin (there’s still time to come up with a better name). You need it to pay your property taxes, you need it to pay for parking, and you need it to vote in the next election, among many other things. So there’s an incentive to buy and hold it if you’re a resident of this great city, but there is far less incentive to hold it if you don’t live here. (Maybe you own a bit of it because you’re a frequent visitor and/or your relatives live here.)

    One of the interesting things about something like this is that it would immediately create economic alignment. Now all of a sudden, everyone who lives in Toronto and owns Toronto coin would have a vested interest in seeing Toronto thrive. At the very least they would want to see the coin hold its value and ideally they would hope to see it appreciate.

    At the same time, the Toronto coin could be used for all sorts of governance matters. Take for example, land use and zoning decisions. What if we set things up such that these decisions weren’t made by the people who show up to community meetings in the basement of their local church but that they were instead made by everyone who holds the Toronto coin? i.e. The entire city, all of whom are, in a way, equity holders.

    In theory we could do this kind of voting today. However, part of the problem is that the economic alignment isn’t there without something like a Toronto coin. Right now a big part of the economic incentive rests with homeownership. If I own a home and a new development is proposed next to me, I am incentivized to do whatever it takes to selfishly maximize my own individual outcomes. And if that means no development and no more homes for people, then so be it.

    But what if we all had part of our net worth tied up in the Toronto coin? And what if when housing supply did not meet housing demand, the value of our coins dropped because it meant fewer residents (less demand for Toronto coin) and more people voting with their feet and moving to other geographies (more demand for some other coin)? This is one of the things about the crypto space. It turns everyone into evangelists because there are now strong economic incentives to be that way.

    Who knows if this is the way that things will actually play out. But it is part of the promise of crypto and it is not some pipe dream. It is already starting to take hold around the world and in the US in places like Wyoming and Colorado. For more on this topic, make sure to check out Vitalik’s full blog post.

  • Apartment rents in San Francisco have yet to fully recover

    On last week’s earnings call, apartment landlord Equity Residential mentioned that the two US markets most impacted by a delayed return to office appear to be San Francisco and Seattle. They went on to say that San Francisco is the only market in which they operate where rents have not fully recovered to pre-pandemic levels.

    According to Bloomberg (which is relying on employee swipe-card data), office utilization in the San Francisco area is sitting at around 25% as of October 20, 2021. This is compared to a national average of around 37%. The obvious rationale here is that large tech companies have delayed their return to office and/or been more aggressive in adopting remote/hybrid work.

    Looking at these numbers, it is clear that as someone who has been going into the office every day since the start of summer, I am currently in the minority.

  • Toronto green-lights new inclusionary zoning policy

    Toronto’s new inclusionary zoning policy went to Planning and Housing Committee this week. Agenda item, here. The recommendations were approved, which means that the item will move onto City Council next month for final approval.

    Here’s a summary of some what is being proposed (though keep in mind that I am not a planner and you should probably do your own due diligence if you’re looking to buy land and/or develop here):

    • IZ to come into force next year in 2022.
    • IZ to only apply on projects with 100 or more residential units.
    • Three distinct market areas across the City with differing set aside rates (see below charts). This strategy acknowledges the fact that you generally need submarkets with expensive housing and rising prices to be able to absorb the financial burden of the affordable housing units. I’ve written a lot about this dynamic on the blog. Relevant posts, here.
    • It’s in the chart, but it’s perhaps worth repeating: Purpose-built rental projects will not be required to deliver any affordable housing units at the outset of this policy. This is important to note because the margins on purpose-built rentals are razor thin.
    • The set aside rates are planned to increase to 8-22% by 2030.
    • The affordable units will need to remain affordable for 99 years. And the rents and prices are to be geared toward low and moderate income households, which are currently defined as those earning between $32,000 and $92,000.
    • Clear transition period for the development industry.
    • Ongoing monitoring of the policy to make sure it doesn’t suck.

    If you’re interested, the full staff recommendation report can be found here and the draft OPA and zoning by-law can be found here and here.

  • OMA New York has just published its first book

    OMA NY — the New York office of OMA — has just published its first monograph. It’s called OMA NY: Search Term. For those of you who may be unfamiliar, Office for Metropolitan Architecture (OMA) is an architecture firm that was founded by Rem Koolhaas in Rotterdam in 1975.

    The firm is considered to be one of the most influential in the world because of their projects, the writing and thinking of Rem Koolhaas, and because of how many notable architects developed their craft under his tutelage.

    When I was in architecture school, OMA was a firm that people wanted to work at and I had friends who did. You weren’t paid very much from what I remember, but people put up with that because you wanted OMA on your resume and you wanted to learn things from Rem (apparently he’s a big fan of Raisin Bran in the morning).

    The New York office of OMA is run by Shohei Shigematsu and Jason Long who are both partners. The practice started out as an American outpost, but it has become more independent over the years and, from what I can gather, it now prides itself on having its own attitudes and views on architecture and urbanism.

    This monograph is about that. Twenty radical projects from the firm’s new guard. It also includes interviews from people like Virgil Abloh (Off-White). I don’t have a copy yet, but if you’re an architecture and urbanism person, you probably want this one on your bookshelf.

    Image: Rizzoli

  • Paris announces plan for “100% cycling city”

    Paris just announced plans to become a “100% cycling city.” A follow-up to plan vélo 2015-2020, which saw a doubling of the city’s bike lanes, plan vélo 2021-2026 includes 130 km of new bike lanes and 52 km of pandemic bike lanes that will now be made permanent.

    In addition to cycling lanes, the plans include new bike parking, new transit integrations, and a bunch of other things that are meant to strengthen the overall ecosystem in the city. The total budget for this second plan is about €100 million, which will bring the total cycling investment over the last 10-11 years to about €250 million. This is a serious commitment to cycling.

    It’s also a good example of one of the things that we have been talking about on this blog. This pandemic forced us to rethink how we allocate urban space — everything from outdoor restaurant patios to bike lanes. And as we can see here, many of the positive changes are not surprisingly starting to stick.

  • In real life in New York City

    This past weekend Bright Moments opened up their NFT art gallery in New York’s Soho. This is the company’s second gallery. The first was in Venice, California. And there are plans for eight more cities, with Berlin being the next one. (When is Toronto?!)

    Bright Moments is a decentralized autonomous organization (DAO), which is interesting in its own right but is a topic for another post. You can read a bit more about Bright Moments and DAOs, here and here.

    What I would instead like to talk about today is how Bright Moments is operating at the intersection of NFT art and real-world spaces. They are in effect a community. It’s a place for artists to release/showcase their work and a place for people to connect.

    One of the things that the company is doing with each gallery launch is minting an NFT collection that is tied to the city and that uses the local demonym. When they opened their popup in Venice, they launched the CryptoVenetians. And last weekend in New York they launched the CryptoNewYorkers.

    In each case, 1,000 NFTs were minted and the idea is that once they have expanded to their 10 cities, there will be a collection of 10,000 NFTs.

    I have said it before, but this is an exciting time in the world. Maybe this current NFT craze ends up being a massive bubble, or maybe it doesn’t. Either way, things are exciting.

    But here’s the thing.

    Organizations like Bright Moments show you just how important physical spaces, live communities, and cities continue to be. It doesn’t matter that this is digital art being displayed on a screen and that one could be viewing it from anywhere. People want to hang out in the same room and experience these sorts of new things together.

    I can’t see that ever going away.

  • The 10 commandments of micromobility

    This is a great 30 minute talk by Horace Dediu that is structured around his 10 commandments of micromobility. If you can’t see the embedded video above, click here. What I think that many of you will appreciate about the talk is that he focuses on smaller interventions. Think bike lanes over big hyperloop moonshoots. In his words, we’re going to get to where we want to go not through hyperbole, but through humility. And micromobility is all about humility.

    I’m also a big fan of his last commandment. It is titled: cities always win. Yup.

  • Offline and online

    I was out for dinner this week with a group of real estate developers. And as you might expect, we spent the majority of the time talking about real estate and complaining about how long things take. But a good chunk of time was also spent pontificating about the world of crypto. That’s what happens these days. In fact, one of my friends joked that my/this blog used to be a real estate and cities blog, but now it’s a crypto blog. It’s a joke, but I guess it’s becoming partially true.

    For as long as I can remember, I have always been interested in what’s new and what’s next. And I think this is next. So I’m reading, playing, thinking, and writing about it. And the more I do these things, the more my conviction grows. But what really did it for me was the hands-on playing around part. I’m not interested in owning a crypto ETF (the US is about to get its first bitcoin ETF based on futures contracts). I want to own the cryptocurrencies directly so I can see what they can do and how everything works. (Though I will say that this space is still not very user friendly.)

    One of the things that comes to mind as I continue to play is the future interrelationship between our offline and online worlds. Because already we are living in a world where people now buy and collect rent on virtual real estate in places like Decentraland (REITs are even starting to emerge). Where parties happen online instead of offline (but still attract big name DJs). Where people buy digital fashion instead of physical fashion, and pay just as much for it and sometimes even more. And where augmented reality is changing how we experience our cities in real life. A few weeks ago, I came across a park in Paris that had partnered with Snapchat to deliver an AR experience, to give just one example.

    These are meaningful shifts that are gaining traction (and this post is by no means an exhaustive list). And while I remain steadfast in my belief that cities are profoundly resilient and real-world experiences are irreplaceable, I do believe that our emerging digital worlds are going to have an impact on how we design and build our cities going forward. From art murals of NFTs to entire new virtual worlds, this is an exciting time for cities and technology.

    Enjoy the weekend.