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.
There is something happening in many North American cities right now. We are starting to question the supremacy of zoning for only single-family homes.
This past summer, the state of Oregon passed policy requiring cities of 25,000 people or more to allow duplexes, triplexes, and fourplexes within their single-family home neighborhoods. Minneapolis is poised to do something similar with its Minneapolis 2040 plan (though it has been contentious). And, of course, here in Toronto we recently rolled out laneway suites all across the city. Small scale multi-family dwellings are also already permissible in some areas (though few are being built).
Some are calling this a YIMBY movement. But however you want to define it, it’s an acknowledgement that, if the goal is to built up instead of out, perhaps it’s time we look at the parts of our cities with the lowest population densities. I would also add that following my recent post on Paris vs. Vancouver, many seemed to gravitate (in the comments) toward the Parisian model — even if it did result in over 50,000 people per square kilometer. Density, it would appear, is okay.
While positive, it remains to be seen whether these policy changes will result in a meaningful increase in housing supply. And a lot of that will come down to the details. As I have said before on the blog, the math can be challenging on these sorts of smaller projects, which is why you have smart people proposing things like an “inverse density” rule to help encourage more smaller scale development.
But as the saying goes, sometimes you need to crawl before you can walk. And, if nothing else, there’s certainly symbolic value to what seems to be taking hold across North America right now.
The CEO of Foursquare — Jeff Glueck — published an interesting op-ed in the New York Times today, calling on Congress to regulate the location data industry. Currently, there are no formal rules in place.
In case you’re not aware, Foursquare is one of the largest independent companies operating in this space. I have written about them many times before on the blog.
Here’s an excerpt from Jeff’s op-ed explaining why this matters:
But location data can also be abused. Bounty hunters were able to buy the current location of a cellphone for $300, Vice reported, because telecom companies sold the real-time location of phones to shady companies. And apps that track location data may turn around and sell that data, revealing someone’s every movement — whether it is to a retail store, an abortion clinic or a gay bar. Bloomberg Businessweek recently reported on a company with thousands of cameras selling car locations to debt collectors and others; there is no “opt-in” involved, and it’s illegal in all states to cover your license plate.
I am writing about this today because I think it’s relevant to city building. Location data is inherently spatial. It is how we exist in cities. So it shouldn’t come as a surprise to any of you that this is valuable information — hence why it is being abused.
Here we have a company advocating for more, not less, regulation. They, of course, want it to be sensible. But I still think it says things about the current location data environment. To learn about the specifics of what Jeff is proposing, click here.
A new mural is underway at Yonge + St. Clair by the Toronto-based street artist birdO (aka Jerry Rugg). He started over the weekend and should be finished by next week, depending on the weather. Here is what it looks like so far:
If you’d like to take a look in person, head on over to 1 St. Clair Avenue East. It’s the building at the southeast corner of the intersection. And if you’d like to learn more about birdO, here’s a short film about some of his work in Detroit. It’s really well done.
In this January 2018 report from the Fraser Institute, they pegged the average population density of Paris to be about 21,067 inhabitants per square kilometer (2014 population year). It is the second densest city in their report after Hong Kong, but the densest in Europe. By comparison, Vancouver sits at around 5,493 inhabitants per square kilometer (2016 population year).
Now, these are of course city averages. Some neighborhoods will be higher and some will be lower. According to a January 2018 study by Alasdair Rae — who is a works in the Department of Urban Studies and Planning at the University of Sheffield — these are the most densely populated square kilometers across Europe (or at least within the 39 countries that he looked at).
Paris, once again, comes in near the top with a peak density somewhere around 52,218 inhabitants per 1km square. The square in question is in the neighborhood of Goutte D’Or. And the only square within the study to come in denser is one from the L’Hospitalet de Llobegrat in Greater Barcelona (53,119 inhabitants per square kilometer).
Now let’s take a look at how these sorts of densities actually manifest themselves. Below is an aerial capture from Google Maps showing a section of Goutte D’Or in Paris. The buildings are all pretty much 7 storeys (mid-rise), but the blocks are mostly filled in. Lots of interior courtyard apartments. This is one way to get to over 50,000 people per square kilometer.
Returning to Vancouver as a point of comparison, below is an aerial capture from downtown Vancouver at exactly the same scale as the Paris capture. I couldn’t find a density map of downtown, but it’s probably safe to assume that it’s greater than 5,493 and a lot less than 52,218 residents per square kilometer.
What you see here is typical Vancouverism. Lots of slender point towers, careful tower positioning and spacing, and generally low podiums. It is a perfect demonstration that height and density do not necessarily correlate. It is possible to have low buildings and high density, which is something that Europe obviously does very well.
But here’s the important question: In which of these two examples would you rather live? Please leave a comment below.
Many, or perhaps most, developers I know have a minimum project size that they will work on. That’s why you’ll hear people say, “No, that project is too small. I need at least X square feet or Y number of units.” Given that smaller scale development such as laneway housing and “the missing middle” are so in vogue today, I thought I would discuss some of the reasons why scale matters.
But first, it’s worth mentioning that “laneway suites,” as we have structured them here in Toronto, are intended to be built by individual homeowners and not by developers. The lots can’t be severed and most lots will yield less than 1,000 square feet. So this is a bit of a unique circumstance. As most of you know, I am a big supporter of this initiative.
When you get into larger developer-led projects, it’s a different ball game. For one, it’s hard to even find sites. And good luck if you need to deal with multiple owners as part of an assembly. Most landowners have pricing expectations that do not even remotely align with “missing middle” level densities.
But assuming you’ve been able to find land at a reasonable price, you still have to contend with the fact that projects have a lot of fixed costs, as well as diseconomies of scale. In other words, there are schedule, cost, and resourcing considerations that won’t change no matter how big or small you go. It’s still going to take this long and cost this much, and you’re still going to need a set of humans to manage it through.
This can then create a situation where there’s not enough margin for error. The project is simply too small to absorb any shocks, such as an unforeseen delay or an unforeseen groundwater concern that is now adding millions to your project budget. There’s a lot of risk with development and it’s prudent to have contingency room. That’s harder to do with smaller projects.
The other problem developers run into with smaller projects is that the construction subtrades also tend to think of them as smaller projects. They have their own set of fixed costs and margins to worry about. So unless you happen to catch them with an opening in their schedule, you run the risk of them telling you they’re too busy or them giving you a stinky price, which is just another way of them saying they don’t want the job.
On top of all this, there’s minimum project size inflation. If capital is not a constraint, there’s a tendency to want to do bigger projects (see above). And because the cost of everything keeps going up, it’s simultaneously getting harder and harder to make smaller projects pencil; unless you, maybe, go ultra luxury and ultra exclusive. But that’s kind of the opposite goal of this whole “missing middle” movement, is it not?
But being the desert city that it is, its population consumes more water than its natural aquifers can support. Which is why there is something called the Central Arizona Project (CAP).
Approved in 1968, the CAP diverts water from the Colorado River into the state of Arizona. The system is 336 miles (or 541 km) and it runs from Lake Havasu to Tucson, via Phoenix.
Today, it is the single largest water source (and consumer of power) in Arizona, serving about 80% of the state’s population. This obviously makes it invaluable. It delivers on average about 1.5 million acre-feet of water per year. (Acre-foot = Acre of area x one foot in depth.)
I have written about Medellín, Colombia before on the blog. But the content has mostly come from my urbanist friends. About five years ago, my good friend Alex Feldman — who is a Managing Director at U3 Advisors — wrote this guest post about what other cities could learn from Medellín. He wrote it following a trip to the city for the World Urban Forum.
I haven’t been to Colombia, but it’s high up on my list. So I enjoyed watching the story of Medellín’s turnaround in this Future of Cities Retro Report. It is the same story that Alex told over five years ago, but that doesn’t make the lessons any less valuable. (If you can’t see the embedded video at the bottom of this post, click here.)
Eugenie Birch — who is interviewed in the video and who is a professor at my alma mater — hits the nail on the head when she says that a lot of this stuff isn’t rocket science. Look, we know how to lay pipes. We know how to build transportation systems. It comes down to this: Is there the political will?
Lincoln Road is one of my favorite parts of Miami Beach. Supposedly the pedestrian-only street attracts some 11 million visitors a year. But I have noticed that the street has lost some of its mainstays to areas such as Wynwood. This is probably why the city and local property/business owners struck a deal this past summer to makeover the street based on a design by Field Operations.
The deal works like this: The City of Miami Beach is going to pay for the entire US$67 million makeover. This money will come from city and county taxes, as well from bonds. In return, property owners in the Lincoln Road Business Improvement District (BID) have agreed to tax themselves an additional 25% in order to pay for promoting and programming the street.
Obviously everyone believes that they will come out ahead as a result of this makeover. An improved Lincoln Road means more foot traffic, more sales, and more tax revenue. There’s also talk of expanding the boundaries of the BID, which would generate additional funds. Right now the district is bounded by Alton Road on the west and by Washington Avenue on the east.
For those of you who aren’t familiar with Business Improvement Districts, they are essentially defined areas where additional taxes are levied in order to fund projects and improvements that help overall economic development within the district. It is a structure that is used all around the world and it is one that was actually pioneered here in Toronto.
Here we call them Business Improvement Areas, and the first ever was the Bloor West Village BIA, which was established in 1970. There are now 83 BIAs in the City of Toronto. The first BID in the United States was the Downtown Development District in New Orleans. It was established in 1974. There are now over 1,200 across the U.S.
If you’d like to learn more about the improvements planned for Lincoln Road, here’s a copy of the master plan that was submitted to the City of Miami Beach’s Historic Preservation Board. The link is from The Next Miami.
This week, RBC Economics published a study on Canada’s rental market where they argued that the pace of new supply needs to at least double in markets like Toronto in order to meet future housing demand and balance the market. Similar things, I’m sure, could be said about many other housing markets around the world.
The report pegs the current rental housing deficit in Toronto at about 9,100 units:
And because they believe that the cost of ownership is pushing more people into rentals, the number of renter households is expected to grow at an average rate of 22,200 units per year in Toronto.
If you take 22,200 units per year over the next two years, and add in the current deficit of 9,100 rental units, you get to a total count of 53,500 rental units. This is what RBC Economics believes must be delivered to the market in order to restore equilibrium, and decrease the upward pressure on rents.
Rental units are, of course, delivered to the market in two main ways. There’s purpose-built rentals and there are for-sale units that end up as rental housing. But even if you amalgamate both of these tenures, we are not building enough housing.
Against this backdrop, I find it curious that developers are so often vilified. Earlier this week, I saw Jennifer Keesmaat tweet out that — as we ready for this fall’s federal election — any sensible housing plan must move away from our current for profit housing delivery model.
Who, then, will build these 53,500 rental units? That part wasn’t clear to me.
From 1899 to 1902, the north side of 42nd Street, between 7th Avenue and Broadway in Manhattan, was occupied by the Pabst Hotel. At the time, this neighborhood was called Longacre Square.
Owned by the Pabst Brewing Company of Milwaukee, the building was part of a growing network of hotels and restaurants that the company used to promote its beer. Note the cool rooftop sign.
The portico you see in the above picture was highly controversial. I guess some things never change. City officials were criticized for allowing such a structure to encroach over a public right-of-way. Curiously, the Times was one of its biggest critics. A judge ultimately ordered for it to be removed in 1901.
The building also came down not long after. The introduction of New York City’s first subway — operated by the private Interborough Rapid Transit (IRT) Company — began to spur new investment in the area. The first IRT line ran right through Longacre Square.
Adolph S. Ochs was the owner of the The New York Times during this period and he believed that the new subway line would increase foot traffic in the area. Betting on transit is clearly not a new phenomenon. So in January 1905, the newspaper moved into a new headquarters on the site of the former Pabst Hotel; a building that it developed for itself.
Today this building is known as One Times Square. Here is a photo of it under construction in 1903:
And here is a photo of the completed building in 1919 (at this point, it was no longer occupied by the paper):
At the time of its completion, it was one of the tallest buildings in New York City. And eventually, perhaps as a result of some encouragement on the part of Ochs, Longacre Square was renamed to commemorate this new building and the paper. It became known as Times Square.
By 1913, the Times had outgrown the building and would move down the street. But not before it would introduce a now famous New Year’s Eve celebration in the Square. The Times would continue to own the building up until 1961.
The area continued to evolve into an important theater district and transit hub. Everything connected through Times Square. Sadly, the Great Depression was not kind to the area and, either because of it or alongside it, Times Square declined into an area of vice filled with everything from burlesque shows to prostitution. This would come to define the area for almost the balance of the 20th century.
It would take many attempts starting in the 1980s to try and redirect Times Square’s now entrenched reputation. In 1982, the Department of City Planning created the Special Midtown Zoning District, which attempted to attract developers with tax breaks and other subsidies. It didn’t really work.
The City eventually looked to eminent domain to try and tidy up the area. But property owners — many of whom owned the adult businesses in the district — objected via a group known as the Coalition for Free Expression.
It would take a few other mayors, many legal battles, and interim ordinances such as the 60/40 rule — which allowed adult businesses to continue operating as long as no more than 40% of their floor area were allocated to sex — before things would really change.
Today, or at least as of 2015-2016, Times Square represents 15% of New York City’s total economic output. And it does this via 0.1% of the city’s total land area and 7% of its total employment.
Real estate in the district is estimated to be worth over $7 billion, with the Square generating about $2.5 billion in municipal tax revenue and about $2.3 billion in state revenue. A lot has changed in more than a century. But perhaps most importantly, the portico came down.
