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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  • The new standard in wired charging

    It is widely rumoured that the upcoming iPhone 15 will replace its lightning charging port with a standard USB-C port. Maybe it doesn’t happen next month, but it will happen before December 28, 2024. Because this is the conformity deadline that the European Union has set for standardized wired charging.

    This said, I am already feeling like everything has switched over. All of the charging cables in my bag right now are USB-C. And I just realized that I’m going to need to buy some new travel adapters with USB-C ports, instead of USB-A (see above). This also means that hotels, airports, airplanes, and all other places around the world are going to need to start switching over to USB-C.

    I’m thinking about this right now because we are incorporating USB plugs next to work areas in some of our development projects. And there’s no point in going with USB-A any longer. That’s done. What would be even better, though, is if we could get rid of the 15 different plug types that are used around the world and switch everything over to one standard.

    Hopefully that’s next.

  • Summit County, Utah to vote on acquisition of 8,576-acre ranch

    Summit County Council is holding a special meeting this week to vote on the acquisition of an 8,576-acre property next to Jeremy Ranch and around the corner from Parkview Mountain House.

    The County Manager has recommended approval of the deal and these are the terms:

    – $55 million total purchase price (about $6,413 per acre)

    – Structured through a $15 million three-year option to purchase, with a right to extend for another year for an additional $5 million (option fees to be applied toward the purchase price)

    – During the option period, the County will have control of the property and pay $5,000 per month in rent

    Another way to look at this deal is that Summit County needs to initially come up with $15 million of equity. This is because they are getting seller financing for the remaining $40 million. (Implied loan-to-value of about 73%.)

    After 3 years, they will have to put in another $5 million, which lowers the implied LTV to about 64%. But in both cases, and assuming the $5k per month is all the County needs to pay, there’s effectively no interest on this 4-year “financing”. ($60k per year on $40-45 million.)

    The purchase price is also only ~$6k per acre, which should tell you that this is not development land. Its value is what you see here:

    And this is exactly what Summit County intends to do with the land: conserve it. As one of the last contiguous mountain ranches in the area that is privately owned, this sure seems like a win for the community. It’s a pretty good deal, too.

    Images: Summit County, Utah

  • Over 15% of retail sales in the US are now happening online

    Amazon was founded in 1994 and went public in 1997. By 1999, some 5 years after the company was started, only about 1% of total retail sales were being done online in the US. So you have to give it to Bezos, he saw what was coming and he got in early to help create it. This was not so obvious back in the mid 90s. The internet as a whole was still being viewed with skepticism, especially after the dot-com bubble.

    Today, online shopping represents over 15% of total retail sales. (See above chart from Charlie Bilello.) The pandemic pop is over, but it looks like we’ve returned to a pretty clear trendline — up and to the right. I guess the questions now are: When and where does this start to flatline? It doesn’t seem likely that this goes to 100% in the foreseeable future, especially if you include grocery. But it’s going to go a lot higher.

    For myself, if I were to exclude food/grocery, I would say that the vast majority (80-90%) of my retail purchases are done online. Even if I’m in a physical store, I’ll often pull out my phone to price compare. If it’s cheaper on Amazon, I’ll just order it there.

    Here’s another example.

    This past summer when I was in Park City, I discovered the brand Vuori. I had heard of them before, but I had never actually seen or touched their clothes. It’s great stuff. But instead of the store convincing me to buy something, it convinced me that I like the brand and that I should probably shop on their website at some point in the near future. And that’s exactly what I ended up doing. (Sorry Lululemon. You’re still my favorite.)

    All of this is perhaps obvious in a world where 15% of total retail sales are happening online. But I would imagine that the retail landscape and our cities will look very different when this number goes even higher. Our cities were different at 1% compared to today at 15%; so imagine what 50% or 80% might be like.

  • Montreal’s Diverse Metropolis policy has delivered exactly zero affordable homes

    Montreal has a bylaw that came into effect on April 1, 2021 and that requires developers to contribute to the city’s supply of social, affordable, and family housing. (All three of these have their own definition.)

    Developers can meet this requirement in a number of different ways:

    • They can build the social, affordable, and/or family housing
    • They can contribute land or a building
    • Or they can pay cash-in-lieu

    Usually, I think of inclusionary zoning as being the first of these three bullet points: a hard requirement to build a certain amount of non-market housing. That is not an absolute requirement here, and so I see this policy as being IZ lite.

    Since the bylaw came into force, there have been approximately 150 new projects by private developers in Montreal, according to this CBC article. That has resulted in about 7,100 new market-rate homes. At the same time, it has resulted in exactly zero non-market homes.

    From what I can tell from the article, every single developer has opted for option three: pay the cash-in-lieu instead of actually building the housing. Supposedly this has produced about $24.5 million in new fees, which sounds like a lot. But if you divide it by 7,100 homes, it isn’t all that much: just under $3,500 for each new home.

    So what is clear is that this is the least expensive option. That’s why everybody is choosing it. If the fee was significantly higher and it was cheaper to just build the social/affordable/family housing, then every developer would just do that. This is how development pro formas work.

    But at the end of the day, we are still taxing new housing and new home consumers for the purpose of trying to create a smidgen of more affordable housing. And this has never sat well with me, especially considering that there are plenty of other things that we could be doing to make new housing more affordable for everyone.

  • You never really own it. You simply look after it for a few years.

    I have been wearing an Apple Watch for many years and I love it. I love tracking my workouts. I love seeing my altitude when I’m snowboarding. And I love using it to pay for almost everything. Today I also learned that when you dive into a body of water, it’ll tell you the temperature of said water and your depth. It’s all pretty incredible and, of course, it’s only going to get better.

    Like clockwork (bad pun), new features are continually being added and that means that the watch I have on my wrist right now will likely be obsolete in a matter of a few years. This is a good thing because it means the tech is continually getting better. But it’s also a bad thing because it means my current watch doesn’t have any real longevity.

    Legacy watch companies like Patek Philippe have sold us on the idea that a watch is something you keep for a lifetime and then pass down to the next generation. And there’s something wonderfully romantic about this idea, which is why people do/did it.

    But today, Apple Watches alone outsell the entire Swiss watch industry. Meaning, most people have moved on from this romantic idea of a watch. We want new diving features! And there’s part of me that feels sad about this. My parents got me my current watch and it would be nice if I could tell that to the next generation of our family.

  • Military-grade camping vehicle

    If you think housing is expensive, consider the above, which I stumbled upon in New Hampshire and which initially struck me as some sort of military-grade camping vehicle.

    I checked out Earth Roamer’s site and these things are luxurious on the inside. However, they also have a base starting price of US$695,000. I don’t know the exact square footage, but the PSF price has got to be very high.

    They’re also about 12’ tall (nearly double what most parking garages are designed to accommodate); meaning they don’t really fit in most cities. But I guess that’s kind of the point.

    These are about adventure and the open road.

  • New Hampshire

    Rye and Portsmouth, New Hampshire. Shot on a Fujifilm X-T3 with a 23mm f/2 prime lens.

  • Urbanism versus architecture

    Good morning from rainy New Hampshire.

    It’s been raining all morning, but apparently there is an ocean hidden in the above picture. We also got in after dark and so all I really saw was what I could see on the drive from the airport.

    Whenever I am reminded that the vast majority of built form in North America is car-oriented in nature, I can’t help but think of how sticky all of this is going to be.

    Witold Rybczynski put it accurately when he said, “urbanism and architecture observe different time lines.” Buildings may take forever to build, but relative to urban form, they actually change pretty quickly.

    New materials and styles emerge, and so do new buildings. But the streets that surround them change so slowly, that for all intents and purposes, they mostly don’t change.

    What that means is that, for better or for worse, most of what we see is likely to persist. No wonder there is an arms race going on with autonomous vehicles.

  • Toward a culture of innovation and entrepreneurship

    One way you could oversimplify the Canadian economy is to say that it revolves around three things: natural resources, real estate, and high immigration. (You can tell me I’m wrong in the comments below.) More recently, we’ve also been touting the growing number of tech workers in our cities. But in some ways this is a bit of a vanity metric. 

    I think of it in terms of two different categories of workers. There are tech workers that are the result of foreign companies opening satellite offices to take advantage of the weak Canadian dollar and our more enlightened immigration policies. And there are tech workers that are the result of Canadian-based companies innovating, growing, and needing more talent. Think Shopify.

    The former situation is not at all bad, but a lot of the value is going to accrue outside of the country. Whereas in the latter situation, we get to be the principal recipients and we get all of the positive externalities associated with innovation and entrepreneurship. One of these is a powerful compounding effect. Successful startups tend to beget even more new companies. 

    So even though I work in and benefit from one of the three things that I mentioned at the beginning of this post, I believe that we need to be much better at encouraging a culture of innovation and entrepreneurship in Canada. We’ve become too complacent.

    This is a critically important topic that we don’t seem to be talking about nearly enough. So I plan to do more of that here on the blog.

  • Cheap mortgages are something to hang onto

    If you really need a new home, then I guess this makes sense:

    We thought rising mortgage rates would crush the homebuilders, and bet against Pulte in the FT stockpicking contest. But the exact opposite happened: high rates froze the existing house market by giving homeowners a huge incentive not to move — their irreplaceable cheap mortgages. That left new homes as almost the only game in town for anyone who really needs to buy a home. Pulte has been one of the best- performing stocks in the S&P 500. Never pick stocks, even in a stupid stockpicking contest, on the basis of superficial research.

    And here’s a chart that supports this argument (new homes as a % of total single-family home inventory, including resales):

    It’s an interesting nuance.

    But it’s certainly a different story here in Toronto with new condominium sales. According to Urbanation, in the first half of this year, the Greater Toronto Area sold 6,727 new condominium homes. This is down 59% compared to 2022, and represents the slowest first six months in a decade.

    In this case, higher rates have dramatically slowed the market.