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.
Today was the official launch of Corktown Condos. (In case you missed it, I wrote about Corktown last month, over here.) So what does this actually mean? What it means is that we got a small group of 500+ agents and brokers together to tell them about the project. We talked about our love of Hamilton and provided an overview of the project’s amenities, suite pricing, deposit structures, and so on. Everyone who attended now also has access to our broker portal, where all of this information is stored.
However, no actual purchase agreements were signed today. That’s for later. The first signing event will take place on Saturday, May 27th starting at 12PM, at 30 St. Clair Avenue West, Suite 103, in Toronto. So if you’re interested in Corktown, I would encourage you to attend on this date. Feel free to also reach out to our sales team if you have any questions (sales@corktown.condos). The people you want to connect with are Shannon Glas, Daniella Commisso, and/or Hansen Chu. Hopefully I’ll see you there next weekend!
The trend continues. BlackRock — the world’s largest asset manager with about 20,000 employees in more than 30 countries — announced today that employees need to be in the office at least 4 days a week starting this September. This is an increase from the current 3 days a week.
You can’t read the news today without seeing some sort of headline about the demise of downtowns. But what is clear from announcements like these is that we still have yet to reach an equilibrium. And it’s probably just taking a lot longer than most people initially anticipated.
I know that this is a very divisive topic and that many of you think I’m old school for continuing to say this. But I fundamentally believe that there are irreplaceable benefits to in-person interactions among teams. I don’t know, maybe it’s because of my architecture background.
In architecture school you’re expected to spend all of your time “working in studio.” And even though you’re often working and producing things on your own, you do it so that you can be around your peers, shout out questions when you need help, learn from their work, and go for burritos and beers together.
And it was such a fun and creative experience for me that I can’t imagine what it would have been like had I been forced to work from my apartment. I probably would have had an equal number of burritos, but maybe a lot less beer?
AI is going to be very disruptive, right? At this point, I think it is pretty clear to most that the answer is yes, almost regardless of what industry you’re in. But is it going to be really disruptive? Like disruptive in the Clayton Christensen sense of the word. (Christensen is known for coining the term “disruptive innovation“, which he contrasted against “sustaining innovation.”)
This is a good question, and I like how Ben Thompson thought about it in his newsletter this morning:
I tend to believe that disruptive innovations are actually quite rare, but when they come, they are basically impossible for the incumbent company to respond to: their business models, shareholders, and most important customers make it impossible for management to respond. If that is true, though, then an incumbent responding is in fact evidence that an innovation is actually not disruptive, but sustaining.
The point he is making is that given that the big tech companies (and of course everyone else) are all now responding to AI by incorporating it into their businesses, it, by definition, must not be a disruptive innovation. It’s a sustaining one. This doesn’t mean that AI won’t have significant impacts on our economy; it just means that maybe it won’t put a company like Alphabet out of business.
I thought this was an interesting way of looking at things because it is a reminder that “disruptive innovations” often start out at the bottom of the market. They start in a way that can feel innocuous to incumbents; that is, until they move upmarket. But this is not at all how AI feels. As soon as you play around with ChatGPT you immediately think to yourself, “holy shit, this thing can do my job.”
That is obviously something very meaningful. But is it going to shake up the big tech world order? I don’t know, if you follow Christensen’s definition, crypto sounds like the more disruptive innovation.
We often talk about the challenges associated with smaller scale developments on this blog. They are difficult to underwrite, there are diseconomies of scale and, after a certain point, developers typically start to require a certain minimum size. In other words, if you have a big development machine with a lot of fixed costs, you probably don’t want to build even 100-150 homes at a time. You want something like 250-300 homes as a starting point.
But there is something so great about small infill projects, which is another topic that we like to talk about on this blog. Take, for example, the above 10,940 square foot project at 6001-6009 Rue St-Hubert in Montréal. Designed by L. McComber, the project includes 2 commercial spaces and 8 homes (specifically, 2 studios and 4 multi-level “townhouses”).
Using rough measurement approximations from Google Maps, the lot looks to be about 15m wide x 26m deep. So the lot itself is somewhere around 4,200 sf, which is effectively a double lot based on the prevailing frontages in the area. According to this rough math, I’m guessing the FSI (floor space index) of this development is somewhere around 2.5x.
It is certainly a beautiful project, but in my mind the two most noteworthy aspects of this development — at least for this audience — are the following:
The architect essentially acted as the developer. They wanted to build and then own their own office space, and so they now occupy the ground floor of this project. As a partial end-user of the development, this likely means that they underwrote it slightly differently compared to if they were a pure developer.
The project’s circulation space is outside and is largely housed in a central open-air courtyard.
Here’s what #2 looks like:
This second point about circulation is an important one because it’s an effective way to reduce hard costs, improve overall efficiency (rentable/saleable divided by gross construction area), and lower long-term operating costs. Of course, exterior stairs/circulation are quite common across Montréal’s walkups. So maybe this isn’t all that novel for them.
But I still think it’s a perfect reminder that we shouldn’t use climate as an excuse. Montréal is both colder and snowier than Toronto. And just look how they’re building. I would happily live here. Would you?
I love my Canadian passport. It is both a part of my own identity and my ticket to the rest of the world. And as much as I also love technology, I hope that we never do away with old fashioned passport stamps administered by grumpy customs officials. I don’t care if the data is being stored on a blockchain somewhere — which will likely be the case — I would really like a barely legible and awkwardly placed stamp inside of my personal paper folio.
Of course, now there’s a new passport.
This week, Canada unveiled a new design featuring enhanced security features (presumably all of which are vitally important) and a lot more images of nature. Perhaps not surprisingly, it has received a lot of criticism. But it doesn’t seem to be the usual, “this is new and I just don’t like change” kind of criticism. It seems to be the “this is objectively bad” kind of criticism.
Supposedly, many of the visual changes were done because they were thought to better represent who we are as Canadians. Really?
Families, Children and Social Development Minister Karina Gould, who helped announce the changes, and who oversees Service Canada, said that the redesign – including images of polar bears, people jumping in a lake, and birds in winter – capture the “spirit of who we are as Canadians.”
At the highest level, I think it is clear from this redesign that we are struggling with our own sense of national identity. Who are we? And what kind of nation do we aspire to become? This is evident through at least two features of this new passport:
The way we are communicating the monarchy of Canada
The iconography that we believe captures the “spirit of who we are as Canadians”
The current passport design — which I have in front of me right now — features the Arms of Canada prominently in the middle of the cover. The new design (pictured above), moves the Arms of Canada to the bottom left, though it appears to remain the same size as before. However, this move makes room for a partial maple leaf to tuck behind the Arms in the center of the cover.
Ignoring that these two objects feel visually incongruent with one another, I generally hate both designs simply because I hate the fact that Canada is a constitutional monarchy. However, I will give credit to the previous design and say that at least it was decisive. It had one visual image in the center of the cover that clearly communicated something: our monarch is first and foremost.
Now what we have done is decided to timidly introduce a partial (and minimal) maple leaf behind it. It is perhaps the softest way we could have done it: “Sorry, mind if I just insert this here?” But rather than assert brand Canada, it merely signals that we’re shy, and we don’t really know who we are.
If it were up to me (and it isn’t), the Arms would come off the cover completely (it can go somewhere inside as part of our history), and I’d place a single small red maple leaf under the word “Passeport.” Nothing on the back cover. Ironically, I think this would be infinitely more impactful — and confident — than what is shown here.
The next problem has to do with the iconography that we believe captures the “spirit of who we are as Canadians.” As of 2021, it is estimated that over 82% of Canadians live in an urban center, and this number continues to increase. So while I appreciate that we have a very large land mass and that our natural environment is precious, it does not actually reflect the current reality of how the majority of Canadians live.
Perhaps the argument is that deep down inside we all secretly wish that we were living in the woods next to nature (or at least in a luxury “cottage” in Muskoka). This is the true “spirit of who we are.” I don’t know, maybe it is for some. But there’s something to be said about recognizing the reality we live in today and the importance of our cities in driving the Canadian economy forward.
Equally important is recognizing the people, moments, and symbols that form part of our history. Much of that was stripped from this new design. So is it time to go back to the drawing board? I think so. Our visual symbols tell the story of who we are and who we want to become. If we can’t get these right, then how will we actually get to where we want to go?
One conventional way to think about cities is that people migrate to urban areas in order to make more money. This remains true today and the data is pretty clear that, if you live in an urban area, you’re likely to make more money than if you didn’t — even if you’re just as educated. You’re also likely to make even more money if the city is really big (there’s a correlation between income and city size). And you probably also walk a little faster given that, you know, time equals money.
But there are other reasons for wanting to live in a city. And probably the biggest is that they can bring us pleasure. Back in 2001, Edward Glaeser, Jed Kook, and Albert Saiz published this paper called, “Consumer City”, where they showed that high amenity cities have tended to grow faster than low amenity cities. They also went on to demonstrate that, in high amenity cities, urban rents have tended to increase faster than urban wages, suggesting that there are other reasons for wanting to live in a city beyond simply wage growth.
New York is undergoing a metamorphosis from a city dedicated to productivity to one built around pleasure. . . The economic future of the city that never sleeps depends on embracing this shift from vocation to recreation and ensuring that New Yorkers with a wide range of talents want to spend their nights downtown, even if they are spending their days on Zoom. We are witnessing the dawn of a new kind of urban area: the Playground City.
I saw City Observatory comment that they thought it was odd Glaeser didn’t mention his previous work on the Consumer City. But I wonder if this is him not wanting to suggest that this was a trend decades in the making. Maybe instead, he wanted to position it as a dramatic and profound shift brought about by a pandemic. But how can you not ask this question: Is the Playground City truly something novel, or are we just following a trend line?
In my view, they’re not all that different. The basic idea is that people like cities that are cool and fun, and so they will pay a premium to be in those kinds of places. This was true in 2001 and it’s still true in 2023. The only difference today is that we now believe we have too much office space in some markets, and so we’re trying to recalibrate around work vs. pleasure. But even with this, the work component of our cities isn’t going to zero.
The thing that we have been talking about for many months on this blog finally happened: Toronto City Council voted (18-7) in favor of allowing fourplexes as-of-right across all residential areas of the city. (If you’re curious, here is a map of which Councillors voted yes and which ones voted no. It’s not all that surprising.)
This is a major accomplishment and milestone for Toronto. So congratulations to everyone who has been working to make this happen. But of course, now is when the rubber hits the road: Will the market actually build this new housing typology (for Toronto) at scale? Is it actually feasible?
Jeremiah Shamess of Colliers came out this morning saying that the answer is no. These multiplexes aren’t feasible and it is “not going to solve our housing crisis or even come close.” He may be right, but I think a lot of people — myself included — are now looking closely at their feasibility.
In fact, this morning I ran into a lender on the street — look what happens when you come into the office — that is seeing if these can be built using CMHC financing. And this is just one example of the work happening all over the city right now.
There is also the question of scale. Small development projects are challenging. The general rule of thumb is that if you have the resources, you should build as big as you possibly can to drive economies of scale. So if these are actually feasible, who will want to build them?
The margins on a build like this are almost certainly going to be somewhere between negative and marginally positive. But I still think there’s something to be said about being directionally right. There’s more work to be done and these policies will likely get adjusted, but I think that’s just fine as long as we’re moving forward.
I am sure that most people aren’t going to feel bad for LVMH, but it is facing some opposition in trying to bring the first Cheval Blanc Hotel to North America. Last year, Beverly Hills City Council approved the hotel development on Rodeo Drive, but since then, enough signatures were collected that a special election is going to be held later this month for the ~22,000 residents who are registered to vote in Beverly Hills. And from the sounds of it, the results will decide the fate of the project.
As I understand it, there are two mains groups that are upset:
A union representing hotel workers
Local area residents
The official message from group #1 is that they want affordable housing. But there is speculation that they just want the hotel to be unionized. I don’t don’t, so let’s move on to group #2. Why would residents be opposed to this project?
One way to think about this is that LVMH is trying to build a fancy new $2,000 per night hotel in one of the richest cities in the US, on one of its most luxurious streets. So, you would think that there would be a fit and that more than a few rich people would be excited about such a development. I guess this is true — and Council did vote in favor last year — but clearly there are other concerns:
…some people were unhappy a 109-room hotel, framed by Rodeo Drive, Little Santa Monica Boulevard and Beverly Drive, would rise nine stories on one side and tower over surrounding retail and commercial spaces sitting at three and four stories high. Four buildings would have to be razed, and the idea of more traffic coming to the area was unsettling.
It seems to be about scale:
…Cheval Blanc opponents want to keep that small town vibe. “The area is charming and beautiful right now, and, if and when they are able to put that project out there, it will not be. It is very nice to be around low-rise buildings. You can sit at a sidewalk café in Beverly Hills and look across the street and see the hills. It is a very good feeling,” said Darian Bojeaux, an attorney who has lived in the city for 35 years and signed the petitions launching a special election. “Let them build a code-compliant hotel that is three stories high. Let them build something nice that doesn’t ruin the city.”
Here’s an aerial of said small town vibe for context (I’ve marked the number of proposed storeys):
What’s interesting about this situation is that it seems to isolate the concerns. Because what is being proposed here is an obviously compatible use. It is a rich thing in an area for rich people. Residents don’t seem to be saying that this is a problem. Instead, it is height that could potentially “ruin the city.” (Ignore for a second that there’s already an office building of similar height across the street.)
What this tells me is that if you’re thinking about proposing nine storeys of Ferragamo and Balenciaga, that’s probably not small town enough. Saint Laurent needs to be no more than three.
One of the things that I have wanted to do since I was in architecture school was visit the Venice Biennale. Partially because I would hear people say, ” so and so exhibited at the Biennale this year”, and that made it sound cool. But mostly because it’s the oldest cultural exhibition of its kind in the world — it was inaugurated in 1895 — and because there’s an entire section of it dedicated to architecture. So I’m excited to say that it looks like this month is going to be the month.
The way I am told the Venice Biennale of Architecture works is that there are two main components. There are the national pavilions in the Biennale Gardens, and there is the Arsenale, which is where lots of different nations exhibit under one roof. Canada is one of the 29 countries that has its own pavilion and, if you aren’t familiar with its history, it’s worth watching this short video:
At the time of writing this post, it only had 277 views, so I’m guessing that most of you have not seen it. I felt patriotic when I watched it, because the purpose of these pavilions is that they host each country’s official representation during the Biennale. It’s Canada to the world and that makes me proud. This year, Canada is being represented by Architects Against Housing Alienation (AAHA) with an exhibit called “Not for Sale!”
Here’s an excerpt from the project description:
Real estate speculation is a form of extortion. It converts homes into spatio-financial assets, changing the form, function, and aesthetics of housing to better serve the logics of wealth storage and speculation. The process is violent, resulting in an urban environment that is racist, sexist, and classist at a systemic level. This global phenomenon is nowhere more visible than in Canada, a country whose economy is now dominated by real estate.
In other words, it looks like the pavilion is going to be turned into a scathing criticism of what I do for a living: real estate development. How neat! The other neat thing about the Venice Biennale is that One Delisle is going to be featured in an exhibition called, “Reconceptualizing Urban Housing.” Our team has been working on this project with Studio Gang since 2016, and so it’s a great honor to have it recognized on such a global stage.
It also means that the Venice Biennale is going to simultaneously tell me that my work is doing some amount of good for Toronto, and that I’m also contributing to racism, sexism, and classism at a systemic level. I can’t wait.
3D printing, or additive manufacturing, is often referred to as the next industrial revolution. And we are certainly seeing it creep into the mainstream economy in meaningful ways. You can soon buy a 3D-printed home for under $99,000, and already you can buy a home in the world’s largest 3D-printed community. We also now make bridges using additive manufacturing, which in this case in Amsterdam, was prefabricated off site and craned in.
Many of the architects we work with also use 3D-printed models to rapidly prototype, which I am guessing is disruptive to the whole unpaid architectural intern thing. But what has been missing, for me at least, is a comfortable pair of 3D-printed shoes from the future. Thankfully, Denmark-based RAINS (in collaboration with Zellerfeld) announced their first 3D-printed pair at Paris Fashion Week earlier in the year.
Maybe you like the look of these, or maybe you don’t. I would definitely wear them. But what’s interesting is that they’re 100% recyclable; they’re printed upon order (so no excess supply); and they’re made using a fully automated production process — meaning there’s little to no labor component and there’s no overseas factory. This sounds like something!
I mean, presumably this completely changes where shoes want to be made. Previously you wanted an overseas factory where labor was cheapest. But if labor is no longer a meaningful input, do you now just want to produce these things closer to where your customers actually live and reduce shipping costs? From what I have read, Zellerfeld’s factory is in Hamburg and it currently takes something like 40 hours to print one pair of shoes.
Decentralization was always one of the great promises of 3D printing. And to be honest, it’s not hard to imagine a world where you walk into a store, have your feet scanned for optimal sizing (already the company lets you do this online with your phone’s front camera), and then you get a new pair of shoes printed for you right on the spot. Maybe you even get to play with the design a little so that no two shoes are ever exactly the same.
Of course, along with this, you’d also get an NFT version of your shoes indicating where you printed/minted them. This would be your decentralized blockchain record for your decentralized physical shoes. This sounds weird and consumers won’t necessarily think of it in this way, but it’ll be what’s happening behind the scenes. What consumers will care about is being able to flex their new shoes both offline and online.
On that note, let’s get back to the basics here: Would you ever order/wear these shoes?
