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.

Subscribe

  • All lit up in the Junction!

    Friday was a busy day at Junction House.

    In the morning, we gave a hard hat tour to Toronto’s City Planning Division. They are currently revisiting the Mid-Rise Building Performance Standards, and so this was an opportunity to see what these standards translate to when you’re on site trying to actually build a mid-rise building.

    It was great to see the group so highly engaged and looking for ways to improve the delivery of this housing typology. Thanks for taking the time to visit Junction House.

    Then we had the “official lighting ceremony” for the placemaking art. And by official lighting ceremony, I mean that there were a handful of us playing around with a drone and trying to get cool pictures on our phones. However, did we have one actual videographer, so stay tuned for some proper video footage of the installation.

    Finally, in the evening after sunset, we got to see it illuminated for the very first time. And it was everything we had hoped for! An idea turned into reality, many years later. Shout out to the Urban Toronto community for spotting one of our earlier prototypes online and then encouraging us to make some design changes. We are happy we listened.

    But what do you all think? I’d love to hear your thoughts in the comment section below.

  • The Well is a very impressive masterplan

    I am so impressed by The Well. I walked through it this afternoon after a meeting at BDP Quadrangle’s office, and I think that once it’s fully open and stabilized, it’s going to become an instant icon and destination in the city of Toronto. So much so that when people visit Toronto, they’re going to come to The Well to take a photo under its glass canopy. Just watch.

    Right now, only a portion of it is accessible to the public and it’s because there’s a BMO bank branch on the lower level that is open and operating. It’s all by itself right now, though, so if you bank with BMO, maybe pop by and say hello.

    Now, if you’re a naysayer, I would imagine you’re probably thinking at least two things. You’re thinking of the office space that Shopify left behind. And you’re thinking that open-air malls maybe aren’t well suited towards the Toronto climate. When our group walked through it today, Matt Young (of Republic Developments) immediately said that it felt like something from California.

    I don’t really get this climate argument though. Mainly for two reasons: (1) because winter clothes exist and (2) because we have lots of other open-air malls throughout the city that are doing just fine. Except we don’t call them open-air malls, we just call them streets. And the way they work is that people walk outside, and then go into various retail establishments.

    On the office piece, well, you all know how I feel about office.

    Congratulations to everyone involved in The Well. It is an accomplishment that you should all be very proud of, and our city is better for it. I look forward to seeing it continue to take shape.

  • The negative externalities of Toronto’s “yellow belt”

    My friend Randy Gladman, of Colliers Strategy & Consulting, recently published this important opinion piece in Urbanize Toronto. In short, it is about how little of our land we dedicate toward high-density housing (about 5%), what that results in, and why it should change:

    TenBlock’s efforts are appreciated; more homes are desperately needed in Toronto, especially near transit. Intensification in all forms should be welcome. But there should be a better way to create the homes we need that minimizes demolition of the ones we have. We don’t have a shortage of low-density land near transit infrastructure in our city. Rather, we have a shortage of the political will needed to combat the calcified forces aligned against intensification. Looking at the development process in Toronto, we can see just how inefficient and confused our system of land planning has become when we consider how we treat low-density areas compared to the very small percentage of the city where greater density is accepted. 

    I think there’s growing awareness in this city and others about why this approach to land use needs to be modernized. And there is certainly positive change underway. But there’s still work to be done. So I’m happy that Randy decided to write about it.

    For the full article, click here.

  • Everything looks in place here

    I was in the mood for some light reading before bed earlier this week, and so I pulled out this comparative critique of Euclidean zoning. Many of you are probably familiar with how single-use zoning works. It is the dominant form of zoning in North America and it is predicated on the idea of “everything in its place.” Meaning, land uses are best off when they are segregated and put into distinct zones: commercial here, industrial over there, residential in these areas, and so on.

    But there are a whole host of arguments for why this is bad cities. Among other things, it makes them less sustainable, because typically you need to drive between zones when you want to do things. It makes them less resilient, because you’ve now created monocultures. And it also encourages segregation, because if this zone is only for 2-acre single-family lots, then only people who can afford a 2-acre lot get to live there.

    I’m sure that many of you are already aware of these arguments. So what I found most interesting from this light bedtime reading was the comparison to the French model of urbanism. One of the key differences in cities such as Paris is that the French have historically preferred to zone for structures over uses. In other words, aesthetics and how buildings look have long been a priority, but what happens inside of them has been less of one.

    The result is an incredible mix of uses that makes the city what it is today. And this is perhaps the great irony of Paris. Its visual harmony might make you believe that “everything is in its place.” But really things are often all over the place — as they should be in a city. Adding to this irony is the fact that many single-use cities do not actually appear very orderly, even though they’re kind of supposed to by design.

    I thought this was an interesting way of looking at these two different models of urbanism. It makes the case that not everything needs to be in its place; maybe it just needs to look that way and the rest will figure itself out.

  • Forty

    Today is my fortieth birthday. And despite a noble attempt to avoid having meetings today, I spent a big chunk of the day in them. Thankfully, I was also fortunate to spend a lot of time with family, friends, and colleagues (see evidence above).

    This is a birthday where I think I’m supposed to feel things. And I do. I’m grateful for the wonderful people that I get to have in my life and who love me. I feel lucky that I get to wake up every day and do something I love. And I’m genuinely excited for this next decade.

    It is, however, true that time does speed up. It feels like just yesterday that I was 30 years old. I had just finished my MBA. I was about to start writing this daily blog (yes it’s nearly a decade old). And I was trying to figure out how to make an impact on the world.

    Maybe not much has changed. It’s not in my nature to feel complacent. But there is something nice about getting older and feeling more confident with yourself and your abilities.

    If anything, birthdays are a good reminder that time is precious. We only have so many weeks. So we shouldn’t feel shy about asking the world for what we want. I think that’s what I’m feeling most this birthday, and I view that as an exciting thing. So here’s to forty years.

  • How Paris’ zoning envelope has changed over the centuries

    I came across this French paper over the weekend, while I was at the gym pretending to work out my legs. It is a fascinating look at the evolution of Parisian urbanism from 1600-1902, including how the city’s height limits have changed over the centuries. Here, for example, are two section diagrams showing the allowable building envelopes for both an 8 meter street and a 10 meter street:

    The way to read these is to start at the bottom with the width of the right-of-way (“voie”). As you move up, it then gives you the allowable heights for various dates. So for example, in 1667, the allowable building height for a 10 meter street was 15.60m. After this height, there was then a requirement to stepback following a 45 degree angular plane. Or in some cases, following a certain radius:

    We don’t have a ton of 8 and 10-meter wide streets here in Toronto, but there are obvious similarities between what is shown here and what is in our mid-rise design guidelines. Of course, the big difference is that we’re mostly zoned for low-rises houses and Paris is not. This broader context matters a great deal and it’s why I keep asking: Are you sure you want Parisian-style urbanism?

  • Toronto’s longest running fashion week

    This past weekend we went to check out Fashion Art Toronto.

    I’ll be honest and say that I had never heard of it before we bought tickets. Even though technically, it is the longest running fashion week in the city because of Toronto Fashion Week getting briefly cancelled in 2016, when its corporate sponsor pulled out. I also had no idea that Peter Freed, of Freed Developments, ended up purchasing the TFW brand later that year. I have been told he talks about it on this episode of Toronto Under Construction, but I haven’t had a chance to listen to it just yet.

    Getting back to FAT (the acronym is deliberate), it was a cool event. There were of course various runway shows throughout the day and evening, but there were also a few art installations and a retail area for local designers (see below). Tricon Residential and Kronenbourg 1664 Blanc were major sponsors, and were giving out popcorn and beer. And in general, the crowd was dressed in ways that made me feel both old and stuffy. It was a lot of fun.

    It was also in a warehouse in the Junction. Well, technically I think the neighborhood is called Harwood. But if you’re even remotely close to the Junction nowadays, it is vital that you just assimilate. That’s how this stuff works. As soon as a neighborhood has a successful brand, its boundaries get invariably stretched in every way possible. I suppose this is the Darwinian world of urban neighborhoods. There is always a chance that you may not make it and you might just get absorbed by a neighboring faction.

    I would also add that a lot of creative uses in need of space — whether it’s a fashion show or a DJ event — seem to be gravitating towards this northern part of the Junction. If you see an event location that says “undisclosed warehouse”, chances are it will be here. This is, of course, another naturally occurring urban phenomenon. It is the whole “new ideas require old buildings” thing, which really just means that new ideas require cheaper rents. And generally, it is a good positive leading indicator for an area.

    Having said all this, I do think there’s a lot of room for Toronto to step up its commitment to fashion and the arts. This is not a world that I live in, and I am not criticizing the good work of Fashion Art Toronto or Toronto Fashion Week. I just think that for a global city of our size and influence, we should be much better. I saw some of this city’s ambition, talent, and diversity in a warehouse in the Junction this past weekend. It’s just too bad that it’s not on stage for the rest of the world to see.

  • What are the opportunity costs of not building new housing?

    The stated policy goal of inclusionary zoning is to to produce more affordable housing. We can debate who ultimately pays for this below-market housing, and we have many times before on the blog, but for the purposes of this post let’s just focus on its stated goal.

    Given this ambition, it makes sense to carefully measure the number of affordable homes produced. And that is ordinarily what is done: “We implemented this new policy on this date, and since then we have produced X amount of new affordable housing.”

    It is then likely that we will take X and form opinions on whether it was a successful policy or not. If X seems like a lot, then maybe we think it’s a good policy. And if X doesn’t seem like a lot, then maybe we think it was a bad policy, or perhaps just an ineffective one.

    But what is largely impossible to measure with any real precision is the number of new market-rate homes that are now not being built as a result of a policy. Let’s call this number Y. It is, of course, possible to come up with an estimate by looking broadly at rents across the city, plugging in some development costs, and seeing what pencils. But this is a rough approximation.

    It does not capture the countless times that a developer has looked at a possible housing site, only to come to the conclusion that it is not feasible to build. There is no official Y figure. And any amorphous estimates of Y are going to be easy to ignore by the general public anyway. Unbuilt homes? Opportunity costs? What?

    I am saying (okay repeating) all of this because I continue to feel like most people believe that development will just happen no matter what is thrown at it. There is a housing shortage, right? So developers should just do what they do best and build today. Surely they could if they were genuinely nice people and really wanted to. Hmm.

    What many people seem to ignore (or not know) is that development, and in turn new housing supply, operates under this very simple decision tree:

    • Find development site
    • Underwrite said site
    • If math works, seek capital/investors and then build
    • If math does not work, do not build
    • If math works, but capital doesn’t like it, also do not build (most can’t in this scenario)
    • Repeat

    Just because you aren’t seeing or noticing something, it does not mean that it doesn’t exist and that it’s not happening behind the scenes.

  • Timing matters in development

    Early on in my career, I worked on a new office development where the decision was made to start construction having only pre-leased 25% of the building. (It may have actually been closer to 22% if my memory serves me correctly.)

    Our big constraint at the time was that this first tenant had to be out of their current space by a certain date, and the only way we could meet their deadline was to immediately start construction. Otherwise, we knew we would lose them to another development or to an existing building.

    To convince ourselves that this was a reasonable thing to do, we looked at all of the upcoming lease expiries in the market, and then came to the conclusion that there would be enough demand in the coming years to fill the rest of the building.

    Still, we were taking a leap of faith, even if it was an informed one. And it meant running the project entirely on equity until we could secure a construction loan. Thankfully, in this particular instance, our hypothesis proved true. The lease expiries did end up creating the demand we were hoping for and so we were able to fill the rest of the building.

    The project was a success.

    But that was then. And in hindsight, this move feels scary. What would have happened had we made this exact same decision at the end of 2019? Things would have been very different. Not because of a fundamentally different decision on our part, but because of a black swan event that was truly impossible to predict. Our timing would have been bad.

    This is just one example of the many risks associated with the building of buildings. Development never happens in a vacuum. You’re always solving for a long list of constraints. And sometimes you need to solve for things that you don’t even know exist yet.

  • Singapore increases property stamp duty for foreigners to 60%

    Singapore isn’t exactly saying that foreigners can’t buy homes there, but it did just increase the stamp duty on purchases by foreigners to 60%. So it is saying that maybe you shouldn’t do it, unless you want to pay a lot of tax.

    On the other hand, if you’re a foreigner with permanent residency in Singapore, the stamp duty is only 5%. But if you then want to buy a second property, the rate jumps to 30% (up from the previous rate of 25%). Companies or trusts that buy any sort of residential property also now need to pay a stamp duty of 65% (up from 35%).

    The official message is that these are “pre-emptive measures” to cool demand, which I guess is mostly aimed at mainland Chinese buyers. This is the largest group. Last year, they accounted for about 25% of foreign condo purchases in Singapore. However, the total number of homes purchased by foreigners remains pretty low at just 4.7% (2022). Though first quarter data from this year does suggest the number has increased to about 7%.

    Even still, how many homes is this?

    Based on this information, there were 20,909 private home sales in Singapore in 2020. So let’s assume this has since increased and the number is, oh I don’t know, somewhere around 25,000 homes per year. At 7%, that’s 1,750 homes being sold to foreigners each year. Going forward, I don’t know how many people are going to be willing to pay the 60% stamp duty, but presumably some will still do it.

    If we pick a random number and assume that this higher tax wipes out 80% of the foreign demand, then that’s an additional 1,400 homes for locals and only 350 homes going to foreigners each year. Maybe this is something?