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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  • A national walk to work day alternative

    I just learned that the US has a “National Walk to Work Day.” And it happens to be today, Friday, April 7, 2023. It was started in 2004 by the federal government and the American Podiatric Medical Association — because, you know, walking is good for your feet — and the idea is that since so few Americans actually walk to work, we should encourage them to do it at least one day of the year. Back in 2019, the figure was that less than 3% of Americans do it on average.

    While I’m sure that there are some good intentions here, I’m guessing that the impact of this national day is probably somewhere between zero and “I guess I’ll park in a farther spot at the office park today.” The reality is that a day like this exists because we have spent the last 75 years, or even longer, making it exceedingly difficult to navigate our cities without a car. So it is equal to, “let me speak out of the other side of my mouth for a day.”

    But we also know that a real and meaningful solution is pretty simple to achieve (though clearly not easy). Build smaller streets and build more densely, especially next to transit. (Would you add anything to this?) So I think it’s time for a new kind of national day. Maybe it’s a day where every dense development proposal next to transit just gets automatically approved. It would be a national day for “this took too long, so here you go.”

    I don’t know, this probably needs some work. I’m open to other ideas here.

  • No more floor space index maximums

    I am positive that it had absolutely nothing to do with this post about fourplex feasibility, but I was happy to receive this notice in the mail yesterday:

    It is a public meeting notice for the City of Toronto’s proposed multiplex policies (defined as duplexes, triplexes, and fourplexes). And as you can see from the highlighted section, they’re looking, among other things, to make this form of housing exempt from floor space index maximums.

    Good.

    I don’t like this “where applicable” business, but I’m going to conveniently ignore that for now and just say that this is positive. Removing density maximums is a mandatory ingredient for helping to make this type of housing feasible.

    No FSI maximums. No DCs. And let’s modernize how HST is charged on new rental housing.

  • Busiest airports in the world

    There were nearly 7 billion global flight passengers last year, and these were the busiest airports:

    Overall, volumes are up 54% compared to 2021 (not surprising). But we are still down about 26% compared to pre-pandemic levels (2019). The one exception — at least when it comes to this top 10 list — is Denver. It’s right back to where it was in 2019. I wonder why.

    I find this list interesting because, one the one hand, airports are what connect global cities to the rest of the world. If you’re a big and important city, you need a big and important airport. But on the other hand, having a busy airport could also mean that you’re a hub in the hub-and-spoke airline model.

    And that’s what Atlanta is. It is the world’s largest airline hub and the primary hub for Delta Air Lines. Apparently, it was also the first airport to adopt the hub-and-spoke model following deregulation of the industry in the 1970s. Which could be why it’s still number one on this list.

  • A small subset of Parisians really don’t like shared electric scooters

    So Sunday came and went and Parisians voted overwhelmingly to ban shared electric scooters in the capital. Of those who voted, 89.03% were against them. And this, to be honest, is not all that surprising. Also not surprising is the low voter turnout (7.46% of 1.3 million registered voters).

    But I do think it raises important questions about this “democratic” process — and not just because I happen to like electric scooters. One problem is that there’s an inherent bias. And this same phenomenon can be found in community meetings for new developments.

    If you’re upset about something (and you have the time), then you are probably more intrinsically motivated to participate. In other words, if you think that electric scooters are a horrible nuisance, then you’re more likely to take the time to say something about them. But if you think electric scooters are just, like, fine, then you’re probably less motivated to go out and vote.

    Maybe this doesn’t matter. Maybe the turnout percentage itself is the answer you’re looking for. Only 7.46% of registered voters cared enough about electric scooters to voice an opinion. So if the rest actually liked them, it’s their problem for not voting.

    But if you think that this percentage should be higher to be more representative, then one solution is to try and reduce the barriers to participation. And I think there’s an argument to be made that something as dumb as a Twitter poll, open only to Parisians, might have been more inclusive.

  • The case for above-grade parking

    This is an oversimplification that won’t apply to all markets, but typically the decision tree for urban parking looks something like this:

    • Do I need to build parking?
    • If no, great. That’s ideal!
    • If yes, how many levels of below-grade will I need?
    • If below-grade parking doesn’t work because it’s either too expensive or because the soil is bad, try above-grade parking.
    • And if above grade, how can I “wrap it” with occupiable space or, at the very least, treat it in such a way that it doesn’t look ugly and the city doesn’t get mad at me?

    What I’m getting at with this is that above-grade parking is generally frowned upon. It is done in lots of places, like in Miami where you can’t go underground, but if you ask your average urbanist they will probably tell you that above-grade parking is ugly and that said ugliness should be mitigated to the fullest extent possible.

    But here’s a counter argument. Let’s assume that we believe any one of the following:

    • We should design new buildings to be adaptable (i.e. easily convertible to other uses in the future)
    • We should design and build in a way that reduces carbon to a minimum
    • Lower construction costs are good for end-users of space
    • In the future, people will be less, as opposed to more, reliant on privately owned cars

    In this case, the ideal solution is actually “unwrapped” above-grade parking. It’s less intensive to build, and both below-grade parking and wrapped above-grade parking result in large windowless spaces with very little utility other than for storing inanimate objects. Your options are parking, self-storage, and maybe a large gym for people who don’t like natural light.

    Judging by the above poll, which was still in progress at the time of writing this post, this is not how most people think about urban parking. But I think it’s time we start changing the discussion.

  • New rental apartments in Toronto by year of construction

    “Your local self-inflicted housing criss ouroboros” tweeted this chart out over the weekend, showing the number of new rental suites completed in Toronto since 1900. The data is from Open Data Toronto and it does not include any condominiums. It also only includes apartment buildings with 10 or more suites (which would be most of the supply anyway).

    This chart is a good example of what we spoke about yesterday: “If you want to negatively impact new supply, cap rental growth.” And that’s exactly what was done in the 1970s. But in reality, the changes were more broad than this. The 1970s saw a philosophical shift in the way Canada thought about new housing.

    Housing became rightly viewed as a basic human right. But because of this, the policy landscape shifted away from facilitating the private sector, to intervening and regulating the private sector. This included tax changes which negatively impacted new housing development and, yes, rent controls.

    Ironically, but not unexpectedly, this dramatically lowered the overall supply of new rental housing. To the point where we had effectively shut off the taps by the late 1990s. Thankfully, the condominium sector stepped in and started meaningfully delivering new housing — both for sale and for rent (via individual private investors).

    The supply of new condominiums in Toronto is not shown above, but there is no question that this (shadow rentals) has formed the vast majority of our new rental stock over the last two decades. But in my view, this shift was largely the result of policy decisions. We decided that we didn’t want the private sector building so many new purpose-built rentals, and so we told them to stop.

    It then listened remarkably well.

  • Two ideas for increasing the supply of new rental housing

    There are lots of ideas out there for how to improve the supply of new rental housing. But it is important to remember, at least here in our market, that the playing field is not level between new condominiums and new rental homes. We have spoken about this before, over here, where I compared the (per square foot) revenue generated from your average new condo against that generated by your average new rental home. Of course, since I wrote that post in 2020, we have seen upward pressure on cap rates (meaning downward pressure on values). So feasibility has gotten even more challenging.

    The important thing to remember is that developers do not have some philosophical aversion to building more rental housing; it is that the math is challenging. You generally need economies of scale (really big projects), patient long-term capital, and a belief that rents will continue to exhibit meaningful positive growth. If you want to negatively impact new supply, cap rental growth. But if you want to encourage new supply, somebody needs to pull out a development pro forma and make the call to improve the cost structure for new rental housing.

    In my opinion, two obvious line items to focus on are development charges (as well as the other government levies) and HST (our harmonized sales tax). The point of development charges, as we always talk about, is for growth to pay for growth. They are intended to pay for municipal services like roads, transit, water and sewer, and so on. In the other words, they’re supposed to capture of the cost impacts of new housing. But what about the impact of not building enough new rental housing? Are we thinking about this the right way? Especially if you consider the possibility of more new rental housing in our existing transit nodes.

    The HST charged on new rental housing is also significant. There is a new residential rental property rebate available to builders (not tax advice!), but the thresholds have not been indexed and so it’s grossly out of date compared to where values sit today. In any event, if the goal is more homes, why not make new rental homes exempt? Developers are simple. If the math works, they will build. If the math doesn’t work, they will not build. And these two line items, alone, would go a long way to helping the former.

    Photo by Pierre Châtel-Innocenti on Unsplash

  • US public transit ridership since March 2020

    Consider the following stat: 65% of all transit trips across the US in 2019 came from just 6 metro areas: New York, Boston, Chicago, San Francisco, Washington, DC, and Philadelphia. Not surprisingly, these are all places with dense and walkable urban centers. In other words, they have built environments that are conducive to the use of public transportation.

    While we know that more people working from home has been bad for transit and that agencies across the world are facing deep holes in their budget, I continue to come back to two things. One, we have not yet reached a post-pandemic equilibrium. We are still making our way back to the office. And two, the single most important thing when it comes to transit ridership is land use.

    If we want more people to take transit, then we need to build our cities accordingly. That means streets people actually want to walk on, and a lot more density.

  • Should Paris ban electric scooters?

    This Sunday, Paris will be hosting an important referendum that has nothing to do with France’s retirement age. The question is whether shared electric scooters should be banned citywide. And while there are concerns about whether this single-question referendum will draw many people out to vote, the city has said that, whatever the outcome, the results will be binding.

    To be clear, this would only apply to the three micromobility rental companies that operate in the capital: Lime, Dott, and Tier. It would not apply to privately-owned scooters, of which there are many. In fact, France might just be one of the scooter capitals of the world. Over 900,000 scooters were purchased across France in 2021, and last year the number was about 759,000.

    Mayor Anne Hidalgo has publicly said that she thinks these scooters should be banned. But does that really solve things given the number of private scooters in circulation? And are the current problems truly ones we can’t solve? As I have said many times before, I like scooters. I like them a lot. They’re convenient and fun to ride, and I see their value in helping to solve the last-mile problem.

    I also can’t help but think back to the early 1900s when cars were just starting to infiltrate our cities and there were absolutely no traffic regulations to think of. It was chaos, it was dangerous, and I’m sure it was similarly divisive at the time. So should we have banned them and stuck with horses? Hmm. Maybe.

  • /imagine prompt: A silver Land Rover Defender driving through a snowstorm in the mountains of Utah

    Like everyone else, I have started playing around with Midjourney to create AI-generated images. Here are two that I created last night using the prompt: “A silver Land Rover Defender driving through a snowstorm in the mountains of Utah.”

    Now, you can tell that these are AI-produced images, but it’s still wildly impressive that something like this can be easily generated in a matter of a few seconds. And that’s the thing about AI: it’s easier to get, especially compared to crypto. It’s immediately useful and it’s immediately clear what this can and will disrupt.

    Levis, for example, just announced that it will start using AI-generated photography in lieu of actual fashion photoshoots. This is obviously suboptimal for photographers, models, makeup artists, and so on, but a hell of a lot easier for Levis. I would also imagine that the same thing will happen to real estate renderings and many other things beyond just imagery.

    Ben Myers and Steven Cameron recently speculated on their podcast — Toronto Under Construction — that AI could be used for reviewing development applications. Imagine how much this would speed up reviews and the delivery of new housing! So there are very good reasons for why the hype cycle has moved over to AI from crypto and NFTs.

    However, I’d like to go on the record saying that my gut tells me that this will only make what crypto offers even more important. Permissionless public databases (as opposed to databases controlled by individuals/companies) and the ability to demonstrate authenticity/ownership, feel like two important things to me in a world where computers are constantly generating a flood of new content and nobody knows what is “real” anymore.

    It’s certainly a lot less tangible than, “hey, check out this badass Defender driving through the snow.” But I feel strongly that these two innovations will end up working together.