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

  • Buildings are carbon icebergs

    Kelly Alvarez Doran shared this article with me on Twitter earlier today. It talks about some of the work that his design studios are doing at the University of Toronto around embodied carbon. More specifically though, his studios are being tasked with figuring out how to halve the carbon emissions generated by new buildings during this decade.

    And one of the big findings from his studio is exactly the title of this post: our buildings have become carbon icebergs. Here in Toronto, we tend to build a lot of below-grade parking. We recently got rid of parking minimums (which obviously needed to happen), but the market still demands it in certain areas and for certain projects. So we continue to build it.

    What the above section drawings are showing is the percentage of carbon emissions resulting from the below-grade construction component in each project. And as you can see, the numbers are significant, particularly in the case of smaller mid-rise buildings where you don’t have a lot of above-grade area to grow the denominator.

    Looking at 2803 Dundas Street West, which is just down the street from our Junction House project, the number is 50%! And sadly, I would guess that our project is probably only marginally better; we’re a bit taller up top, but we also have a raft slab foundation and a watertight below-grade.

    This is one of the reasons why I recently tried to make the case for above-grade parking. A big part of my argument was that if we want parking that can be adapted to other uses in the future, and if we want to reduce the embodied carbon in our buildings, then we should be building “unwrapped” above-grade parking. That is, parking which isn’t hidden behind other uses.

    But this is often frowned upon in planning circles and it’s not going to be feasible in smaller mid-rise buildings like the ones shown here. We’re also just talking about what is less bad. What we really ought to be doing is trying to build our cities so that people don’t need to rely so heavily on cars to get around.

    Image: Ha/f Studio

  • Dubai is now the capital of branded residences

    One way to define “brand” is that it is “the sum of how a product or business is perceived by those who experience it.” And it’s a pretty awesome construct when you stop to think about it. Because if I perceive one brand to be superior to another — which might just mean that it better matches my sense of self — then there’s a good chance I’d be willing to pay more for that brand.

    And if I happen to own a brand that people perceive to be valuable, then I can also monetize this brand by lending it out to other people for money.

    It is for this reason that in the world of real estate development there is something known as branded residences. Broadly speaking, it involves a pretty simple trade. Person 1 has a brand that lots of people perceive to be desirable. Person 2 has real estate that it is looking to sell, but it doesn’t have a brand with the same kind of cachet as person 1.

    So what happens is that person 1 offers the following trade to person 2: pay me $X (upfront and/or over time) and then I will let you use my highly coveted brand to sell your real estate. And hopefully you won’t screw it up by doing weird things with it. (But other than this, person 1 isn’t really taking on much risk with this trade.)

    Because person 2 believes that they’ll be able to sell their real estate for more money and/or faster than without the brand, it gladly accepts the trade. And as long as the benefit it gains is, in fact, greater than the cost of using the brand, it should be a good trade and both person 1 and person 2 should be happy with the outcome.

    Now here’s an actual example. Earlier this month, the proposed Baccarat Hotel and Residences in Dubai set a new pre-construction pricing record when it sold a ~14,507 square foot apartment for 203.1 million dirhams (or US$55.3 million). For those of you who are wondering, this works out to be about US$3,812 psf.

    Supposedly this is the most that anyone has ever paid for a new place in Dubai, and there’s a strong argument to be made that the developer got this pricing because it was a branded residence.

    Image: Bloomberg

  • Speed outweighs all else

    Rapid and high-volume decision making are fundamental to real estate development.

    In fact, it’s hard to think of anything being more important when it comes to executing on a project. This is not to say that being thoughtful and doing remarkable work aren’t important. You, of course, need to do those things as well. But it is to say that the benefits of moving as fast as you possibly can usually outweigh all else.

    What this means is that any decision is often far better than no decision. Because no decision can grind everything to a halt. You need to maintain momentum and the way to do that is to make a lot of high-quality decisions.

    As someone who was originally trained as an architect, this is something that I had to learn in the workplace. Because in architecture school, you’re basically taught to work on your projects for as long as humanly possible and then, when you’re done, you work on them some more. They’ll never be good enough and you certainly haven’t spent enough time “working in studio”.

    But in practice, you need to go. I would like to once again reiterate that this is not a license to do crappy work. I think the way to think about this is that speed and excellence reinforce each other. Our team always strives to do exceptional and remarkable work. And one of the ways to actually do that is by focusing on speed.

  • New web3 restaurant loyalty platform launches in NYC

    I just learned about Blackbird’s technology platform and the restaurant loyalty program that they are currently building. On the surface, the way it works is that you walk into a restaurant and then tap your phone on one of their NFC-enabled chips (see above).

    This then signals that you are/were there and so you earn loyalty points, kind of like a stamp on one of those cards in the food court. Except here, the idea is to create an endless and customizable array of wonderful customer experiences.

    Maybe after 15 fifteen visits you’re now considered “fam” (decided by the restaurant), and so you get a designated table at the restaurant and your favorite dessert automatically sent to your home on your birthday. This is just one example.

    At the same time, you also earn $FLY, which is the platform’s native crypto token (built on Base by Coinbase). And this to me is one of the most exciting aspects of the platform.

    Because here is a crypto or web3 product that is seemingly really easy to use. In fact, nobody needs to know that it is doing things on a blockchain. Just tap your phone on the thingy. Earn stuff. And move on.

    So I think it’s a really good example of where we’re headed in this space. The underlying technologies are going to recede into the background and all that we’ll see are useful products and services.

  • Don’t get me started

    I cover a lot of different topics on this blog. It’s hard to write daily for a decade and not meander every now and then. But generally speaking, I do try and keep this forum focused on things that are related to city building — real estate, housing, design, transportation, etc. And I do try and share some of the things that I have learned (and the mistakes that I have made) since I started working in real estate development back in 2007.

    But we all have limits, and different perspectives are vital for solving problems. So I’d really like to introduce more Q&A features on this blog, similar to this recent one that I did with structural engineer, James Cranford. If this sounds interesting to any of you, please reach out. I’m open to anyone who touches the built environment: architects, artists, planners (private or municipal), lenders, furniture designers, bollard manufactures … you name it!

    Image: Jason Adam Katzenstein

  • What would you do if you were Mayor?

    Let’s assume that you’re Mayor of your city and that, for whatever reason, you have no need to pander to voters. You’re a benevolent dictator. You can do whatever you think is best overall for the city and it will just happen. What would you do? This is more or less the question I asked on Twitter this morning, and I think it’s only fair that I answer my own question. So here is a non-exhaustive list of items that came to mind while thinking of Toronto:

    • Substantially increase the pay of public sector workers throughout the city and bonus them based on measurable outcomes. Forget things like time limits on development applications; instead align incentives. For example, if we’re trying to get more shovels in the ground on affordable housing, incentivize people based on building permits issued. I’ll never forget what Roger Martin told me while I was at Rotman. When he became Dean of the school, Rotman was a whatever business school that wasn’t faring all that competitively in the rankings. One of the problems he discovered was that the school’s professors were getting paid far less than those at Wharton, Harvard, Stanford, and so on. So if you were a star, why would you ever want to teach at Rotman? He immediately matched the salaries of those top-tier schools and then, not surprisingly, the top-tier talent arrived. You get what you pay for.
    • Immediately price roads and congestion, and direct, to the fullest extent possible, the funds toward transit and cycling infrastructure. At the same time, the planning and building of transit would be depoliticized. There would be a reccurring funding stream and a plan that we’re continually building out. Minimize protracted debates. Never stop building. There’s a lot of talk this mayor election about solving traffic congestion. I have yet to see a plan that will actually work. Accurately pricing congestion likely won’t be popular, but I can guarantee you that it will be highly effective.
    • Ensure that property taxes are sustainably covering the costs of operating the city and then, at a minimum, peg all future increases to CPI.
    • Make any new housing development less than 12 storeys as-of-right. That would mean, no rezoning process and no site plan approval; just straight to building permit.
    • Empower the private sector to build affordable housing through incentives and subsidies. Affordable housing isn’t feasible to build on its own, which is why nobody is doing it. Inclusionary zoning also won’t get us there. Make developers want to build it and they’ll do it.
    • Liberalize licensing and cut red tape to empower small entrepreneurs across the city in various industries. A perfect example in my mind is street food. Toronto is the most diverse city in the world with some of the best restaurants, and yet the only thing you can buy on the street is a stupid hot dog. If we empowered small entrepreneurs to setup shop on our streets, we would easily have the best street food scene in the world. And I am positive that there are countless other latent opportunities in this city that are being held back by dumb and archaic rules.
    • Make dramatic improvements to our public realm with an eye toward becoming the most beautiful and livable city in the world. Finally pedestrianize Kensington Market, remove the elevated Gardiner Expressway, make it so that we can swim in the Lake, build beautiful public washrooms all across the city that are actually open and aren’t gross, and the list goes on. And yes, “beauty” should be requirement so that we don’t end up with shit like this.
    • Focus on art, design, culture, and innovation as central pillars of Toronto’s brand. Miami is a good example of what this approach — along with favourable taxes and nice weather — can do for a city. I’ve said this before, but here’s just one example: Toronto is in many ways the birthplace of the cryptocurrency Ethereum. Why is nobody talking about this? Why are we not celebrating and leveraging this? It’s a missed opportunity. Broadly speaking though, I think just having and doing three things can be effective in promoting new ideas for these pillars: have reasonably affordable housing, be a city that young people want to live in, and remain open and tolerant to immigrants.
    • Stop thinking of the night-time economy as a nuisance and instead think of it as a powerful economic development tool. I recently responded to this “night economy survey” that the City of Toronto released and the obvious bias is that nighttime things are seen as a terrible nuisance. In other words, “tell us how do we make all of this less annoying for grouchy voters.” My response was to extend last call to 4am and to start thinking of it as an opportunity to draw in young people, tourists, and whoever else. This complements my previous point.

    This is, again, a completely non-exhaustive list. But if I had to summarize the overall ambition, it would be to make Toronto a truly exceptional and remarkable city. We should never be happy with mediocrity.

    What else would you do? Leave a comment below.

    Photo by Aditya Chinchure on Unsplash

  • California has a plan for 2 million new homes

    On July 1 of this year, a new California bill, called the “Affordable Housing and High Road Jobs Act of 2022”, will go into effect. And the goal of this legislation is to significantly increase the supply of new homes in the state by allowing multi-family construction on lands that are currently zoned for commercial uses.

    On some level, it is of course curious that there even needs to be this bill. Because what we are effectively saying is, “hey, we should allow people to build a mix of uses on our main streets and with high enough densities that we might actually be able to support transit.” Why was this not always the case? (Rhetorical question.)

    In the words of architect and planner Peter Calthorpe, who was recently interviewed here in ArchDaily, this is a “landmark piece of legislation” that has “received very little attention.” So that’s why we’re talking about it today.

    Calthorpe was actively involved in crafting this legislation, and his work apparently started with different scenario land-use models. The first experiment looked at a 43-mile stretch of El Camino running from San Francisco to San Jose (pictured below). And what they found was that this one strip alone could accommodate somewhere around 250,000 new infill homes.

    To put this into context, the state of California is currently building about 140,000 new homes each year, through a roughly equal (1:1) split of multi-family and low-rise single-family. Already this represents a shift, as supply used to be slanted (3:1) toward low-rise. (I don’t know when exactly this was the case, but Calthorpe mentions the figure in his interview.)

    Moving on from El Camino, Calthorpe and his team then ran a similar exercise for the five-county inner Bay area. And here they found that some 700 miles of commercial land could produce up to 1.3 million multi-family homes at “reasonable densities.” This was then expanded to the entire state of California and the number increased to 10 million new homes.

    Of course, as we have talked about before on this blog, not all of this land might actually be feasible for development. Sometimes the math doesn’t work even at a zero land cost; you might need a negative land cost in order to pencil a new development. Meaning, you might need to be paid, perhaps through some sort of subsidy.

    So what Calthorpe and the team did was use MapCraft to quickly run development feasibilities on the above sites. They had it run 6 different pro formas using local rents, construction costs, city fees, and so on. And what they determined was that this 10 million number drops down to 2 million when you apply the economic realities of the world.

    As a disclaimer, I’m not at all familiar with MapCraft. But I’m going to take this number at face value and say that this is still a lot of new homes. And this is what people are hoping for come July 1 of this year.

    Image: HDR / Peter Calthorpe

  • 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.