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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  • Development happens on the margin

    April 3, 2026 · View original

    Every single real estate development project I have worked on has generally gone something like this:

    – Design the project. – Budget the project. – Realize: “Oh shit, this is way too expensive and will never work.” – Cut out some of the parking (a loss leader on most projects). – Look for value engineering and other creative opportunities. – Repeat the cycle until the project works (hopefully).

    This is so typical that if I went through this process and everything just magically worked, I would be immediately suspicious. This can’t be. We must be overlooking something! The expectation is that the project isn’t going to work until we, as developers, figure out a way to make it work.

    This is what we mean around here when we say that “development happens on the margin.” Projects are sensitive to even slight changes in market conditions. If rents soften, costs go up, and/or interest rates move in the wrong direction, that could be the end.

    Current market conditions have only heightened this dynamic. More than ever, developers need to be both creative problem-solvers and disciplined managers because there’s very little elasticity on the revenue side to help cover up any mistakes (if the revenue side even exists at all!).

    Development is hard. But working through challenges is a big part of what makes it so rewarding. On that happy note, enjoy the long weekend, everyone.

    Cover photo by Shivendu Shukla on Unsplash

  • Thinking out loud about tokenized real estate

    April 2, 2026 · View original

    One of my predictions for this year was that we would see the mainstream adoption of tokenized real-world assets. More specifically, I said that we’d see some noteworthy office building or apartment building get tokenized on the Ethereum blockchain.

    Maybe. I’m not sure that we’ll see a singular event this year or that we’ll be able to call it “mainstream” just yet. According to this recent article by Chris Lehman, co-founder of a tokenized REIT called Groma, it’s still early days.

    Real estate is the world’s largest asset class, with an estimated global value of around $400 trillion. But only about $500 million of it has been tokenized, which is a relatively small amount, though it’s not nothing. So, what is it going to take for us to say it’s “mainstream”?

    Some of the obvious benefits of tokenization are that it makes transactions cheap and efficient, and it allows for composability, meaning the various smart contracts on a blockchain can then be combined and interconnected with other protocols and applications to unlock additional use cases.

    Lehman gives the specific example of being able to split yield and appreciation for tokenized real estate. My mind always goes to codifying the financial terms of something like a Limited Partnership Agreement such that all of the cash flows get automatically distributed as per the agreed-upon deal.

    Importantly, though, and this is mentioned in the article, the fractionalization of real assets is unlikely to be the killer feature of tokenization. Notwithstanding that it does bring some additional benefits, we’ve already figured out how to “democratize” the ownership of large and expensive real estate assets through REITs and other vehicles.

    Instead, Lehman argues that “improving real estate’s utility as collateral is likely to be the most significant improvement tokenization can offer.”

    I don’t have a strong opinion on what will serve as the primary adoption catalyst, but I have little doubt in my mind that this is where the ownership of real estate (and other assets) is heading. If any of you are working in this space, and especially if you’re based in Toronto or elsewhere in Canada, I’d love to connect with you for a coffee.

    Cover photo by 瓜田 月下 on Unsplash

  • The historic drop in US international migration

    April 1, 2026 · View original

    The WSJ recently published a pair of articles (here and here) talking about where the US is growing and shrinking — through charts. The three components of this are domestic migration, international migration, and births minus deaths.

    One of the key themes for the year ending in June 2025 is that the country is seeing significantly less international migration. According to the WSJ, more people moved out of the US than moved in last year for the first time since the Great Depression.

    International migration is critical because around 65% of all counties in the US are now experiencing more deaths than births, meaning the fertility rate is declining. This is an increase from around 34% of all counties as recently as 2010.

    On the domestic front, one interesting finding is that, for the first time in many years, the Midwest added more domestic migrants than it lost. As expected, the growth region for domestic migration remains the South, though it has slowed.

    Also interesting is the extent to which San Francisco has rebounded. During the depths of the pandemic, things appeared dire for the city. Nobody was more untethered than tech workers, and the feeling was that they’d never return. Nope. The city has grown for the last three years.

    The decline in international migrants is not unique to the US. The same thing is true in Canada. But we (Canada) remain in the business of attracting the smartest and most ambitious people from around the world. I have no clue what’s going on in the US these days — it changes hour by hour — but maybe they’d like to remain in this business as well.

    Cover photo by Austin Neill on Unsplash

    Charts from The Wall Street Journal

  • The hidden cost of regulatory fat

    March 31, 2026 · View original

    In the olden days here in Toronto, approved development land used to sell for a premium compared to unapproved land. This was true because approved land meant you could start construction much sooner. And since time has value, this was worth something.

    Today, this is far less valuable to developers (if at all) because, in most cases, the market does not support new construction. So, the land may be approved, but what does one do with it?

    Rather than speed, I would say that the most valuable feature right now is the ability to be patient. Developers need to be able to stay solvent long enough for the market to return. But this does not mean that there isn’t a cost to permitting, approvals, and lengthy pre-construction periods.

    Here is a recent paper (that I discovered via Thesis Driven) by economists Evan Soltas (Princeton) and Jonathan Gruber (MIT) that asks: “How Costly Is Permitting in Housing Development?” What they discovered in the Los Angeles market is the following:

    – Developers have been willing to pay roughly 50% more for pre-approved development land (averaging about $48 per square foot). – The permitting process in Los Angeles accounts for about 40% of the time required to develop and construct a new housing project. – Approximately one-third of the gap between home prices and construction costs can be explained by permitting costs and delays.

    This last point is an interesting one to focus on because it tells you how much regulatory fat there is in the system. In a perfectly free and efficient market, the market price of a home should, in theory, be roughly equal to the cost of the land, construction costs, and the developer’s margin.

    When you have a massive gap between the cost of the physical materials and labour required to build the home and the price of the home, it means that there are other costs being shouldered. The paper refers to some of these as “pure wait” (time) and “capitalized hassle” (dealing with bullshit).

    This is an important way to think about the efficiency of housing markets, because minimizing the gap is a clear way to make housing more affordable.

    Cover photo by Josh Miller on Unsplash

  • On the future of cities

    March 30, 2026 · View original

    Bruno Carvalho has just published a new book that is right in the wheelhouse of this blog. It’s called The Invention of the Future: A History of Cities in the Modern World.

    The book starts in the mid-18th century with cities like Lisbon, Paris, and London. However, more than being just a history of cities, it is (from what I’ve read) the story of how city builders throughout history have tried to predict and create the future, only to often get it wrong.

    In the words of Carvalho (via CityLab): “The constant of urbanization is change, so we have to always imagine our solutions as being contingent.”

    The same is, of course, true today. For example, building tunnels for Tesla cars may seem like a clever and futuristic solution to urban traffic congestion, except that it’s hard to imagine it actually working (also via CityLab):

    > “One of the values of history is to give us a sharper sense of what’s new in the present. Many people imagine solutions that to them represent the great rupture, but that’s not always the case. The tunnels are a good example; they bring together the problems of cars having very low carrying capacity and subways being very hard to build. That doesn’t strike me as a very futuristic approach to mobility, but rather one that just hasn’t learned enough about the past.”

    I now have Carvalho’s book on my reading list, and I thought I would share it here in case some of you would like to do the same.

    Cover photo by Michiel Annaert on Unsplash

  • Sidewalks as a bug

    March 29, 2026 · View original

    I’m a big fan of walking. I like it for the health benefits, the freedom to explore, and the simple luxury of being able to walk to things. In fact, it’s an important housing prerequisite for me: can I walk to stuff?

    But as we often talk about on this blog, the ability to do this depends largely on the prevailing land use patterns, the overall built environment, and, to a great extent, when a neighborhood was built.

    It is commonly argued that the “best” neighborhoods were all built before the widespread use of the car, and there’s a lot of truth to this. (This makes me wonder if self-driving cars will eventually create a similar “pre and post” divide in our built environment.)

    However, not everyone sees it this way. I just read an article about how residents in the suburbs of Minneapolis-St. Paul are vehemently opposed to the construction of sidewalks in areas where there are currently none.

    Perhaps I haven’t been paying enough attention to the suburban sidewalk wars, but this is the first time I’ve seen this level of opposition. Some people view sidewalks as a feature, and some people view them as a bug. Clearly, there are residents in the Twin Cities who view them as the latter.

    Why? Because they interrupt large front lawns:

    > “I chose my home with the nice big lawn out front,” Edina resident Melissa Cohen told the mayor and City Council at a Dec. 8 hearing about proposed sidewalks for streets in Prospect Knolls. “We are in a quiet neighborhood. This does not require a sidewalk.”

    And for some people, they’re unsightly:

    > In 2007, a Golden Valley resident named Charles Upham told the Star Tribune “sidewalk is a four-letter word. U-G-L-Y.”

    You could call it a kind of rural ideology, where sidewalks symbolize the opposite: the city. I suppose there are also practical considerations, like the fact that snow removal on sidewalks often becomes the homeowner’s responsibility.

    But it appears to me that a large part of this opposition stems from wanting to maintain some semblance of pastoral exclusivity, even if we’re talking about higher-density suburbs and the opposition is masquerading as an environmental preservationist movement.

    On the flip side, there are practical benefits to sidewalks. They give you a safe place to walk. So, what I wonder is to what extent are the people opposing these sidewalks also anti-walkers? Or is it that the traffic flows in these neighborhoods are so low that people simply feel comfortable walking on the street, like here?

    Not surprisingly, there’s lots of data to support that people who live in neighborhoods with sidewalks are significantly more likely to walk and be active. If you want people to walk more, build sidewalks. If you want people to ride bikes more, build bicycle lanes. And if you want people to drive more, build roads and highways.

    This is how this behavioral stuff works. We’re not completely independent actors; we’re products of our environment.

    Cover photo from The Minnesota Star Tribune

  • Competition and redistribution

    March 28, 2026 · View original

    I recently joked that, because of AI, everyone now sends you a 50-page PDF for review. Of course, what we all do next is just ask AI to summarize it and help prepare a response. So, the net effect is AI talking to AI.

    We’re all becoming a kind of intermediary because the volume of information is simply too great for any human to reasonably process. In many ways, this can feel overwhelming. It also makes me feel like it’s becoming harder to maintain a long attention span.

    But this appears to be where the world is heading. Eventually, we are going to have what is known as Artificial General Intelligence (AGI), and that is going to have a profound impact on our lives.

    Venture capitalist Albert Wenger has been spending a lot of time thinking about what an AGI-level economy might look like, and he recently published a post where he modeled some of the possible scenarios.

    I will give you the spoiler here: His intuition is that we’re going to need to create an economy that combines competition and redistribution (also referred to as a Negative Income Tax, which provides people with a basic income).

    Because without competition, productivity gains will be captured as rent, rather than resulting in lower prices. And without redistribution, we are likely to see an untenable increase in inequality.

    If you’re interested in this topic, I would encourage you to check out his post.

    Cover photo by Alex Knight on Unsplash

  • A new opportunity for congestion pricing

    March 27, 2026 · View original

    We’ve been talking about the merits of congestion pricing for as long as I’ve been writing this blog. But it remains politically unpopular, despite the overwhelming evidence that it consistently does what it’s supposed to do: it reduces congestion, shortens commute times, improves air quality, and raises money for alternative modes of transport, among other things.

    The status quo bias is strong, but right now we have an opportunity. Self-driving cars are in the midst of shifting the mobility landscape, and there’s a growing belief that (1) roads are going to need to be more accurately priced to deal with the surge in demand, and (2) this is a moment in time that grants us the opportunity to do it. Here’s a recent tweet by Chris Spoke of Toronto Standard that makes this point and that I agree with.

    The basic idea behind point number two is that many voters don’t like the idea of a congestion charge for themselves, but will probably mind a charge on robot cars a lot less — both because they are robot cars and because there are relatively few of them on the road today. However, at some point, robot cars will form the majority of vehicles on the road, so now would be a good time to establish new practices.

    What do you think?

    Cover photo by Minku Kang on Unsplash

  • The development charge cliff

    March 26, 2026 · View original

    One of the reasons why we are seeing more multiplexes in Toronto (smaller infill buildings with less than seven homes) is that the city has waived development charges and parkland dedication fees on this scale of new housing.

    This has helped enormously; without these changes, we’d be seeing far fewer of these housing projects being built.

    But here’s the odd thing about this exemption: if you build even one more home in the same building, the project is now subject to development charges on all of the homes (minus any credits you might receive for existing homes on the site).

    Adding a seventh unit shouldn’t suddenly trigger hundreds of thousands of dollars in fees for the first six. This makes zero sense:

    – It creates a disincentive to build incrementally more homes on sites that can accommodate them. – It creates a bias toward multiplexes (also known as “houseplexes”) and away from apartments. The housing type shouldn’t matter. We’re talking about homes. – It perpetuates the “missing middle” problem. Build small or build big enough to shoulder the additional costs and regulatory burden.

    If we’re waiving DCs on sixplexes, why not at least waive them for the first six homes on every site? Better yet, waive them on even more homes. This is just one specific example of the hurdles I was talking about yesterday.

    Note: My understanding is that the City of Toronto is currently looking to remove this DC cliff and implement a universal first-six-free rule.

    Cover photo by Jason Ng on Unsplash

  • Toward more fine-grained development

    March 25, 2026 · View original

    Yesterday we spoke about the merits of fine-grained urbanism and why the direct and obvious way to achieve this is to just, you know, encourage more small-scale development. So today, let’s talk about some of the specific things that would likely need to happen in order to unlock all of the small and under-utilized sites that today are not being developed at scale.

    I’m going to speak from a Toronto perspective and talk specifically about small-scale “apartments,” which in today’s planning environment are generally buildings with seven or more dwelling units. Under this threshold, we have new terminology like “houseplex.” But I’m sure that much of what I raise will translate to other cities and building types.

    Here’s my working list (I’ve also added a few items from this Twitter discussion):

    – As-of-right zoning permissions (the key, though, is that what’s as-of-right needs to be economically viable) – No side-yard and front-yard setbacks – No site plan control approval (currently required for projects with 10 or more homes) – No/lower development charges – No parkland dedication fees – No required parking – No required amenity spaces (the city is the amenity) – Curbside garbage collection (as opposed to internalized collection facilities) – Reasonable servicing connection costs (I’m specifically looking at you Toronto Hydro) – No Record of Site Condition, or a streamlined process (Ministry of the Environment, Conservation and Parks approval) – Single egress stair – Flexible elevator sizing – No rental replacement – Predictable financing terms from agencies like CMHC

    There’s a lot on this list. But there isn’t just one thing standing in the way of more fine-grained development. If you think I missed anything (or you just disagree with my line of thinking), feel free to leave a comment below.

    What Toronto has demonstrated with its efforts to expand housing options in its neighbourhoods is that, when it makes economic sense to do so, people will actually build small. Today, the market is building single-unit laneway houses, and increasingly, it is building things like fourplexes and sixplexes.

    So, what’s standing in the way of more 10-, 20-, and 30-unit projects? It’s the barriers and hurdles we have erected.

    Cover photo by Jason Ng on Unsplash