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

  • The most expensive home in Brooklyn’s Dumbo neighborhood

    The most expensive home in Brooklyn’s Dumbo neighborhood is currently under contract and is expected to close in the next few months (at least according to the WSJ). It is a 4,270 square-foot penthouse, with a 500 square-foot terrace, that occupies the full top floor of Olympia Dumbo.

    The asking price / contract price is $17.5 million, which works out to be about USD 4,098 per square foot (or CAD 5,486 per square foot based on the exchange rate right now). Based on this price per pound, an equivalent 600 square foot suite would cost you about CAD $3.3 million.

    The land was purchased in 2018 for about $98 million. I don’t know what the total GFA of the building is, but it does have 76 residences, so that works out to about USD 1,289,473 per suite (or CAD 1,726,624 per suite), for the land cost alone.

    This should give you an indication of what the end suite pricing would need to be to make this development feasible, and likely also speaks to its average suite size. New York City tends to build much bigger suites. Certainly compared to here in Toronto.

    Also, notice that I didn’t say unit?

  • Global electric vehicle adoption

    This is the current state of global electric vehicle adoption:

    • Last year was the first year that global electric-vehicle sales reached 10% of all car sales — the total was around 7.8 million cars (see above chart)
    • Fully-electric vehicles accounted for about 5.8% of all car sales in the US, 11% of all car sales in Europe, and about 19% of all car sales in China — China is leading in this department
    • The US saw 807,180 fully-electric vehicle sales last year — Tesla remains the biggest EV maker in the world
    • In Germany, electric vehicles accounted for about 25% of all new vehicles produced last year — BMW reported a 5% decline in new-car sales, but saw its EV sales more than 2x
    • Similar story with Volkswagen: 7% decline in new-car sales; 26% increase in EV sales
    • This year, some are predicting that China will see EV sales increase to every third car, and that it will reach its tipping point sometime between 2025-2030

    It is obvious where all of this is heading. It is simply a question of how fast, and who will be the leaders at the end of the day.

    All data sourced from the WSJ

  • Canadian complacency

    The founder and Editor-in-Chief of Monocle Magazine, Tyler Brûle, recently had a nice trip to Ottawa:

    If you’ve never been to Ottawa, don’t bother. Of all the G7 capitals, it’s one that hardly conjures up much in the way of attractive images. Don’t believe me? Try it. What comes to mind? What stands out? You see what I mean? No Big Ben, no Lincoln Memorial, no Eiffel Tower. Ottawa might have had an easier time when Germany was partitioned and Bonn was its capital but that credit ran out when Berlin was reinstated as Haúptstadt and the Brandenburg Gate roared back as a symbol for the Federal Republic’s capital.

    He and his mom also thoroughly enjoyed their hotel:

    We walked into the bar and the whole space seemed gripped by a similar force that plagued the front desk: no speed, movement or sense of urgency. A man-child showed us to the table and barely said a word. His colleagues at the bar were having their own discussion, disconnected from the patrons around them. I started to laugh. My mother urged me to stop. “It’s incredible that this is the best that our country can do for people coming to the capital, no?” I said.

    As an unabashedly proud Canadian, this is deeply upsetting. It is upsetting because a lack of movement, a lack of urgency, and an overall lack of engagement are truly terrible qualities to possess. But more importantly, it is upsetting because one could argue that Tyler’s Ottawa and hotel experiences were a microcosm of some broader national issues around Canadian complacency.

  • Most of Europe is getting denser

    Here is an interesting set of maps (from this study) showing density trends, population trends, and residential area trends (i.e. sprawl), across Europe between 2006-2012 and 2012-2018:

    The key takeaway is that, broadly speaking, there is — or at least there was five years ago — a new density trend across most European cities. From 2006 to 2012, the prevailing trend was de-densification. That is, fewer people per hectare. However, from 2012 to 2018, that trend largely reversed. With the exception of the Iberian Peninsula and Eastern Europe, the majority of cities flipped to densification.

    The study tells us that there are two main reasons for this switch. The first is that more cities started growing again. During the first period, about 60% of cities in the sample size of 300+ cities, were adding people. In the second period, this figure increased to 75%. It’s also worth noting that this growth is being largely driven by immigration, and increasingly so. The number of cities with positive natural growth diminished from 67% to 51% between the two study periods.

    The second driver is a reduction in sprawl. Though almost every city in the study continued to expand outward, the rate of expansion was much lower between 2012 and 2018. So less land consumption, and more people. That’s how you increase your urban density. Of course, it would be interesting to see if any of this has changed or reversed (again) as a result of the pandemic. 2018 kind of feels like eons ago, doesn’t it?

  • The 12 best design districts around the world

    Architectural Digest has just published the perfect article for gratuitous self-promotion. It is a list of “the 12 best design districts around the world”, and it includes The Junction, here in Toronto:

    Located in a tree-lined historic area of the city, The Junction gets its name for its past as the heart of the Canadian Pacific Railway. Mix with locals on the main drag of Dundas West at boutiques including the minimalist homeware store Mjolk and modern stationery shop Take Note. A short 20-minute walk from this charming retail center, the Museum of Contemporary Art is worthy of a stop in too. (Current exhibitions include a site-specific commission by artist Sarah Badr and Seeing the Invisible, an augmented reality experience in the museum’s Jerusalem Botanical Gardens.) Then take a tipple at The Junction Brewery, which serves local craft beers within an Art Deco building that offers a glimpse of the neighborhood’s rich history.

    Early on in high school, I used to come downtown to primarily do two things: skateboard and walk Queen Street. This was the street. It was weird and artsy and we loved it. And so we would start at University Ave and walk west for as long as the street was interesting.

    For a period of time, it felt like things kind of fell off after Spadina Ave. So we would often stop there. But then west of Spadina started getting cool and interesting too.

    Years later in 2004, the Drake Hotel would open up on what felt like a far off location on Queen Street. And then seemingly overnight, all of Queen Street was cool. Parkdale had a taco place with absurdly long lines and loud hip-hop music, and cool started moving up Ossington Ave, presumably because Queen had run out of space.

    Of course, neighborhoods have cycles. Before it was the Drake Hotel, it was Small’s Hotel. And when it opened in 1890, it was located in one of the wealthiest areas of Toronto. Then the area became a lot less wealthy, and eventually the hotel became a flophouse, before once again becoming cool again. These are the cycles.

    There is no doubt that Queen Street remains one of the greatest streets in Toronto. But in my mind, 2018 was a turning point. This is when when the Museum of Contemporary Art (MOCA) left Queen and moved to the Junction Triangle (or the Lower Junction, or just the Junction, depending on what you prefer to call it).

    This to me didn’t signal that Queen had in any way peaked. Far from it. But I think it did solidify the Junction as one of Toronto’s next cool and artsy neighborhoods. And now here we are with Architectural Digest calling it one of the best in the world.

    It would be hard for me to be more biased. But I’m a big fan of the Junction. And I am really looking forward to erecting our placemaking art later this year. It is one of the things that our team is most proud of, and we proposed it simply because we thought it would be cool and interesting. That’s important.

  • Immigration to Canada is back

    According to the Globe and Mail, Canada’s census metropolitan areas (or city regions) grew by about 574,000 people for the year ending July 1, 2022. This is the highest number on record (or at least since Statistics Canada started tracking this figure in 2001), which is not entirely surprising given that immigration flows slowed dramatically during the pandemic.

    The other thing that the pandemic did was accelerate a trend of people leaving the biggest city regions for other parts of a province. During this same time period, Vancouver saw a net intraprovincial migration loss of about 14,300 people, Montreal saw about 29,500, and Toronto saw 78,077. But again, this was a trend that was building prior to the pandemic:

    It is perhaps no surprise that these losses follow the order of our largest city regions. And it once again suggests that we are not doing enough when it comes to housing supply/affordability and homes for young families. These intraprovincial losses are not because these city regions aren’t desirable. It’s in fact the exact opposite.

  • A home not a unit

    I dislike the term residential unit.

    It makes a home sound like some sort of widget. When have you ever heard someone say, “unit sweet unit”? Never. And yet this is generally what we use to refer to housing that comes in an apartment form and is not grade-related.

    If you build low-rise houses, you’re a home builder. But anything beyond that, and the home moniker apparently needs to fall away.

    There is, of course, a very good reason for this and it is that we have a longstanding history of not liking apartments. And so this is in all likelihood some sort of carryover of that bias. Surely there’s no way to create a morally-correct home in an apartment. So let’s use a more utilitarian sounding name, like unit.

    I’m sure that I have used the word “unit” countless times on this blog throughout the years. But I am working to remove it from my vocabulary. And now you can all hold me accountable to that.

  • What rich people plan to do with their money in 2023

    Each year in March, Knight Frank publishes something called, The Wealth Report, which typically includes things like its Prime International Residential Index (PIRI) and a general overview of what ultra high-net-worth individuals (UHNWIs) are up to with their money.

    (An UHNWI is typically defined as someone with a net worth greater than $30 million. And as of last year, there were nearly 400,000 of them around the world, with Hong Kong being the city with the most.)

    In anticipation of this year’s report, Knight Frank has just published the key findings of an “Attitudes Survey.” This is them talking with and surveying private bankers, wealth advisors and family offices about some of the key themes for 2023.

    Here are a few of my takeaways:

    • Globally, about 1/3 of UHNWI wealth is allocated to primary and secondary homes. This is expected. Generally the richer you become, the more your net worth gets diversified away from your primary residence. It is also worth noting that of this 1/3 allocation, more than a quarter is being held outside of their country of residence. This outside-of-country-of-residence percentage is highest for UHNWIs in the Middle East (41%).
    • The average UHNWI owns 4.2 homes around the world, with UHNWIs in Asia owning the most: an average of five homes. This is the kind of stat that might provide motivation for a foreign buyer ban, but I continue to believe that there are other bigger drivers impacting housing affordability/supply across our global cities.
    • About 15% of UHNWIs said that they want to purchase a residential property this year (2023). This is down from 21% last year. Inline with bullet point number one, the greatest appetite/stated intent is coming from the Middle East. (Related article: The new Gulf sovereign wealth fund boom)
    • Real estate was identified as the top investment opportunity. About 1/3 of UHNWIs want to invest in real estate — either directly or indirectly — in 2023. And the top asset classes are: healthcare, logistics/industrial, office, multi-family rental apartments, and hotels. It is interesting to see office in the top three. A positive sign that it is maybe being viewed as an oversold opportunity.
    • Finally, environmental sustainability is being increasingly considered by UHNWIs when it comes to investment properties: 57% are considering energy source(s), 33% are considering opportunities for refurbishment, and 30% are considering the materials used/the embodied carbon footprint inherent to the asset.

    For the full findings, click here.

  • Our current public transit problem/opportunity

    Over the past few years, I have been writing about the fall off in public transit ridership that we have seen as a result of the pandemic. Most recently, I mentioned it in my predictions for 2023.

    This topic doesn’t seem to get a lot of air time, but it is a problem. Because the standard way to operate a transit system in North America is at a loss.

    According to this recent WSJ article, the average fare recovery ratio across the US is somewhere around 1/3, with the remaining 2/3 of operating costs being covered by public money.

    (Somehow Japan has figured out a way to make money on rail.)

    During the pandemic, federal aid was disbursed in order to maintain service levels. The MTA in New York, for example, received $15.1 billion. But these aid packages will eventually run out, and ridership has yet to fully return:

    New York’s subway system has regained about two-thirds of its pre-pandemic ridership with about 91 million trips in November, according to the MTA. But that is about 50 million fewer rides than in November 2019. Officials worry usage has stalled out at that level.

    In San Francisco, the Bay Area Rapid Transit, or BART, recorded 3.7 million trips in November—a little more than one-third of the ridership before Covid.

    The obvious answer is likely to be a combination of service cuts and/or more public money. But an even better answer would be to use this opportunity to figure out how to make our transit systems a little more Japanese.

    That is, let’s make them more financially sustainable. And yes, that is going to necessarily involve looking at how we build around and on top of transit.

  • 2 storeys not 12

    I came across this poster — related to this development application — over the weekend:

    And I think it raises a number of important questions:

    • Is 2 storeys appropriate for next to a subway station and next to an existing mid-rise building?
    • Is a mid-rise building truly unprecedented in this context? See below.
    • Are mid-rise homes inappropriate for “residential streets?”
    • How does building height factor into flood plain concerns? Wouldn’t lot coverage be more relevant?
    • And when does a mid-rise become a “high-rise?”

    For more context, here’s the proposal and its immediate surroundings:

    I fully appreciate that there’s little incentive to support new development in a place where you already live — even if you happen to live in a similarly-scaled building across the street. And I am sure that I’ll receive a number of emails following this post.

    But optimizing the use of land around our existing transit stations is one of the best things we can do as city builders.

    Update: I have redacted the contact information on the above poster.