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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  • 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.

  • Single-exit housing in Paris

    Lloyd Alter of Treehugger recently wrote about this infill housing project in Paris. Designed by Mobile Architectural Office (MAO), it is a 6-storey building with 6 residential suites (two of which are 3-storey triplex suites) and 1 ground floor non-residential space.

    Building section:

    But here’s where things get really remarkable: the area of this corner site is less than 100 m2 (~1,000 sf), the construction budget was €940,000 (excluding VAT), and almost the entire structure was built out of cross-laminated timber. So overall, this is an incredibly sustainable build: it uses land and services efficiently and it uses low-carbon materials.

    At this point, you should now be wondering, “why can’t we just do this everywhere?” And this would be the right question.

    Lloyd correctly points out in his article that one of the things that makes this building feasible is that it only has one exit stair (as well as no elevator). Typically you need two means of egress, which can serve as a real barrier to smaller builds like this one here.

    But in this case, and this is part of the argument, the building is small enough that, should a fire or emergency happen, occupants could be rescued through their windows. So technically there are still two ways of getting out.

    In this year’s predictions, I mentioned that we would see “supportive building code changes”, which would help to encourage more infill housing. Exiting is one of the changes I had in mind when I wrote the post. So here’s hoping that policy makers are reading this blog, looking to projects like this one in Paris, and recognizing the benefits.

    Talking about exit stairs may not be as exciting and seemingly impactful as something like a foreign buyer ban, but I promise you that removing the many barriers to building this scale of housing would ultimately bring more benefit to our cities.

    P.S. This project is also social rental housing.

    Image: MAO

  • An interactive map of industrial space in southern California

    Here is an interactive map, created by the Robert Redford Conservancy for Southern California Sustainability, showing the approximately 1,573,777,062 square feet of industrial space that can be found in Los Angeles, Riverside, and San Bernardino.

    The map allows you to zoom in on specific parcels to see things like site area, warehouse size, and year built. You can also play around with different map radii to create a rollup of warehouse space within a specific area, which includes an estimate of daily truck traffic and CO2 produced.

    The Guardian also used this data to create the following chart, which is helpful in showing the dominance of certain cities, as well as how much of this industrial space has been built since 2010:

    The point of this interactive map, this data, and the accompanying articles is to highlight just how disruptive all of this new industrial space is to these southern California communities and to the environment in general. But I think it is also an important reminder that, whether we like it or not, our online activities have real-world physical implications.

    Online shopping requires warehouses and logistics. Online food delivery requires (ghost) kitchens. And online activity, in general, requires the storage of unprecedented amounts of data. All of these “back-end spaces” take up room, even if they’re mostly easy to ignore when we’re just looking at our phones.

    This is our new “phygital” world and, yes, it is changing the landscape of our cities. Now our task is to figure out how to do this in a way that respects communities and respects the environment.

  • No more foreign buyers

    Here’s the thing about housing:

    The delegates insisted on one hand that “housing is for living not speculation”, but on the other, emphasised the critical importance of real estate to China’s economic growth.

    In other words, things are complicated. We want housing to be affordable to more people, but at the same time, we recognize that housing appreciation is kind of useful for overall economic growth. So we’re a bit conflicted. And that may be why we tend to take contradictory actions.

    Broadly speaking, the current playbook in Canada seems to be as follows: heavily tax new housing, force those who can afford new market-rate housing to subsidize those who can’t, and then tax/ban foreign buyers.

    Canada’s new foreign buyer ban came into effect on January 1 of this year. And for the next 2 years, it prohibits companies and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada. (What is the definition of non-recreational?)

    While this may sound good to some — finally, more homes for Canadians — we’re talking about a relatively small portion of the market, which is likely why there’s also little evidence that any of our foreign buyer taxes have been all that effective.

    It’s really hard to imagine this one working much better. But it certainly sounds like something.