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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  • Sorry, you can’t build that kind of housing here — downtown or the distant suburbs

    Between 2016 and 2021, and according to this recent report from Statistics Canada, the population of the Toronto CMA (Census Metropolitan Area) grew by over 274k people:

    The population of the Montréal CMA grew by nearly 188k people:

    And the population of the Vancouver CMA grew by over 179k people:

    These are the three largest CMAs in the country and they, not surprisingly, also have the three largest “downtowns.” As of the spring of 2021, the most populated downtowns were as follows: Toronto (275,931 people), Vancouver (121,932 people), Montréal (109,509), Ottawa (67,169 people), and Edmonton (55,387).

    In this exercise, Statistics Canada breaks down each CMA into 5 categories, which are generally based on two things: (1) your typical monocentric city model (downtown in the middle with a declining gradient of surrounding sprawl) and (2) how long it takes to commute — by car during non-rush hours — from downtown to the surrounding areas.

    The good news in all of this is that Canada’s downtowns seem to be doing just fine. Broadly speaking, they are growing at a faster rate than their respective CMAs and growing at 2x the rate of the previous census cycle. Halifax’s downtown grew at 26.1% from 2016 to 2021 and Calgary grew at 21%, to give two more examples. So I think you can safely ignore what you may have heard about a pandemic exodus. Those people are now returning from the country after realizing that there aren’t any pretentious coffee shops and expensive butcher shops.

    But something else is also going on in Canada’s largest urban centers. The concurrent trend is continued urban sprawl. The biggest downtowns are growing quickly, but so are the distant suburbs (30 minutes or more from downtown). And they are growing at a faster rate than everything in between. This is not entirely surprising, but it is obviously concerning from a climate change perspective and because it suggests that people are being forced to do the old “drive until you qualify” thing.

    These two phenomena are the most pronounced in the Toronto CMA. If you scroll back up to the top of this post, you’ll see that downtown absorbed a decent chunk of the population growth (about 14%), particularly considering its small footprint. But then if you look at the distant suburbs (the mustard color), you’ll see that it’s where 72% of new entrants went!

    The question I like to ask with all of this is, “are people choosing to move to the distant suburbs because that’s the housing and location that they truly want, or are people choosing it because it’s all they can afford?” There is an argument out there that sprawl is a natural market outcome and that we shouldn’t be forcing people to live in higher-density housing. And I am certainly sympathetic to giving people as much choice as possible.

    But how much choice are we really giving people in our biggest cities? We have figured out how to intensify our downtowns through mid- and high-rise development. And evidenced by the growth rates, many people are enjoying this form of housing and the kind of urban lifestyle that comes along with it. But if it happens to not work for you, our current solution is, “either be rich so you can remain close to downtown or go for a drive.”

    What is clear from this latest census data is that we haven’t yet figured out the in-between. The missing middle is still missing. And that’s because we have clear mechanisms in place to more or less ensure this is the case: (1) We restrict meaningful growth from taking place in our single-family neighbourhoods and (2) we have made a habit out of shifting some of the incumbent tax burden to new entrants through things like development charges.

    Overall, it’s a devilishly clever system where two things happen: “Sorry, you can’t build that kind of housing here. Build it somewhere else. By the way, I’d like to keep my property taxes as low as possible, so not only do I not what you close to me, but I’d also like you to help pay for some things. Cool?” This is the arrangement that we are seeing playing out in these charts. It can be easy to ignore, but it’s there.

    Charts: Statistics Canada

  • Celebrating Stool 60

    This stool, Stool 60, was originally designed in 1933 by celebrated Finnish architect Alvar Aalto. And it’s pretty much perfect, which is why the design has remained untouched for almost a century. But here’s an interesting collaboration. Wood Wood — a Danish streetwear and design company — approached Artek — the furniture company that Aalto, his wife, and others founded — to see if they could experiment with different color stains for the stool. The objective was to still allow the natural grain of the birch to come through, but to also add some color, so as to get people to relook and what is for many people a very familiar piece of furniture. The result is three new colours: bothnia blue, powder pink, and factory yellow. I think they’re beautiful. There is also a good story behind them. And isn’t that often what we end up buying — a narrative?

    Image: Wood Wood

  • This may not actually work

    I am, of course, generalizing, but we live in a world of comparables and proof. In the slightly-modified words of Seth Godin, we have been trained to show up with proven and verifiable answers because that’s what will get us an A on the test or what will allow us to keep our jobs. And there’s nothing wrong with that. Risk mitigation is an important part of any organization. But if everything you’re doing is already proven, then by definition, and regardless of any claims, you are not innovating. Because if something is truly new, then it may not actually work.

    My friend David Wex — who is on a mission to develop modern condominiums all across Canada — once told me that if he were to hire consultants to prepare market studies for his projects (he doesn’t), they would almost always tell him never to build. And that’s because there are often no comparables to point to and say, “look at this thing over here, it shows that somebody has already done this before and has been successful.” Instead, he has been forced to ask himself, “is there no comparable product offering because the market doesn’t exist or because nobody has done it yet?”

    This is a risky proposition. Because if you’re wrong — and the market doesn’t exist — then you will likely fail. But if you’re right, and you get to introduce something new to people that want it, then you get the benefit of a commanding market position. You were right about something that most people thought was wrong and/or didn’t bother to explore. That’s why Seth Godin has argued that innovation really requires two things. It requires guts, because the thing you’re trying may not work. And it requires generosity, because innovation is, after all, about trying to make things better.

    I think this is a great way of putting it.

  • Construction site day

    Thursday mornings have become my construction site time. I start off at Junction House. I walk the site with the team. We meet and use a lot of profanities. And then I head over to One Delisle for a similar set of activities. It is one of my favorite times of the week because, as a developer, you get to see all of your work coming together in a real and physical thing.

    The views can also be pretty nice. Here is photo of the downtown skyline from Junction House this morning (there was a bit of fog):

    I know this goes without saying, but I think it is crucial to walk one’s sites. There’s no way to do this in sweatpants over Zoom. You need to see the details. You need to build relationships. And you need to problem solve with the team. It’s also a great opportunity to learn — generally and from mistakes — and get better as a professional.

    Here’s the thing about development: sometimes you’re flying at 10,000 feet and sometimes you’re talking about how many layers of drywall are appropriate for demising walls. It’s a lot of fun.

  • 70% of Hong Kong’s housing supply is either subsidized or a small unit

    This is an unfortunate distinction:

    Of all the world’s housing crises, Hong Kong’s may be the most formidable. The city of 7.3 million leads the world in housing prices and inequality, with 125,100 millionaires and 1.6 million people living in poverty. Home prices have rocketed by 187% over the last decade. In May, the number of public housing applicants hit 245,000, with an average wait time of 6.1 years — the highest in over two decades. According to lawmaker Scott Leung, a shortage of 30,000 units in the next five years means that the public housing queue will soon stretch to 6.5 years.

    So let’s take a look at overall housing supply (source):

    What this chart tells us is the following:

    • For the five-year period from 2017 to 2021, Hong Kong built about 173,900 housing units. That’s somewhere around 34,780 per year.
    • Of these units, 60,700 were subsidized public rental housing units (~35%) and 25,500 were subsidized sale units (~15%). So overall, about half of Hong Kong’s housing supply over the last five years was some form of subsidized housing. That said, the number of public rental housing units has been declining. It was about 70,800 units between 2007 and 2011.
    • Looking at private residential units during this same five-year period, about 35,200 of them (20% of total supply) can be classified as “small units.” These are units with an area less than 40 square meters and, based on the above chart, they obviously represent a rapidly growing market segment.
    • Adding all of this up, we get to 70% of Hong Kong’s housing supply being either (1) a subsidized unit or (2) a small unit under 40 square meters.

    This is how Hong Kong builds, and it clearly isn’t enough to meet demand.

  • A whole new internet

    I don’t exactly know what “metaverse” means, but what is clear is that nobody really does right now. Here is an excerpt from a recent article by Benedict Evans:

    If the narrow definition of ‘metaverse’ is that VR and AR will be the next smartphone, the broad definition is that there’s going to be a whole new internet. Our experience will be 3D, but much of that will be layered onto the real world as we see it through glasses. Games will become a much larger part of daily life – instead of the current split between a few hundred people playing deep and rich AAA PC and console games and several billion playing much lighter-weight smartphone games, Roblox and Fortnite point to a growing middle ground of persistent, open, accessible and expressive environments that are much more about social and identity than games per se, and that can become platforms and ecosystems for developers. Many of these experiences will blur into each other, and digital goods (skins, avatars and other models of self-expression in digital form) will be portable and interchangeable between these worlds, rather like the characters in Wreck-it Raph could pass between games.

    Some people, namely Mark Zuckerberg, believe that VR is going to be the next smartphone. But Benedict raises an interesting point: the direction of travel for tech seems to be toward less immersion, rather than greater immersion. We used to have giant computers that filled rooms. Then computers got smaller. And now we just carry one around in our pocket and pull it out when we’re standing in a line and bored. Portability and casual usage are what won out. And so is it reasonable to assume that billions of people are going to want to immerse themselves in VR goggles all day?

    I don’t see it. Here’s my working thesis:

    • I am an urbanist. I love cities. And I believe that our deep desire to interact meaningfully with other humans is not going to go away. For this reason, I believe in the less immersion over greater immersion argument.
    • At the same time, blockchain technologies have made it possible for us to own, collect, and trade digital assets — everything from digital fashion to digital art. I think this trend is only going to continue.
    • And as this trend continues, we are going to continually look for ways to display and experience these elements of our digital identity. So how do we make that happen? This is an important part of the conversation around “the next smartphone.”
    • My view is that it’s going to be some version of augmented reality, and that we are going to end up with a continuous blurring of the line between physical and digital.

    But hey, I could be wrong. Time will tell.

  • The West Toronto Railpath needs to be extended to Union Station

    Following my recent post about cycling to the office, Richard Witt of BDP Quadrangle suggested that I do a post on the West Toronto Railpath and use the little influence that I have to try and encourage further expansion. I thought this was a reasonable idea and so here I am writing about it today.

    For those of you who may not be familiar, the WTR is a multi-use trail that can be used for “human-powered activities” such as biking, running, or unicycling. And as the name suggests, the path runs on an old rail line on the west side of Toronto. Here is the current route map (we’re talking about the dark orange line):

    And here’s what it looks like today:

    It’s an incredible amenity and piece of infrastructure on the west side of Toronto, but it’s probably also a little underrated. I think of part of this has to do with it being somewhat hidden. And I think another part of this has to do with it being too short.

    Right now the WTR runs from Cariboo Ave in the north — which is around the corner from Junction House — down to Dundas Street West & Sterling Road in the south. But according to the City of Toronto, an expansion phase has already been funded and construction will start next year. This will take its southern terminus down to Queen Street & Sudbury Street:

    All of this is, of course, excellent news. But you and I both know that the WTR needs to be further extended to Union Station, then up north, and probably elsewhere too. So I am here today to advocate for that to happen. If we can find a few billion hanging around to rebuild the Gardiner East (ugh), then surely we can scrape together a few more million for this.

    Images: Friends of West Toronto Railpath

  • Seoul crush

    We have spoken a lot over the years about the benefits of narrow and pedestrian-focused streets. Most recently, I even ran around Europe with a laser distance measuring device to collect a few field samples. Here’s an example from Marseille and here’s an example from Sicily.

    But given all this, I think it is important to recognize that what happened in Seoul over the weekend — a deadly crowd crush that killed over 150 people — is both a horrible tragedy and a result of too many people in a narrow and pedestrian-focused street. So clearly there can be a flip side to what we talk about here. At the time of writing this post, investigations were still ongoing.

    I am not a crowd-control expert, but I have spent time in dense Asian cities during major events and holidays, and never have I felt so claustrophobic. I have lined up for hours to get into subway stations and I have lined up to get into entire city districts — presumably because they were trying to avoid things like what happened this past weekend.

    My heart goes out to all of the people and families that were impacted by this horrific incident.

    🇰🇷 🇨🇦

  • Building on top of existing buildings

    There is a growing trend in Toronto right now where people want to build on top of existing buildings. We are proposing to do this in midtown at 1 St. Clair Avenue West and, this week, this proposal was announced for the Cambridge Suites Hotel in the Financial District (shout out to Len Abelman).

    Generally speaking, this is something that an owner and/or developer might want to do when you have an older building and there is now “unused” density on the site. By “unused” I mean that if you were developing the land for the first time today, the resulting density would be higher than what is currently on the site.

    Alongside this, it can also be a way to reposition the existing asset. In the case of the Cambridge Suites site, it sounds like the existing 231 hotel keys will be converted to residential.

    At some point in the process you will probably also look at whether it is “better” to tear down the existing building and build new, or whether you should try and build on top. The former is obviously very bad from an embodied carbon perspective but, for whatever reason, this may be the preferred option.

    If you decide to build on top, your structural engineer will love you because the result — for them — will be a far more interesting project compared to a typical high-rise. But interesting comes with its challenges. Here’s how your structural solution might work:

    It’s a complicated project that will require a 10-metre-high bridge structure to be built atop the existing hotel where the roof is removed. The bridge will help bear the weight of the new tower, explains Len Abelman, principal at Toronto’s WZMH Architects, the firm designing the redevelopment for the property’s owner, Centennial Hotels Ltd.

    “It’s not a common technique, it’s challenging. We worked with a firm called RJC Engineers to do simulations of the massing and loading of weight and the lateral forces the building will face, to make sure it will work,” Mr. Abelman says.

    “Other projects in Toronto have added floors before, but it’s usually done with a big exoskeleton that goes over the entire building. This one uses technology that transfers some of the weight to the columns and the floors of the existing structure below,” he says.

    This is similar to what we are doing in midtown, except that we are proposing to retain all of the the existing facades along with the building. It is certainly not the easiest way to build. But we are likely to see more, not less, of it in the city.

    It is evidence of the immense development pressures that certain areas of our region are facing. When you restrict new supply, the market will find somewhere to build, even if it involves a lot of structural gymnastics.

  • Cycling to the office

    Right now my typical morning commute consists of a 15 minute walk and a quick stop off for a coffee. I must admit that I’m spoiled. But next year I’ll be moving to the Junction and so that means I’m going to need to make some minor adjustments to my routine.

    I fully expect that on warm summer nights I’ll probably still walk home on occasion. But broadly speaking, my loose plan is a combination of cycling, e-scootering, and taking the Union Pearson Express train.

    Then this evening I was out for drinks with one of our partners and two of the guys were talking about how they cycle to work each morning and compete on Strava to make sure everything gets properly logged. One of them actually lives near the Junction and his regular route is down through High Park and then across along the lake.

    Naturally I got inspired and decided — after two beers — that I too should join this competition. So I have now obligated myself to cycling to the office starting next year. That said, I could probably use a new bike, and I’m hoping that some of you will have recommendations.

    My criteria is as follows: it should look impossibly cool, it should work for a daily commute, and it should be at least somewhat suitable for tight-fitting clothes and long rides through the French countryside (even though I currently have no concrete plans of doing such a thing).

    Any thoughts?