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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  • How to tell if you have a housing shortage

    Housing supply is one of those topics that a lot of people can’t seem to agree on. Some people, including annoying city bloggers from Toronto, will tell you that we’re not building nearly enough new housing. While others will tell you that, no, everything is just fine. We are totally building enough to meet demand.

    So today I am going to encourage all of you to read Brian Potter’s latest Construction Physics article. In it, he answers the question: Is there a housing shortage or not? But just in case some of you don’t feel like doing that, here is the tl;dr:

    • You can’t look at construction rates alone and infer whether or not you have a housing shortage. There are so many other factors to consider, including household size (see above chart). A drop in household size alone, for example, means that you need more housing, even if nothing else is going on.
    • The US is probably short at least several million housing units right now.
    • Vacancy rates, within a market, are pretty useful for predicting housing cost increases. When vacancy rates fall, prices go up. This is one reason why housing supply matters.
    • Looking at the gap between population increases and housing supply increases is “hilariously non-predictive” if you’re trying to determine whether or not you need more housing. We’ve all seen this before: This city added X people, but only constructed Y new homes.
    • Finally, there is an extremely strong correlation between housing supply restrictions (i.e. land use restrictions) and home prices. It turns out that the harder we make it to build new homes, the more expensive they become.

    So yeah, Potter’s article is definitely worth a read when you get a moment.

    Chart via Construction Physics

  • Remote work & innovation

    Here are two interesting studies that explore the relationship between remote work (distributed teams) and innovation:

    1. This one explores how distributed teams have impacted “disruptive scientific discoveries” from 1961 to 2020. To measure this they look at scientific discoveries that end up becoming widely cited, which they take to mean that the work has supplanted an existing body of knowledge. Here they find that distributed work is inversely correlated with disruptive innovation. It is fine for incremental improvements, but it is less than ideal for new foundational ideas. That said, they do note that new technologies — stuff like Zoom — have started to minimize the innovation gap by helping people communicate as if they were co-located.
    2. But stuff like Zoom isn’t perfect. The second study looks at the impact of virtual communication on idea generation. And what they find is that videoconferencing is bad for that, largely because it focuses people on a screen and “prompts a narrower cognitive focus.” So if your job involves coming up with new ideas, Zoom may not be the best forum for that. But you probably already knew that.

  • Distribution of trips by distance across the US

    The US Bureau of Transportation Statistics has just published some recent data looking at average trip distances across the country. What it allows you to do is drill down to the county level and see exactly how many trips people take that are less than 1 mile, between 1-3 miles, between 3-5 miles, and so on. This is interesting, in my view, for two reasons.

    One, it showcases the fact that most of our trips tend to be short ones (a trip is defined as being away from your home for more than 10 minutes). If you look at the data you’ll immediately see this, which is, of course, a pretty good argument for trying to encourage other forms of mobility besides driving.

    And two, it is yet another example of how much data our mobile phones are constantly off-gassing. I mean, how do you determine where someone’s home is so that you know when they’re taking a 10 minute trip away from it? You figure out where their phone spends long periods of time (particularly at night) and you likely have that person’s home.

    What would be even more interesting to see is how this data correlates with built form. In other words, to what extent are higher densities inversely correlated with trip distances? This should certainly be the case, but it would be cool to see the data.

  • Over 60% of global luxury spending now happens in Asia

    The global luxury goods market is somewhere around US$300 billion if you exclude fancy cars. And in just 4 years, global luxury spending has flipped from over 60% of it being in Europe and the Americas, to now over 60% of it being in Asia — with over 40% of it being in mainland China alone. See above chart from the Financial Times.

    But I think what really happened is that when global travel shutdown in 2020, Chinese buyers just started spending all of their luxury goods money at home instead of flying to Paris for the week. Because if you look at Chinese luxury goods spending in 2018, somewhere around 1/4 of it was done in mainland China, whereas today it’s close to 100%.

    So the Chinese have been moving this market for quite sometime. But now that the consumption has moved entirely home, what does that mean for cities around the world? Hong Kong used to be one of the most important places for luxury consumption in Asia (no sales tax), but that has changed and it probably won’t return. This is for reasons that go far beyond luxury goods.

    But I think we’ll see spending in Europe bounce back along with Asian travel. Because buying a luxury good is about much more than just the good itself. It’s about the experience. It’s about how it makes you feel when you buy it. And it’s about signalling to others who you are as an individual. This may sound vacuous, but we all do it, with or without expensive luxury goods.

    There are also new opportunities emerging by way of NFTs. I am sure that some brands are already doing this, but if I were in charge, I would issue a unique NFT with each luxury goods purchase that records, among other things, where it was purchased. Is a bag purchased on the Champs-Élysées worth more if there is a record of it that is etched in stone permanently? Maybe.

  • Housing starts up 63% in Calgary

    The Canada Mortgage and Housing Corporation (CMHC) just published its latest housing supply report for Canada’s 6 largest city regions (downloadable over here).

    One figure that stands out is the increase in housing starts in the Calgary CMA — it was up almost 63% last year compared to 2020. This is a positive indicator for that market.

    It’s also worth mentioning that Calgary’s supply is more evenly split between low-rise and apartment housing. This is in contrast to markets like Toronto, where 3/4 of all new housing is now “apartment”, and in Montreal, where the percentage is even higher.

    My view is that it’s time to get more granular with our reporting of higher density housing. In the above example, we are showing 3 categories for grade-related housing and only 1 for anything outside of that.

    This is our national bias toward low-rise housing coming through.

  • Sick day

    I somehow managed to get food poisoning in Amsterdam. I feel awful and I’m not in the headspace to write anything remotely thoughtful today. So regularly scheduled programming will resume tomorrow — hopefully.

    P.S. It looks like Toronto will be getting its first Michelin restaurants guide. Good timing given this recent post.

  • Studio Gang in Amsterdam

    Slate Asset Management, RAD Marketing, and the top producing brokers for One Delisle were fortunate enough to be able to tour a Studio Gang-designed project in Amsterdam today called the Q Residences. A huge thanks to the developers — Kroonenberg Groep and Neoo — for their time and hospitality this afternoon.

    Here are two photos of the exterior:

    The building, which is a mixed-income rental apartment, is still under construction, and occupancy is expected sometime this fall. The structure is poured-in-place concrete, but the balconies were all pre-fabricated and installed on site. You can tell this by looking near the top of the above photo.

    Here are a few other interesting takeaways from the tour:

    – 40% of the complex is social housing (which is housed in an entirely separate but similarly impressive building); this is a mandatory requirement

    – The land is owned by the city and is being leased to the developers; the lease rate was discounted to account for the social housing requirement

    – The entire building uses in-floor heating and cooling, so there are no ducts or bulkheads in any of the suites (slabs are all about 300mm to accommodate this)

    – The balconies all have a rainwater collection system, which is mounted and concealed on the exterior of the building (it rarely goes below freezing here I am told)

    – The parking ratio for cars is very roughly about 0.5 per unit and the bicycle parking ratio is very roughly 3 per unit (remember this is the bicycle capital of the world)

    – Structural system is mostly shear walls; they also have some post-tensioning in the slabs

    – Less reliance on metal wall studs; instead they use a more expensive block-like system that offers more rigidity and better sound attenuation (I will look for the exact specification)

    – There is also this odd/interesting requirement that all of the suites have an operable window that can provide both natural ventilation and sound attenuation; in other words, it needs to let air in and block sound at the same time

    Here’s what that looks like at Q Residences:

    We don’t have a requirement like this in Toronto and so that’s why I used the word odd. We have ventilation and sound requirements, but they don’t need to be solved simultaneously in this same way.

    Why I also think this is interesting is because I think it speaks to a greater reliance on natural ventilation over active mechanical systems. In Toronto, the underlying thinking is that if it’s too hot and noisy, it’s just a matter of shutting your windows and turning on the AC.

    Of course, we obviously we have to manage around a very different climate, so I don’t mean this as a criticism of Toronto codes. It’s just an observation.

    If you aren’t familiar with the Q Residences, or the work of Neoo and Kroonenberg, I would encourage you to search around online. The project is gorgeous and so is the rest of their work.

  • Toilet seat heights in Amsterdam

    I am in Amsterdam right now for the very first time. And after I took in all the bicycles, the beautifully tilting buildings, and its iconic canals, the first thing that struck me was — get this — the height of its toilet seats.

    Now don’t get me wrong, I am a reasonably tall guy. So it’s not that the bowl in my hotel room isn’t comfortable or anything like that. It actually feels quite luxurious. I just know that this thing has got to be taller than your average bowl.

    A typical toilet seat height can be anywhere from 15 to 19” when measuring from the floor to the top of the seat. But I think 17-19” is the most typical range. So how much taller is my Dutch bowl?

    Sadly, I forgot to pack my tape measure on this trip. So I instead used the tallest book I could find in the room as a measuring stick. It happenend to be the above book by Hollywood photographer Matthew Rolston.

    Matthew’s book is 36cm tall and so, by using everything I ever learned in architecture school, I am now fairly confident that my seat is currently sitting at around 21-22” off the ground.

    Dutch people are tall. And so too are the bowls, it would seem.

  • The Eiffel Tower and the awful tower

    It was explained to me this week that Paris has two principal towers: The Eiffel Tower and the awful tower. The awful tower is, of course, the Tour Montparnasse. Completed in 1973, the Tour Montparnasse is tall, brown, monolithic, and seemingly out of place with the rest of Paris’ urban context. At the time of its completion it was the tallest building in Paris and it remains the tallest building outside of La Defense (business district).

    But the Eiffel Tower is also tall. In fact, it’s taller. So how is it that the Eiffel Tower became such a symbol for Paris and the Tour Montparnasse became the “awful tower?” Both were intended to represent modernity (at their respective times) and both were controversial at the time of their construction.

    Today people respond to these two towers very differently. Is it because the Eiffel Tower is set in a beautiful park and more separated from its urban context? Or is it because the Eiffel Tower has had almost another 100 years to settle in. It’s not exactly clear. But we do know that as humans we have a bias toward the status quo. And so I like to think of change in the following way:

    – There’s change that people immediately like

    – There’s change that people hate and will always hate

    – And there’s change that people initially hate but will eventually like

    The Eiffel Tower, you could argue, falls into category number three. It was big, modern, and alarmingly different when it was built at the end of the 19th century. But now people seem to like it. I know this based on the number of street vendors selling little replicas. For the record, I have yet to see little replicas of the Tour Montparnasse sitting on blankets on the street. I’m a buyer if I do come across one though.

    But is it really right to place Montparnasse into category number two? Could it be that it just needs more time to settle in and then it will ultimately move into number three? Maybe. In 2017, an international design competition was held to find an architect for the redesign of the tower. Studio Gang submitted an entry. But Nouvelle AOM was ultimately selected.

    I wasn’t part of the selections committee, but I think a good way to evaluate the success of this project will be whether or not it moves the tower into category three. That is, people start to like it. Then maybe Paris will become known as a city of two towers, as opposed to a city with one nice one and one awful one.

  • Les banlieues of Paris

    One of the things that I notice about people from Paris is that they’re always very clear on whether they live in Paris or outside of Paris in the banlieues (the suburbs). They’ll say things like, “No I don’t live in Paris. It’s too expensive. I live in such and such a place in the banlieues.”

    I suppose this isn’t entirely different than saying you don’t live in New York, you live on Long Island, or you don’t live in Toronto, you live in Burlington. Except that there seems to be a greater sense of division when they say it here in Paris (although it’s entirely possible that it could be my rusty French that is leading me to believe this).

    There is a sense that you’re either inside the Boulevard Périphérique, or you’re really not. And this seems like a shame. Cities regions care less about administrative borders and more about the movement of people, ideas, and goods.

    And as much as I love Paris (the central part), it is, from what I can tell, far more static than some of its surrounding areas in terms of new people (immigration), new buildings, and probably new ideas.

    Paris can sometimes feel like a perfectly curated museum. It’s beautiful and precious and should not be touched — please stand behind the ropes mesdames et messieurs. But perhaps it’s time to equally celebrate les banlieues and recognize what they have to offer.