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

  • Toronto proposes at 49% increase to development charges

    The big news this week for Toronto city builders is that the city has put forward a proposal to substantially increase development charges. Here’s a tweet storm that I published earlier today on the topic, and here’s a summary of what the new fees might look like:

    To translate this into a specific example, let’s assume that you’re building a 300 unit apartment building with 180 one bedroom suites and 120 two bedroom suites.

    Under these proposed DC rates, this would translate into charges of about $9.6mm for the one bedroom suites and $9.8mm for the two bedroom suites, totaling over $19.4mm in DCs alone. But keep in mind that there would be other charges on top of this for parkland dedication, community benefits, and a bunch of other things.

    When our cost consultant ran the numbers back in 2019, the estimate was that about a quarter of the price of a new condominium in Toronto was going to government fees and taxes. But with the above increase and with the introduction of policies like inclusionary zoning, I am sure that the number is higher today.

    These are easy fees to hide. Most people don’t know they exist. And a lot of people don’t seem to like new development and new housing. Property taxes on the other hand are highly visible and highly sensitive. So that tax tends to be left alone, especially by comparison.

    But these increases are hugely impactful. It means that developers across the city will now need to start looking at increasing rents and prices in order to try and offset it. If they can’t, they won’t build. And if they can, it will mean that the housing that does ultimately get built will be that much more expensive.

  • Right-click, save as — world’s first Bored Ape restaurant opens in Long Beach

    The common criticism with NFT art is that it’s just a JPEG image. So why bother “owning” it when you can just right-click, save as? Who in their right mind would spend thousands, let alone hundreds of thousands on such a thing?

    But as I’ve argued before, this is missing the bigger picture and missing what this new technology has the potential to empower. Take for example, the new Bored & Hungry restaurant that opened up in Long Beach, California this past weekend (with lines down the block).

    It is being dubbed the world’s first Bored Ape Yacht Club restaurant, and here’s the backstory. Andy Nguyen is a successful food entrepreneur in southern California. And last month he spent US$267,000 on Bored Ape #6184 (yes, a JPEG).

    After doing this, he took to Twitter and asked: “Worst decision I’ve ever made or best idea of all time?” Of course, he clearly had a new business idea in mind.

    Fast forward to today and he now has a pop-up restaurant concept that is branded with his Bored Ape. And because the Bored Ape IP is very permissive, he is perfectly within his rights to do this. He can create whatever business he wants on the shoulders of his NFT, as can others with theirs.

    His restaurant is also accepting the new ApeCoin that is part of this NFT community, and if you yourself have a Bored Ape, you qualify for perks like free food. All you have to do is scan your crypto wallet. Digital asset ownership = real-life something.

    This to me is just one small example of the kind of new businesses that crypto and other digital assets might unlock. And I am sure that it’s the tip of the iceberg.

  • Transit data tells us that people don’t like Mondays

    My unscientific Jimmy the Greek Reopening Index has led me to believe that flexible hours have resulted in more people working from home on both Mondays and Fridays. The middle of the week seems to when demand peaks for delicious lunchtime souvlaki.

    But that may only be half right. According to some recent transit data from New York City, which looked at weekday subway ridership between October 2021 and March 2022, it seems to only be Mondays where people really prefer to stay at home:

    What you are seeing here is subway ridership per day (with any holidays removed from the data set). Mondays, on average, saw 2,815,166 rides per day, whereas the average for non-Mondays was 3,026,371 per day. So over this particular 6 month period, Monday ridership was about 7% lower.

    The probable takeaway: People seem to like to ease into the week.

  • An undignified bus stop in Toronto

    I was driving to the office from the Junction last week, and I passed a brave individual waiting at this bus stop on Parkside Drive:

    I immediately thought to myself, “what an undignified and silly bus stop.” There’s a little bit of paving so you have a place to stand while you’re waiting, but how do you even get there?

    There are no sidewalks actually leading to said bus stop, and so you really only have two options: 1) jaywalk or 2) cross at some far away intersection and then walk unceremoniously on a narrow strip of grass and dirt on the side of a busy street.

    Not surprisingly, this was the first time I had ever seen anyone waiting at this stop even though I take this route all the time on my way to and from Junction House.

    I recognize that I was operating a motor vehicle when I saw this guy waiting for the bus. But I also took transit last week. And I know that we have it in us to do much better than what you’re seeing in the above street view photo.

    It’s also a reminder that while High Park is really great, we need to work on its edges. Both the urban edge that I’m describing above, and the built form that surrounds our magnificent park. High Park is an urban park, but we seem to be a little uncomfortable with that idea.

  • Forget infill development, why not just build entirely new cities?

    We talk a lot on this blog about how best to intensify and add housing to our existing cities. But here’s alternative approach: Why not just built entirely new cities? This way you don’t have to worry about fixing any of the things that are currently broken in our existing cities or worry about messy things like community engagement.

    Now, I disagree with many, or perhaps most, of the points that Nathan J. Robinson puts forward in the above Current Affairs article, but I think this is an interesting question to unpack. Robinson’s argument is that the main obstacle for building new cities in the US is ideological rather than technological. You need a bit more central government planning if you’re going to pull off a completely new urban center. And that’s not how things are generally done in the US.

    However, I think the real problem is that cities have powerful network effects that encourage centralization (even if some people are working from home). It’s easy to look at a large country like Canada and say to yourself, “but look at all that empty land. How could we possibly have a housing shortage?” The reality is that most of our land is empty and cheap because it has little value. The jobs are in our cities and that’s why Canada is a largely urban country.

    Indeed, this is how most cities have emerged historically. They start with some sort of economic purpose, be it an important trade route, access to resources, or some other driver of prosperity. It is for this reason that urbanists like Alain Bertaud will tell you that, typically, urban infrastructure follows the market, and not the other way around. Because who wants to live in a city with nice infrastructure but no jobs? More importantly, how long can a city without a strong economic purpose even last?

    Take for example Delhi. By 2030, Delhi is expected to be the largest city in the world. This has made it exceedingly difficult for the city to build enough new housing. So government there has been focusing on building new cities on the outskirts surrounding Delhi. These cities are referred to as “counter magnets”, and their purpose is to intercept and literally attract new migrants before they reach Delhi, thereby relieving some of the urban pressures on the capital.

    The fact that these cities are referred to as “counter magnets” speaks to exactly my point about centralization. It is recognition that Delhi is by far the biggest urban magnet. Because of this, these satellite cities haven’t been as successful as everyone had initially hoped. Migrants seem to still want Delhi. You can build new housing, but without jobs and economic opportunity, people will continue to flock to the biggest urban magnets.

    So sooner or later, you’ll need to fix what isn’t working.

    Photo by Ravi Sharma on Unsplash

  • Over $26 trillion in US homeowner equity

    Last year was a pretty good year for people who own a home in the US (or in Canada and many other places). Current estimates peg the total value of US residential real estate at somewhere around $40 trillion.

    But of course, a lot of this real estate has debt on it. The Federal Reserve considers this in their calculation of “homeowner’s equity,” and so the net number, as of the end of last year, was just over $26 trillion (see above chart). This is up from about $10 trillion in 2012, following the financial crisis.

    Not surprisingly, a lot of these gains are accruing to a pretty specific demographic. According to City Observatory, about 67% of residential real estate in the US is owned by non-Hispanic white people. And about 44% of owners are 55 years or older.

    Oddly enough, this also happens to be a demographic group with a disproportionate say over the kind of new housing that we’re allowed to build in our cities. Scarcity is a very good thing when you already have and own some.

  • The infamous 45-degree angular plane

    The Toronto mid-rise housing typology is known for architectural forms that often end up looking something like this:

    The reason for this is the infamous “45-degree angular plane” that gets applied when new developments abut low-rise residential neighborhoods. It is a way to transition down and mitigate some of the impacts associated with this kind of infill development — usually the concerns are overlook, privacy, and shadowing.

    These are, of course, legitimate concerns. But here’s the other side: Should we really be reducing the number of homes that we can build on our main streets by carving away area like this? Is overlook and shadowing more important than additional housing? Stepping buildings like this also makes constructing them more expensive and cumbersome. Are higher costs the goal?

    It is for reasons like these that some people have been paying attention to the new Danforth Avenue Planning Study that went to Toronto City Council this week. Among other things, the study recommended the relaxation of the 45-degree angular plane standard along a portion of the Danforth.

    This is certainly a step in the right direction. But in my humble opinion, it’s not nearly enough for an area that will ultimately sit at the intersection of two subway lines.

  • A mapping of US rental housing rents, scraped from Craigslist

    https://twitter.com/mnolangray/status/1511098796364632067?s=20&t=tX0MTFB9wZyb6rKAGEFM7w

    This is an interesting way of seeing rental housing rents (national scale). And there’s a lot that you can glean from a mapping like this. But it’s also interesting in that what you are seeing here is a visualization of some 11 million Craigslist rental housing listings (taken from this study). The authors refer to it as a “nontraditional source of volunteered geographic information”, and they argue that it’s probably more granular and real-time than what is typically available when it comes to rental housing. That sounds right to me.

  • [Video] Are NIMBYs selfish?

    Peter Baugh tweeted this out on Monday. Essentially, he attended a community meeting for a new housing project in his neighborhood. He spoke in favor of the proposed development. And was then accused of being a developer shill. His comments were subsequently no longer allowed at this “public” meeting. I mean, how could anyone possibly be in favor of new urban housing? Surely he must be a developer “plant.”

    This is wrong, disappointing, and a whole host of other unsightly things. So today I thought I would share a recent City Beautiful video that asks: “Are NIMBYs selfish?” I have shared Dave Amos’ videos before. He’s an assistant professor of city planning at Cal Poly and a well known YouTuber. And I think this video does a great job explaining some of the tensions and trade-offs at play when it comes to development, particularly infill development.

    But as Dave clearly explains in the video, he is not a neutral actor when it comes to this topic. His view is that, yes, NIMBYs are selfish.

  • Twitter > Instagram

    If I had to pick only one social network to use, it would be Twitter. I, of course, also enjoy Instagram because I like taking photos. But if I had to pick one, it would be Twitter.

    I just find that Instagram is more about passive consumption (like watching TV), whereas on Twitter I’ve found a way to actively engage in productive discussions around the topics that interest me — everything from real estate and architecture to NFTs and photography.

    The crypto community is also very centered around Twitter. I haven’t looked at the numbers, but I would think that NFT activity has been, or at least should be, a boon for the company. That said, Twitter has never really been a great business and public company.

    But maybe that changes now that Elon Musk has become its largest shareholder with a 9.2% stake in the company (currently valued at a few billion). The stock jumped over 27% today. Or maybe it doesn’t change at all and this is just a fun side hustle for Elon.

    Here is a typically funny explanation from Matt Levine introducing what just happened:

    Look this all makes complete sense, obvious, intuitive, simple sense. If you are the richest person in the world, and annoying, and you constantly play a computer game, and you get a lot of enjoyment and a sense of identity from that game and are maybe a little addicted, then at some point you might have some suggestions for improvements in the game. So you might leave comments and email the company that makes the game saying “hey you should try my ideas.” And the company might ignore you (or respond politely but not move fast enough for your liking). It might occur to you: “Look, I am the richest person in the world; how much could this game company possibly cost? I should just buy it and change the game however I want.” Even if your complaints are quite minor, why shouldn’t you get to play exactly the game you want? Even if you have no complaints, why not own the game you love, just to make sure it continues to be exactly what you want? The game is Twitter, the richest person in the world is Elon Musk…