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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  • An exciting new proposal for Toronto

    I love change.

    In fact, a big part of what I do for a living is imagining what things could be in the future. However, the bias that humans have toward the status quo has been well documented by people like Seth Godin, as well as many others. It is easier to defend that which already exists. Here’s how Seth puts it:

    All one has to do is take the thing we have now as a given (ignoring its real costs) and then challenge the defects and question the benefits of the new thing, while also maximizing the potential risk.

    So as I was reading this recent blogTO article about the work of Stephen Velasco, I wasn’t surprised to see some of the responses. Stephen has built an outstanding 3D model of all the towers that are currently planned or under construction in Toronto. Here’s what that looks like:

    For some of you, this is exciting. And for others, this may look like too much density. In both cases, we might think we are being fair and reasonable in our assessment, but the reality is that it’s actually quite difficult to be a neutral judge. We are all guilty of poor logic and too much emotion.

    But here’s a good mental exercise, put forward by Seth, to test your logic: flip the story and then see if you still feel the same way.

    In this particular case, imagine that all of the above proposed buildings are already built. This is the city that we all live, work, and play in. This is the status quo. Now consider an exciting new proposal being put forward to demolish many/most of these buildings, create more surface parking lots in the core, industrialize our waterfront, and reduce our overall population density.

    Photo from the 1940s:

    Photo from the 1960s:

    Is this a better proposal?

  • The “hotelization” of housing

    When I was younger and looking for any excuse to travel (I’m not sure this has changed), there were periods of time where I “lived” for weeks and months in hotels and in spaces that today we would characterize as co-living. I always liked the idea of living in a hotel. It was carefree. There were amenities. And you got to meet people from all around the world.

    Well it turns out that these kinds of living arrangements aren’t just attractive to poor university students. We have seen a proliferation of different living and hospitality concepts over the years, and I don’t see this trend slowing down. A recent example, which I just learned about via Globetrender, is “the Other House”. Their first location, pictured, above, is scheduled to open this spring in London’s South Kensington.

    The founder refers to it as a “residents’ club”, and the idea is for it to sit somewhere between a hotel, a serviced apartment, and your typical long-term apartment rental. Each “Club Flat” will have a separate living area and bedroom, as well as a kitchenette for cooking. And guests will be able to stay for as long as they would like — anywhere from one night to more than a year.

    Why this is potentially innovative is that the company is looking to combine the best of a few different worlds here. For example, hotels are great because they offer flexibility, amenities, and a carefree lifestyle, but they’re often missing the sense of belonging/home that you get from more conventional longer-term housing.

    The Other House hopes to fix this through what you might call the “hotelization” of residential real estate. They’re investing in design and in creating the right experience, but they’re also doing things like offering storage facilities for their residents. The idea here is that if you need to travel somewhere else for a few weeks, there’s a place to store all of your personal belongings so that everything is waiting for you when you return “home.”

    Pricing is still TBD. But supposedly the average room rate is anticipated to be around £250 per night, with rates obviously coming down for longer stays. I am curious to see how this concept does in London. While it is not entirely novel, it is decidedly urban. It is an another example of design, location, and experience being privileged over raw square footage.

    They don’t have much up on their website just yet. But if you’d like to follow them on the socials, you can do that over here.

    Image: The Other House

  • My predictions for 2022

    As promised, below is a list of some of my predictions for this coming year. I have tried to be both punchier and more precise in my prognostications; because, well, obvious predictions are boring and precision will allow me to better evaluate my thinking at the end of the year. So here goes.

    1. 2022 will be the year that COVID-19 becomes endemic and finally fizzles out to a point where it no longer factors into our decision making in the same way that it has for most people over the last two years or so. I think this will happen by as early as the summer.
    2. As a result, I think the majority of people will be back in their offices by this September at the very latest, with many coming back much earlier. The whole hybrid/flexible work thing won’t completely disappear, but the majority of people who used to work in offices will be back.
    3. Recreational/fringe residential real estate will soften in 2022 as a result of 1) its tremendous run-up during this pandemic and 2) the renewed pull of urban/office life. Conversely, urban apartment rents will continue to rise and eventually surpass their pre-COVID levels. The SF Bay Area could be one exception.
    4. The explosion of travel that I thought was going to happen in 2021, will truly happen this year. The summer will mark its official return, with European travel volumes (to give just one example) returning to their pre-COVID levels.
    5. We will see meaningful efforts to further breakdown the hegemony of single-family zoning throughout many North American cities. This has been building for a number of years and I think we will see some tipping point-like moments in 2022. Specifically, expanded permissions for multi-unit housing and greater densities.
    6. I wish I could say that autonomous vehicles are destined to do something truly remarkable this year, but I think we are still a few years out (2024-2025?) before a large chunk of us are ride-hailing AVs. But on a related note, I do think that Uber will come into its own this year and finally become profitable (and not just with adjusted profits).
    7. Public transit ridership will, unfortunately, remain depressed and below its pre-COVID levels for this entire year. The beneficiaries of this will continue to be cars (not good), bikes, and micro-mobility solutions like e-scooters.
    8. 2021 was a huge year for NFTs and other fun stuff like digital fashion. Given these trends, I believe there will be growing demand from people to better integrate their digital and physical lives through technologies like augmented reality. Snap has been at the forefront of this space for many years and 2022 will be an important year for its Spectacles (AR glasses). But Apple and others will also make major announcements.
    9. Miami’s ascent as an important tech hub will get interrupted by questions surrounding the climate crisis and its own resilience. At the time of writing this post, the price of carbon on the EU’s Emissions Trading System (EU ETS) is about €80 per tonne. I think we will see it break €125 per tonne this year, and possibly go even higher.
    10. Ethereum, Bitcoin, and Solana (in this order) will be the top three cryptocurrencies according to market cap by the end of the year. At the time of writing this post, their market caps are $446 billion, $895 billion, and $55 billion, respectively. I am also expecting some breakout web3 consumer applications that will push, maybe, 40% of Canadians and Americans into the crypto space.

    Photo by Dave Xu on Unsplash

  • How past pandemics affected the urban housing markets of Amsterdam and Paris

    Past performance, we are often told, is not necessarily indicative of future results. At the same time, history has a funny way of repeating itself. I recently stumbled upon this research paper by Marc Francke (University of Amsterdam) and Matthijs Korevaar (Erasmus School of Economics) looking at the impact of pandemics on housing markets. More specifically, it looks at the impacts of the bubonic plague on 17th-century Amsterdam and of cholera on 19th-century Paris. Here’s an excerpt that summarizes what they found:

    Our analyses for both cities point to substantial impacts of pandemics on property prices. We find that sales prices respond negatively to outbreaks, in particular in heavily affected areas, and that responses are short-lived, with the effects on sale prices being particularly significant in the first six months of an epidemic. Evidence from aggregate house and rent price indices suggests a smaller negative impact on rent prices. Amsterdam and Paris were very resilient to these outbreaks, with population and house price growth quickly reverting to prior trends.

    This paper was first published at the beginning of 2021. A lot has changed since then and, in some ways, their findings now seem obvious. There was still a great deal of uncertainty in the market 12 months ago. While it seems like eons ago, I remember our team having discussions around when would be the right time to launch sales for One Delisle. Of course, 2021 turned out to be a record-setting year for housing and that includes the core/urban housing that the media was quick to write off at the onset of COVID.

    This is not to say that certain things haven’t changed or that there won’t be further changes — both positive and negative — that come out of this. To give one just example, we all continue to hear anecdotal evidence that a lot of tech talent would now prefer to be in cities like Miami over San Francisco. (I’m not tech talent, but this would be my strong preference.) Did the pandemic help fuel this? Probably. It opened a door for the people who no longer wanted to live in a city with such a supply-constrained housing market. (I’m sure there were other reasons, too.)

    These things, of course, happen. Cities are powerfully resilient, but they still need to compete. The bigger point is that cities continue to be our greatest centers of opportunity. And here we have centuries of data and housing records to support the fact that opportunity is both a powerful motivator and a centralizing force for urbanization. This is true even in the face of things like pestilence.

    Happy new year, everyone. I think there’s a lot to look forward to in 2022, including far less talk about pandemics and hopefully far more talk of places like Miami.

    Photo by Adrien Olichon on Unsplash

  • Largest cities in the world — revisited

    Following my recent post about the largest cities in the world (from 100 to 2015 CE), a number of you rightly pointed out that the data looked questionable. Where, for example, is Shanghai in this latest list of largest cities? So I think it’s important that I do a follow-up post.

    There are a number of nuances to consider when trying to measure urban populations. Perhaps the two most obvious are the geographic extent of each city (i.e. what urban boundary do you use) and the number of people living in informal settlements.

    The UN recently estimated that there are some 1 billion people living in slums or informal settlements. That represents nearly a quarter of the world’s urban population, which is a staggering number and a pressing global need. We desperately need more housing.

    When it comes to measuring the size of an urban agglomeration, most of the studies that I have seen tend not to focus on municipal boundaries (“city propers”) or metropolitan areas. The former is often based on arbitrary political boundaries and the latter often contains undeveloped rural land.

    So for the purposes of this post, I’m going to go with Demographia’s definition of “built-up urban area.” They define this as being a continuously built-up area with one labor market and with no rural land. In their view, the world is either urban/built-up or rural. The built-up part is the lighted area that you would see on a nighttime satellite photo.

    Given this definition, there are a number of interesting fringe cases. For example, contiguous/adjacent urban areas with more than one labor market get split up into multiple ones. This is the case in the US with the northeastern “megalopolis” that runs from Boston to Washington.

    Conversely, if adjacent urban areas share a labor market and are linked together by similar commuting flows, then they get grouped into one urban area. This might be the case even if the area(s) straddle a national border. In this particular case, the free movement of people and goods would be another prerequisite.

    With these definitions out of the way, below is another stab at sharing an accurate list of the world’s largest megacities or built-up urban areas. This is one is by Demographia and there are a number of key changes compared to the last one I shared. Shanghai now features in the top 10. But Lagos drops down to number 20, which remains a bit of a question mark for me.

    For a copy of Demographia’s full report, click here. It looks at all urban areas with a population greater than 500,000 people (total is 985). Of course, if any of you have any other data sources that you think I should take a look at, feel free to share them in the comment section below.

  • Is crypto just snake oil?

    As I understand it, databases are pretty important to technology companies. Here is an excerpt from a recent post by Albert Wenger talking about why he and his company (Union Square Ventures) believe that web3/crypto is going to unlock new value for our society:

    As a first approximation all the big powerful internet companies are really database providers. Facebook is a database of people’s profiles, their friend graphs and their status updates. Paypal is a database of people’s account balances. Amazon is a database of SKUs, payment credentials and purchase histories. Google is a database of web pages and query histories. Of course all of these companies have built a great deal more over time, but operating a database has stayed at the core of why they are powerful. Only they get to decide who has permission to read and write to this database and which parts of it they get access to.

    So how will web3 be any better? Well blockchains, at least right now, are poorer performing databases in almost all dimensions, according to Albert. And this is one of the reasons why they’re being so quickly dismissed by most people. But they do have one key advantage: permissionless data. No single entity controls a blockchain database. More from Albert:

    It is difficult to overstate how big an innovation this is. We went from not being able to do something at all to having a first working version. Again to be clear, I am not saying this will solve all problems. Of course it won’t. And it will even create new problems of its own. Still, permissionless data was a crucial missing piece – its absence resulted in a vast power concentration. As such Web3 can, if properly developed and with the right kind of regulation, provide a meaningful shift in power back to individuals and communities.

    All of this said, I do agree with Fred Wilson and others that the web3/crypto enthusiasts on Twitter these days are getting to be a bit much. For obvious reasons, everyone is trying to pump the crypto stuff that they own. And it can certainly feel like shills trying to sell snake oil. But as Fred pointed out today, this isn’t the first time that we’ve been here:

    It reminds me of the early days of web2 in 2001/2002/2003, when we started USV. That was also a time of great cynicism. We almost did not get our first fund raised. Nobody was buying the story we were telling. But of course, that story turned out to be true. And I am confident this one will too.

    If/when this story does turn out to be true — and I believe it’s a when — I think we will see it permeate through all sectors of the economy, including how we plan, build, and operate our cities. Of course, this will probably take decades and much of what will happen is unknowable right now. But it’s pretty hard to ignore that this was a pivotal year for the crypto space.

  • Choice over convenience

    “Change makes us uncomfortable. Sunk costs are hard to ignore. Possibility comes with agency, and agency comes with risk.” –Seth Godin

    This is a quote from a recent blog post by Seth Godin talking about choice vs. convenience. His overarching argument is that we tend to go with convenience over choice when making decisions, and that means forgoing many/most of the options that we actually have available to us. Life inertia is a thing, which is why we often require big and meaningful events to shake us out of the conveniences of complacency.

    I think that is one of the reasons why you’re hearing talk of a “great resignation.” This pandemic has shocked many people into thinking about whether or not they’re truly happy doing what they’re doing. And for many people, that has translated into going out and starting their own business. Fred Wilson recently argued that what we’re living through right now isn’t actually a great resignation, it’s a great formation.

    I have never been a huge fan of new year’s resolutions for the simple fact that I don’t think you should wait until the new year to do something you allegedly want to do today. If you want it, do it now. But there is no denying that this week is probably the slowest week of the year. And this slowness has a way of freeing up cognitive capacity. Perhaps it’s just enough breathing room to encourage more choice over convenience. Whatever the choice may be.

  • Londoners bought a record number of homes outside of the city this year — or did they?

    The Financial Times published an article this week talking about the record number of homes that Londoners bought outside of the boundaries of the city this past year. The total was about 112,780 homes worth some £54.9 billion — again, it was a record in terms of total value.

    The argument is that this pandemic continues to fuel decentralization, flexible working arrangements, and greater demand for larger spaces. Housing preferences have permanently changed. And the suggested takeaway is that this dynamic might have “serious consequences for the city’s population and housing market.”

    But of course, I’m going to question whether this is really the case. The ~£55 billion number is clearly a new high according to the article. The previous record was £36.6 billion back in 2007. But that doesn’t give you the full picture because homes cost a lot more today than they did back then.

    If you look at the total number of homes purchased outside of the city by Londoners, the record still belongs to 2007 with approximately 113,640 homes. When I see this number it makes me pause.

    Because here we are living through a global pandemic and the largest work from home experiment in modern history, and yet the total number of homes purchased outside of the city this past year is still comparable to that of the last housing cycle.

    Did this moment in time really create an anomalous and irreversible shift in housing preferences?

    Photo by Fineas Anton on Unsplash

  • Largest cities in the world from 100 to 2015 CE

    I just discovered this set of maps (via Brian Potter) looking at the largest cities in the world from 100 CE all the way through to today (well 2015 CE). Here are what the two bookends of this map series look like:

    It is an interesting reminder of just how centralized the world was around the Mediterranean and parts of Asia, and also how nothing is guaranteed. As recent as 1900, cities like Manchester and Philadelphia were among the top 10 largest cities. Today they aren’t even close.

    For the full map collection, click here.

    UPDATE: The data behind these maps has been called into question. Look out for a follow-up post.

  • The world’s first 3D-printed home, kind of

    Habitat for Humanity recently announced that they have completed, in partnership with additive construction company Alquist, the first 3D-printed owner-occupied house in the world. I’m pretty sure that I’ve seen other 3D-printed homes kicking around, but this is still a big deal and one of the first of such homes for Habitat for Humanity. (It also 3D-printed a house in Arizona this year, but I guess that one wasn’t owner-occupied.)

    The 1,200 square foot three-bedroom home is located at 129 Forest Heights Road in Williamsburg, Virginia. And it was “printed” in just 22 hours, which Habitat and Alquist are claiming reduced their construction schedule by approximately weeks compared to a traditionally framed house. Overall, this translated into an estimated savings of 15% on the total construction costs. (Again, according to Habitat and Alquist.)

    These kind of savings are particularly important in many rural communities where it is not uncommon for homes to sell below their replacement cost. Not surprisingly, when you have a market dynamic like this, there’s zero incentivize to build new. I mean, why would you when you can just buy something that already exists for less money, and with less risk.

    Alquist uses a patented concrete to print its homes. The concrete can be left exposed, or it can be finished with traditional building materials. For any load-bearing or structural walls, I understand that they print two walls with a cavity and then use typical reinforcing bars. I would imagine that this approach is particularly helpful when lumber costs are high, but there’s an obvious question around embodied carbon (concrete in lieu of wood).

    Still, it’s hard not to believe that we will be seeing more, rather than less, 3D-printed homes in the future.