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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  • The century of gasoline vehicles is coming to an end

    Chrysler announced last week that it will become an all-electric vehicle company by 2028. This is a pretty big deal and, as I understand it, a first for the legacy US automakers. At this point, it now feels difficult to argue that this shift isn’t going to happen. Though I remember lots of people in the past asserting that the masses would never ever switch over to electric.

    I guess that’s the status quo bias at work. Because if you flip the script and assume that the status quo is already electric (that is, we all come home after work, plug in our cars, and charge them up at low rates), it would be pretty hard to argue for a switch to gasoline-powered cars. Here, try this new thing. It’ll cost you more to fill up and you get to pollute the environment more. But hey, it sounds cool when you do a cold start.

    Do we have Tesla to thank for exposing this?

    Here’s some further evidence from the Exponential View.

    In the UK last month (December 2021), 41% of new car registrations were electric or some kind of plug-in electric hybrid. That is up from 29% for the same period in 2020 (see above). Pure EVs also make up about 2/3 of these registrations and look to be picking up momentum. That’s certainly what I would expect to see when we revisit these numbers next year. The century of gasoline vehicles is coming to an end and it’s going to happen well inside of this decade.

    When I was buying a new car back in 2018, I wanted to buy an electric vehicle. I don’t have a charging station in my parking garage, but I would have gotten one. The problem is that I couldn’t find the kind of car that I wanted in an electric version. And the ones that were available were pretty expensive. That has changed and is no longer the case. If I were buying today, it would certainly be an EV. The car would also have to change colors at the push of a button.

    But, of course, the other element of change here is autonomy. And if/when that arrives, it will be far more disruptive than this shift to electric.

  • Robotic furniture startup Ori partners with Marriott Hotels

    Space-saving transformational furniture isn’t necessarily a new thing. We’ve all seen a murphy bed. And people like Graham Hill (of LifeEdited) have been designing and building out small urban apartments that magically transform for what seems like a decade. Perhaps it’s even longer than that.

    But I wouldn’t say that robotic and transforming furniture has hit the mainstream yet. There is, however, an argument to be made that it’s kind of inevitable. As the price of construction and housing continues to increase, there will be a continued push to do more with less space.

    Enter companies like Ori, which offer robotic and tech-enabled furniture for both end-users, as well as developers. Ori is already in 57 buildings across the US and, at this year’s Consumer Electronics Show (CES), it was also announced that they have partnered with Marriott to start rolling out their furniture in the hotel space.

    This to me feels like a perfect use case.

  • Toward more multi-family housing

    This recent article by Brookings is a good reminder of the all too important link between land use policies/patterns and GHG emissions. Because electric vehicles are cool and all, but they’re still not as efficient as just walking around and/or taking transit.

    As has been argued before on this blog, we need to not only electrify our transport network, but we also need to change how we get around. And probably the best way to encourage a modal shift, is to plan and build our cities differently. Something that is simple, but not easy.

    It also turns out that people who live in multi-family buildings tend to consume less energy (on a per capita basis) than those in single-family houses. So there are numerous benefits to encouraging denser housing on top of transit and within mixed-used communities.

    With all of this in mind, here are some interesting charts from the above Brookings article.

    This first one shows new housing permits in the metro areas of Atlanta, Chicago, and Washington DC, according to their urban, suburban, or exurban status. Here, Chicago is an outlier, with the “urban core” (defined as Cook County) now making up about half of all new housing.

    If you look at the entire study period, the number is less. The urban core accounted for about one-third of new housing permits in Chicago, and only 15% of permits in Atlanta and DC. But in all cases, housing permits in the urban core have been increasing since the 2008 financial crisis.

    But here’s the other thing. Looking at these next two charts, there appears to be a clear trendline toward more urban housing typologies. The first of these next two is showing single-family housing permits as a percentage of all new housing. And the second is structure type over time.

    Atlanta is still building mostly single-family housing, but less of it. And based on these charts, Chicago has already passed its inflection point. DC is not far off. Every city region is of course going to be different, but it does look like there is some kind of broader housing shift underway.

  • Neighborhood retail in residential Calgary

    I have written, many times over the years, about small-scale commercial uses in residential neighborhoods. Here in Toronto, they are generally not permitted. The small convenience stores and bodegas that remain are often legal non-conforming uses.

    Today I came across a great example from Calgary. I don’t know if it was done on an as-of-right basis or if variances were needed, but it is an example of small-scale commercial on a site that used to be low-rise residential.

    Here is the before (from street view):

    Here is the after:

    And here are a few more photos from the developer:

    Developed by RNDSQR and designed by FAAS Architecture, the project houses three street front commercial units that are now leased — according to their website — to an ice cream shop, a coffee shop, and a pizza + wine bar. The second flour houses office space.

    Congratulations to the team behind this development. It looks like a terrific project. And in my view, being able to leave your home and walk to things is one of the greatest urban amenities out there.

  • New York City releases climate resilience plan

    New York City is projecting that Lower Manhattan is likely to see more frequent flooding by as early as the 2040s. This could move to monthly flooding by the 2050s and daily by the 2080s. These time horizons may seem like a ways away, but I’m personally going to try my damnedest to see the 2080s.

    In light of these projections, New York City released a new Financial District and Seaport Climate Resilience Master Plan at the end of last year. The plan is projected to cost somewhere between $5 to $7 billion and entails building out a new multilevel waterfront that extends the current shoreline into the East River by up to 200 feet.

    Here are a couple of renderings:

    The upper level will be elevated by about 15-18 feet (designed to protect against storms like Sandy) and the lowest level will be a continuous waterfront esplanade (designed to connect humans to the water). Overall, the plan encompasses about one mile of waterfront, running from The Battery to the Brooklyn Bridge.

    City building take times. In the case of this plan, it is building for the next century.

    For a copy of the full press release, click here.

    Images: NYC Economic Development Corporation

  • Adam Neumann has quietly acquired some 4,000 apartment units

    So it was announced today that Adam Neumann — the cofounder and former CEO of WeWork — has been quietly buying apartment buildings across the United States. According to the Wall Street Journal, he is involved in entities that have acquired more than 4,000 apartment suites valued at least $1 billion.

    The buildings, which seem to be fairly typical and have at least a few hundred doors, are located in cities like Miami, Ft. Lauderdale, Atlanta, Nashville, as well as in many other US cities. It’s not clear what the exact plan is for this real estate but people who claim to know things are saying that it will involve “redefining the future of living”, or something along these lines.

    Presumably this means catering to young professionals with cool design, fun amenities, and beer taps. Whatever ends up happening, it is interesting to see some of the cities that he/they are targeting. They are the cities that we’ve all been talking about for many years. You know, the ones that are growing quickly and have greater housing supply elasticities.

  • 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