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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  • Free roads or free-flowing traffic?

    If you are a longtime reader of this blog, you’ll know that I am a supporter of road pricing. I believe it’s the only way to realistically solve the problem of traffic congestion and I believe that underpricing roads (such as not charging for them) isn’t fair and equitable to taxpayers, especially given our need to shift to more sustainable forms of mobility.

    Todd Litman’s recent opinion piece in the Globe and Mail is a good reminder of these points:

    Also, new highways are far more expensive than most people realize, typically costing tens of millions of dollars for each kilometre of lane. Considering land, construction and additional operating expenses, the cost-recovery price for additional highway capacity – the toll required to repay its incremental costs – is typically 50 cents to $2.00 per vehicle-kilometre, far more than what motorists pay in fuel taxes.

    The law of demand is a fairly simple economic concept. It states that price and quantity demanded have an inverse relationship. The more you charge for something, the less demand there will be. And the less you charge for something, the more demand there will be.

    So it shouldn’t come as a surprise to anyone that when you underprice road and highway usage, you get lots of demand — oftentimes too much demand. As Litman argues in his article: “You can have free roads or you can have free-flowing traffic, but it is not economically feasible to have both.”

    Photo by Denys Nevozhai on Unsplash

  • The tricks with masterplanning

    Alex Bozikovic of the Globe and Mail recently made a good point in one of his articles about how challenging it is to properly “placemake” when it comes to large-scale masterplanned projects. This blog post is not at all intended as a commentary on any one project, but I would like to acknowledge that, for a variety of reasons, places do often need time, layers of history, and some patina on them in order to really settle in. When you build big, it can be easy for things to end up feeling sterile.

    It is also true that tastes can change over time (as we have talked about before), though you could argue that this change is driven by the settling in process. Spaces start to get rethought, reconfigured and recast, and that can make them more desirable.

    But it’s not just about time. What else is going on here that makes masterplanning so tricky? Four things immediately come to mind. If you have any others, please share them in the comment section below.

    One, a lot of the old stuff that we love is now illegal and no longer possible. Here is a great example from Paris that I wrote about. But there are countless others. Another example from Toronto might be the corner retail stores that used to dot our residential neighborhoods. In my opinion, these are wonderful additions. They create urban vibrancy. But today they are generally legal non-conforming uses.

    Two, great urban experiences often happen at the micro scale. Things like the perfect patio with a great view of the street and full afternoon sun. Or that intimate side street lined with beautiful homes. These are some of the moments that make cities great. But when you’re masterplanning at the master scale, it is perhaps easier for more of these intimate details to get lost.

    Three, any new community needs to be seeded. Cities and communities are nothing without people. And so what will be the anchors? What will bring people here? How are we going to animate its streets and public spaces? These can be tricky problems to solve and they often take time (and density).

    Four, masterplanning likely equals fewer feedback loops. I recently came across this great line from Chris Dixon: “Composability is to software as compounding interest is to finance.” Composability is the ability to mix and match software components. And the idea here is that open source software allows new software to get built on top of existing stuff (just like interest on top of interest). This way the world never needs to solve a problem twice.

    I’m not sure what the pithy line should be for city building, but cities also compound. We are constantly building on top of the efforts of others, except when we’re largely not, and we’re designing a whole bunch of new stuff all at once, as is typically the case with masterplanned projects. This isn’t inherently wrong, but building a community from scratch will always be more difficult than adding on to one that is already successful.

  • Construction starting at One Delisle

    Two quick project announcements today.

    One, the sales gallery for One Delisle has now officially closed in preparation for demolition and construction (above is a photo from moving day). None of us expected it to close so quickly after only having launched sales in May, but of course this is a good problem to have. We are now just waiting on our demolition permits to arrive, which we expect will happen sometime between the next few days and several weeks. The official groundbreaking ceremony will happen early in the new year once we have a clean/flat site to work with. Shoring and excavation works after that.

    Two, we just announced a partnership with Technogym for Junction House. Our team was all in the office one day and I asked a question about who makes the best performing and most design-forward gym equipment. Technogym was immediately mentioned and so we reached out. They’ll now be equipping the entire fitness center at Junction House and the plan is to make it a longer-term relationship. If you aren’t familiar with Technogym, you can check them out here. They were the official supplier for the recent Olympic Games in Tokyo, as well as 7 other Olympics, which I suppose is something.

  • Some cities in California are exploring ways to make housing more difficult to build

    Earlier this year, California joined Oregon to become the second state to pass policy that would allow additional housing density in single-family neighborhoods. Set to take effect on January 1, 2022, Senate Bill 9 requires that communities across California allow duplexes — and in some cases four units if they sever their lot — in most low-rise neighborhoods.

    This is similar to what Toronto is looking at doing, though the details seem to be different. But as I mentioned before, sometimes you can have the broader permissions in place and yet very little building actually takes place because of other land use restrictions or market factors.

    People in California seem to get this dynamic, because the Los Angeles Times just reported that some/many cities in California are now looking at local policies that would mitigate the effects of Senate Bill 9. In other words, they’re looking at policies that would make it harder to build the housing that this new law was hoping to unlock.

    Land use planning is a funny thing.

  • A fixed transport link between Great Britain and Northern Ireland

    Here is a report that was just published looking at the feasibility of a fixed transport link between Great Britain and Northern Ireland across the Irish Sea. It is part of a study known as the Union Connectivity Review, but according to the report, this idea has been floating around since at least the middle of the 1800’s. This recent report claims to be the most rigorous of the bunch though.

    What they discovered is that it would be — you guessed it — super expensive. Somewhere in the range of £209 billion for a tunnel crossing and £335 billion for a bridge crossing. And it would take some 30 years before something like this could be operational when you consider planning, design, construction, and the various legal processes that something like this would require.

    So the recommendation was to stop and do nothing. But if any of you are curious about what it would take to build across the Irish Sea, here’s your chance.

  • Crypto energy consumption

    One of the main criticisms of cryptocurrencies is that they consume a lot of energy and are therefore not sustainable. But all blockchains are not created equal and there are different ways in which transactions on a blockchain can be validated.

    Bitcoin and Ethereum use something known as “proof of work” (though Ethereum plans to change this sometime next year). This method of validation does indeed use quite a bit of energy.

    But another way to validate and maintain security on a network is through something known as “proof of stake.” This is what Solana and many other blockchains are now using. Put differently, there’s no “mining” required, which is the work that is so energy intensive.

    To demonstrate the difference, the Solana Foundation recently published this comparison chart:

    To try and further put this into context, the entire Solana network is currently doing about 20 million transactions per year. Right now, they are claiming that this is equivalent to the electricity usage of about 986 American households.

    If you’d like to take a look at the footnotes, click here.

  • Should we be building more live/work spaces?

    Lately, I’ve become very interested in live/work uses. This is not something that I have written much about over the years, but it is now on my mind for a few reasons.

    One, many of us tried working from home for the first time over the last 21 months or so, and my understanding is that some people enjoy it. It’s not my preference, but I don’t represent everyone.

    Two, photography is a hobby of mine and I’ve always thought it would be super fun to have a studio space to play around with on the weekends. If any of you have any suggestions or spaces available, please let me know.

    Three, there are lots of urban conditions where retail doesn’t work, but a bit more ground-floor animation would be nice. This is commonly how live/work uses have been used. That said, I can think of a number of unsuccessful examples of this in Toronto. It’s tough to execute on.

    And four, there are lots of instances of older non-conforming spaces throughout our cities serving this purpose: inexpensive spaces for people to live, work, and create in. Though often “illegal”, I believe they are important for fostering new ideas.

    Here’s an example that I was reading about this morning in The Spaces and that triggered this blog post. It’s about sculptor Andreas Anastasis and his live/work loft on the west side of New York.

    I don’t know what building this is and whether or not work functions are technically permitted (presumably they are), but it’s an example of what I’m talking about. Take a spin through the video embedded above. If you can’t see it, click here.

    Should we be designing and creating our new residential spaces with multiple uses and this kind of flexibility in mind? Is there a big enough market for it? Does it devalue the pure residential aspect of the building knowing that your next door neighbor might have an office in their space, an artist studio, or a short-term Airbnb rental?

    These are some of the things that I’ve been thinking about and I would love to hear thoughts in the comment section below.

    Photo: Maxwell Schiano via The Spaces

  • Why construction productivity sucks and how it might be fixed

    We are living through an inflationary hard cost environment. In speaking with one of our cost consultants the other week, he was predicting that overall we could see another 9-10% increase next year here in the Toronto area. Now, who knows what will ultimately happen. But this is top of mind for everyone in the industry and it will continue to impact how and what we build.

    One of the challenges with construction — and this is will documented — is that unlike the manufacturing industry, which has seen sustained productivity improvements over the years, the construction industry has seen relatively little productivity growth over the last half century. In fact, you could argue that it’s been mostly negative in recent history.

    The obvious thought is why not just apply what we’ve been doing in manufacturing to construction. There is, of course, a long standing tradition of trying to do this, with varying degrees of success. But at the end of the day, building a house remains different than building something like a car.

    Probably the key difference is that every construction site has unique constraints and conditions and so the process is constantly changing. Whereas the innovations that Henry Ford pioneered were centered around interchangeable parts and a well-defined process that could be repeated millions of times to generate the exact same output.

    From what I can tell, there seems to be two ways in which we can think about improving productivity. One, we can try to be more Ford-like and drive standardization. This means more off-site factory construction and more standardization. This is the typical “pre-fab” approach and companies like R-Hauz, as well as many others, are already successfully doing this. The trade-off is less design flexibility.

    The second option has to do with better software and hardware. What if we had significantly better “digital twins” for our buildings such that we could see and experience it in 3D before it is physically built? I’m thinking strap on VR goggles and do a walkthrough with the team. This could allow us to pinpoint all of the issues before they actually happen on the job site.

    In parallel to this, what if we had far better on-site automation and robotics to then execute on the above digital twin? Think 3D printing concrete instead of using traditional forms. This is all happening and being worked on, but it doesn’t seem to be at a point where it is changing our industry. But it is exciting to think that it may one day.

    Photo by Di on Unsplash

  • Being a real estate developer means asking a lot of questions

    I was having coffee with a developer friend of mine this morning and we got onto the topic of asking a lot of questions. We joked that that’s what we do all day.

    Development projects happen because of teams of very smart people all working together toward a common goal. It’s a beautiful thing. And as a developer, there are certain expertises and competencies that you should have.

    But for the most part, we usually sit in rooms as the least qualified person. We are not structural engineers. We are not geotechnical engineers. We are not architects (though I sometimes pose as a fake one). We are not planners. And we are not façade specialists, among many other things.

    But we are the ones taking on most of the financial risk and trying to bring everything together. And what that means is that you end up asking a lot of questions. You collect information, you try and consider what could go wrong, you lean on past experiences, and then you make a decision — often without perfect information or 100% certainty.

    This is how projects move forward. You have to rely on others and you have to make decisions. Because not making a decision is even worse. It burns time, which is why too many cooks in the kitchen can be the kiss of death for development projects.

    I’m sure the same thing can be said for many other things in life.

  • Decentralization, centralization, and new frontiers

    In this recent post by Naval Ravikant, he argues that innovation seems to like two things: decentralization and a frontier. He starts by giving the examples of more decentralized states (i.e. smaller federal governments) and the Wild West. The American frontier was, as you know, wild. But it was also a place of great innovation.

    Naval then goes on to talk about the pendulum that tends to swing between centralization and decentralization. And in the world of technology, the last decade has been one of centralization (big companies). But this pendulum is much broader. Cities, as we have talked about before on this blog, are constantly in tension between centralizing and decentralizing forces.

    COVID was a powerful decentralizing force for cities. Everything was closed and we were all supposed to stay home. And so most/all of the benefits of centralizing in a city were suddenly, yet temporarily, turned off. Many people naturally decentralized. But when the dust finally settles, I highly doubt it will be as dramatic as most people initially thought.

    We know that cities and urban density encourage innovation. That’s why “unicorns” tend to overwhelmingly originate in big cities. But here’s the thing: this is a form of centralization. The fact that cities even exist in the first place tells us that their centralizing forces are winning out over the decentralizing ones.

    So how do we reconcile this with Naval’s argument that new frontiers and decentralization are actually what are needed for innovation? I agree wholeheartedly that one of the key innovations with crypto, for example, is that it is decentralized and permissionless. But what does this ultimately mean for cities and our built form?

    Does it encourage a similar sort of decentralization to happen? Or is the irony that decentralized technologies actually still thrive in centralized urban places? We may all be online buying NFTs, but we still want to get together in person to show them off and exchange ideas.