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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  • We should build more nice places to live

    Nice places to live — however you want to define that — tend to be expensive places to live. There are all sorts of reasons why this might be the case. Perhaps it’s on a body of water, next to a park, or it has some other redeeming qualities.

    Daniel Herriges of Strong Towns makes a cogent argument, here, that when it comes to nice and desirable places it usually comes down to one thing: scarcity. Demand > supply. But on top of this, he argues that in most cases, the supply constraint is artificial.

    Here’s an excerpt:

    In fact, our shortage of nice places is almost totally self-imposed. And it’s precisely because 98% of the North American built environment is so blah that the 2% of places that are really well-designed environments quickly get bid up by the rich and become inaccessible to the rest of us. The solution to this isn’t to stop creating such places, but to create vastly more of them.

    He goes on:

    The same story applies to the countless row house neighborhoods of the Northeast, Chicago, and San Francisco. In city after city, the mass-market, working-class housing of its time has acquired a distinctly bourgeois reputation today. In all cases, the reason lies in economics, not design. What’s abundant becomes culturally coded as middlebrow; what’s scarce becomes culturally coded as elite.

    We have talked before on the blog about how tastes change over time and how housing that was previously undesirable can sometimes/oftentimes become desirable given enough time.

    My sense is that there are a number of factors at play here and it’s perhaps a bit difficult to decode where new “cultural coding” truly starts. But I very much appreciate Daniel’s scarcity argument. Scarcity drives so much in markets (just look at the NFT art market right now and the fixation on rarity tables).

    But let me be the devil’s advocate. If we were to be successful at building no blah and all nice stuff, wouldn’t the rich just seek out a new 2% rarity? And if so, would the 98% still seem just as nice?

    Either way, more nice places to live should always be the ambition.

  • Do, and then theorize

    Architecture school has a way of indoctrinating you with an appreciation for the past. One of the ways that is done is through architecture history and theory classes.

    In my case, I was taught to appreciate the work of Le Corbusier, Mies van der Rohe, Louis Kahn, Adolf Loos, and many other influential architects from the 20th century.

    It was okay to disagree with their ideas, but you at least had to learn about all of the important stuff that they had done and/or thought about. It’s a standing on the shoulders of giants kind of thing.

    But as Witold Rybczynski argues in this recent post, it’s important to keep in mind that history and theories are written after the fact:

    “Some buildings are, in a sense, experiments, and when something works, and is taken up by others, it eventually becomes a rule of thumb, perhaps even a theory.”

    For me, this is yet another reminder that the world moves forward as a result of doing, creating, and making new things happen.

    Sometimes you’ll get it wrong and do the wrong things. But sometimes you’ll do something wonderful that nobody else has thought of before.

    And when then happens, the world will have moved forward such that it’s then possible to look back at what happened and make sense of it all.

    As Witold puts it, “first you build a flying machine, and later you discover the aerodynamic theory that supports flight.”

  • Three steps to the future

    Each year, tech analyst Benedict Evans publishes a “big presentation” on the macro trends in the tech industry. This year’s presentation is now out (link here) and it’s called “Three Steps to the Future.” Not surprisingly, crypto, web3 and the metaverse feature prominently in his exploration of what tech might look like by 2030 (obligatory market cap chart shown above). But there’s also a lot about ecommerce, logistics, TV/content, and a number of other topics and industries. The back half is filled with some great charts and I think that many of you will find it interesting.

  • All-in-one real estate transactions

    Opendoor just published its 2021 year in review.

    In it are a few interesting figures about the housing market in the US. According to a recent survey that the company did, the average first-time buyer made 10 offers before successfully securing a home last year. The percentage of all-cash offers is also up to 25% from 15% a year ago. What is clear is that demand is currently outstripping supply. Based on these figures, housing supply in the US is at the lowest it has been since the early 1980s.

    But of course, the real point of the year in review was to talk about all of the great things that Opendoor has been doing to digitize the real estate industry. Perhaps the most interesting is its focus on creating “all-in-one real estate transactions.” What this aims to do is consolidate the now separate processes of selling a home, buying a new home, and obtaining financing, into one digital workflow. Whether or not Opendoor is the one to do it, I believe that this is the future.

    And what we have learned from other industries (that have successfully digitized) is that when you make something super easy, people end up doing a lot more of it.

    Full disclosure: I’m still long $OPEN.

  • Bangkok has a lot of messy wires

    Actor Russell Crowe tweeted this out back in October while he was in Bangkok filming a movie:

    It’s a photo of the city’s notoriously messy communication wires. As I understand it, many or most of these wires aren’t even active. The telecom industry just has a very ad hoc approach to running new ones and there’s also nobody responsible for removing any of the old ones.

    In response to this tweet, the Prime Minster of Thailand, Prayut Chan-o-cha, has called for these utilities to be tidied up and put underground. No more mess! Who knows if it’ll actually happen, but it’s kind of cool to see what can be done with a single tweet.

    I wish I could say that my tweets were also capable of inspiring such swift urban action.

  • To collect is to be human

    Nearly 1,000 lots from Karl Lagerfeld’s estate are soon to go up for auction. I was reading about it over the weekend in FT and, what is obvious, is that Lagerfeld liked to collect things. He had homes all over the place and in those homes were lots of nice things, ranging from art and tapestries to unique furniture and iPods.

    Yes, he really liked iPods. After he passed away, over 500 of them were discovered in one of this drawers and another 70 were found in his office in Paris’ 7th. Apparently he used to curate music on them and then gift them to people. It was one of his things.

    Of course, Lagerfeld was a wildly successful fashion guy and his estate is surely pretty unique. But I think it’s important to keep in mind that to collect is a deeply human endeavor. We have been doing it forever. And in this context, it’s not surprising at all why non-fungible tokens (NFTs) have taken off in the way that they have.

    Our world is profoundly digital, but before blockchains and NFTs, we were missing a way to validate ownership over digital assets. That’s no longer the case. For more on this, here is an interesting TEDx Talk by Roham Gharegozlou, who is the CEO of Vancouver-based Dapper Labs (the company behind CryptoKitties and NBA Top Shot). The talk is from 2018, but it’s just as relevant.

  • 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.