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 new mobility landscape

    McKinsey published a report last month on the future of electric vehicles and what that will mean for the industry. Many countries, cities, and companies have set some sort of electrification target for 2030. The US is targeting 50% EVs by 2030. Several countries have announced a flat-out end to ICE sales by 2030. And a number of OEMs have committed to the same.

    But there are already cities, such as Oslo, which have reached EV majority. In July of this year, its passenger EV adoption figure was 66%, making Norway a global leader. What is clear is that the electrification of personal transport is well underway. Anecdotally, we are seeing that play out with the number of people now inquiring about electric charging infrastructure in our buildings (here in Toronto).

    This move to electric will have many repercussions, including a major shift in the entire supply chain (which McKinsey outlines in their report). While ICE vehicles and EVs still both have things like tires, EVs require a whole slew of new and now growing components:

    It is also going to force new public infrastructure:

    But in parallel to the electrification of personal vehicles, we are also seeing a number of other trends and shifts. The electrification of public transport (Shenzhen has already electrified its entire bus and taxi fleets). The rise of micro-mobility (things like e-scooters). The ongoing push to discourage driving in urban centers. And the continuing goal of autonomous vehicles.

    What all of this suggests to me is that the electrification of personal vehicles is only part of the story. The entire mobility landscape in our cities is changing and it will probably look a lot different by 2030.

  • Affordable housing for all?

    Bloomberg CityLab has a new video out talking about how Vienna has seemingly solved the housing unaffordability problem that is impacting most global cities around the world. Each year Vienna builds about 14,000 new housing units and about half of this is supply is “affordable.” Already over 60% of Viennese live in an affordable home. The title of the video suggests that their approach is radical, but is that really the case?

    What was clear to me when I watched the video is that there are perhaps two key differences in terms of how Vienna approaches this problem. One, they quite simply care about delivering high-quality affordable housing to the middle class. They think it’s culturally important and they believe that architecture and design matters. Two, they are willing to invest in it, both up front and over time (maintenance).

    In the video, the former Vice Mayor of Vienna talks about how the City will go out and buy land (or use already owned land) and then make it available (sale or lease) at discounted rates so that it makes economic sense for non-profit housing developers. If the math still doesn’t work for the private sector, then there are other subsidies available.

    I’m certainly not an expert on Vienna’s approach to housing delivery. And I’m not suggesting it’s perfect. My knowledge base comes largely from one 13 minute episode by CityLab. But I think it’s notable that I didn’t pickup anything in the video about inclusionary zoning leading the way (which I have argued before tends to shift the burden to the remaining market rate housing units). Instead, they value it and they invest in it. There’s no such thing as a free lunch.

    Image: CityLab

  • Pigovian transport pricing in Switzerland

    A Pigovian tax is a tax on market activities that produce some kind of negative externality for society. The basic idea behind the tax is to try and use it to correct something that is happening, but that isn’t all that desirable. Examples of negative externalities might include things like pollution and traffic congestion.

    Traffic congestion is a bad thing, which is why I have long been a supporter of road pricing. We know how to do this. It has been proven to work in countless cities, including Singapore, London, Stockholm, as well as many others. But in most cases, there isn’t the political will. That has certainly been the case here in Toronto.

    Maybe this post will help.

    A recent study by ETH Zurich, the University of Basel, and ZHAW has looked at the effects of Pigovian pricing on mobility within Switzerland. The study included 3,700 participants and spanned both French and German-speaking parts of the country.

    The way the study works is pretty simple. They took thousands of people, gave them a transportation allowance (in Swiss francs), and then assigned costs to the various mobility options. These costs were intended to be commensurate with their amount of negative societal impact.

    Driving, for example, came at a cost of 0.1 Swiss francs per kilometer. Whereas participants actually earned money for walking, since you could fairly easily argue that walking produces a net benefit to society. At the end of the four-week experiment, participants were allowed to pocket whatever money was left in their transportation wallet. So in theory there was an incentive to spend less.

    What the researchers were trying to do was simulate Pigovian transport pricing and give people a more direct understanding of the societal costs associated with how they move around. And based on their results, it looks to have worked.

    What the results show is that when you start pricing transport in this way, all mobility declines slightly (the “all modes” line). But that the biggest hit is, not surprisingly, driving. Car use declined by almost 5%, whereas walking, biking, and using public transit all increased. (The price elasticity of demand for car travel was found to be similar to when the cost of gas increases — people drive a bit less.)

    The authors go on to argue that longer-term Pigovian pricing is likely to produce an even greater impact on mobility, as people would likely adjust and start making bigger decisions about where and how they live. That seems plausible to me.

    For a full copy of the study, click here.

  • AI-generated poems at Expo 2020

    Expo 2020 is currently being hosted by Dubai until March 31, 2022. The dates are all misaligned because this year’s World Expo was originally scheduled for last year.

    As is typical of World Expos, countries from around the world participate by building a physical pavilion. Below is a photo of the UK Pavilion, which I thought was really interesting. It was designed by Es Devlin.

    The pavilion is a cross-laminated timber structure with no actual exhibits inside. The structure itself is the exhibit.

    As you can see, on one elevation of the pavilion there are a series of displays. These displays are used to show AI-generated poems that appear in both English and Arabic.

    Part of the point is to celebrate the diversity of the UK. But the other point is to bring our attention to the growing involvement of algorithms in today’s world.

    Photo by Ry Galloway and Alin Consstantin, courtesy of Es Devlin and via Dezeen

  • There is no effort without error and shortcoming

    I had a blog post planned out in my mind for today. I was going to write about how the Penthouse Collection launch went this evening at One Delisle (our new website just went live), and the digital NFT art (by Petra Cortright) that we commissioned to accompany each of the 8 penthouse residences.

    But then my partner Lucas Manuel sent out the below quote by Theodore Roosevelt in one of our group chats and it derailed everything. I think it’s imperative that it gets reshared here immediately:

    It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

    There is no effort without error and shortcoming. But in the worst of cases, that means failing while daring greatly. Because failing while daring greatly is better than not daring at all. These are words to live by. And I would like to think that our team’s efforts to bring digital NFT art to Toronto’s condominium market is daring on some level.

    What is clear to me after speaking with a lot of people this evening is that most people don’t know what an NFT is and they don’t know how this all works. But at the same time, they recognize that real and meaningful change is underway. (I was on Global TV this evening trying to explain this stuff.)

    We may be the first (at least here in Toronto), but I would put money on the fact that we won’t be the last developer to incorporate NFTs into their projects. And that’s a good thing. We should all be building on top of each other’s work. Let’s dare greatly.

  • The development manic meter

    We have a running joke in our office about the manic nature of the development business. Sometimes you feel like you’re having the best day of your life and everything is clicking and moving forward. And sometimes it feels like you’re about to die (slight exaggeration). Things are stuck, nothing is moving, and/or a new problem has just popped up. So our team likes to joke that we have a “manic meter” in our corner of the office. Sometimes it’s up and sometimes it’s down.

    Part of the challenge is that progress in the world of development generally takes a very long time. Whenever I talk to someone who isn’t in the industry and I explain our timelines, they are usually shocked and question why things move so slowly. For example, we just spent the last 82 days trying to pull a building permit that realistically could have been issued in an afternoon. That is frustrating. Meter down. We have also spent more than half a decade working on some planning approvals. That’s even more frustrating. Meter down.

    The way I have learned to respond to this dynamic is to try and move as fast as possible. Never assume you have enough time, because things will generally always take longer than you expect. You need to be constantly moving and pushing. So you need to be impatient in the short-term. I also find it helpful to break big projects down into smaller projects so that you have wins to celebrate along the way and you can feel some accomplishment. Having hobbies that don’t take decades to come to fruition may further help.

    But alongside being impatient in the short-term, you also have to be patient in the long-term. Our team started working on One Delisle in 2015. We are now in 2021 and preparing to start construction. That’s a marathon, not a sprint. So what you need to do is find the right balance between short-term impatience and long-term patience. This, I guess, is part of the manic nature of this business.

    Meter up.

  • Urban China’s empty homes

    China Evergrande Group has been in the news lately for being one of the most indebted property companies in the world. The company is now looking to raise some $5 billion by selling a stake in one of its business lines. That seems like a lot of money, but apparently it has upwards of $300 billion in liabilities. As I was reading about the company (in this WSJ article) I was surprised by some other stats about China’s housing market. According to some sources, nearly a third of the country’s GDP can now be tied back to real estate-related activities (see above chart). On top of this, about 21% of homes in urban China were thought to be vacant as of 2017. This equated to about 65 million empty homes. I don’t know what the exact numbers look like today, but these are staggering figures that speak to overbuilding.

    Chart: WSJ

  • Louis Vuitton, Frank Gehry, the Impressionists, and NFT art

    La Foundation Louis Vuitton (which is housed in a building designed by Frank Gehry) has an exhibition on right now that displays the art collection of two brothers: Mikhaïl Abramovitch Morozov (1870-1903) et Ivan Abramovitch Morozov (1871-1921). The collection contains mostly early modernist work from the late 19th century and includes pieces by Cézanne, Van Gogh, Renoir, Monet, Matisse, Picasso, as well as others, including some Russian avant-garde work. We went through the exhibition last week when we were in Paris. Partially to see the collection and partially to see the architecture, which is, you know, very Frank Gehry. See above photo.

    As I was going through the exhibition I was reminded of how much I like the Impressionist movement. I like the work, but I also really love the story. The Impressionist movement started in Paris in the late 1800s and many consider it to mark the beginning of modern art. It broke free of tradition and violated the rules of what was considered to be proper art work at the time in France.

    Because of this, the Impressionists were heavily criticized at the outset. So much so that they were routinely rejected from exhibiting in the traditionally accepted art venues in Paris. The annual Salon de Paris was the big and most prestigious one as I understand it. This forced the group to organize their own exhibitions and circumvent the incumbents in order to get their work out into the world, which is pretty much what any “startup” has to do. Obviously the rest is history and now people to go to museums like La Foundation Louis Vuitton to look at Impressionist art work and talk amongst their friends about how we don’t make art like they used to back in the late 19th century.

    I mention all of this because of what is happening today in the world of NFTs. Non-fungible tokens and their application to digital art feels to me like history is repeating itself. We are at the dawn of something new and a lot of people seem to think that what’s happening today is pretty stupid: Why pay thousands or even millions for a JPEG? I can just download a copy to my computer for free. This is not art. How do you even display it? I don’t get it.

    I am sure that most of the NFTs that people are buying today will go to $0 in value; just like a lot of the paint that has gone onto canvasses over the years hasn’t created much value. Art is a funny thing. But that doesn’t mean that cultural value will not be created over time. When people are talking and they think what you’re doing is dumb, you may actually be on to something. The Impressionists taught us this important lesson well over a century ago.

    Photo: La Foundation Louis Vuitton

  • Making River City

    My good friends over at Urban Capital recently released a short film about the making of their River City project here in Toronto. (If you can’t see the embedded video above, click here.)

    For those of you who aren’t familiar, River City is a 4-phase development on the east side of downtown that was really the first project in what was known as the West Don Lands area. Urban Capital secured the right to develop the then government-owned lands in 2008 through a public tender process that was run by Waterfront Toronto.

    It’s a tricky and unobvious kind of site in that it’s surrounded by infrastructure and it came with a whole host of development challenges, including flood risk. But the team figured it out and River City has gone on to win a number of awards including the Ontario Association of Architect’s Lieutenant Governor’s Award for Design Excellence.

    River City is an important project for Toronto in that it dared to be different. It’s like no other project in the city, and I’m not just saying this because they’re my friends. I’m saying it because I want our city to be a global leader in architecture, design, and development, and to continue to push the envelope.

    River City did exactly that.

  • From free CDs to a decentralized internet

    This is a great Twitter thread by Chris Dixon talking about why Web 3 — the next major iteration of the internet — is kind of a big deal. In it, Dixon refers to Web 1 as the period from about 1990 to 2005. This is the period of time that started out with CompuServe and AOL sending us all free CDs in the mail and most of us using a dial-up modem to access the internet. Web 2 was the period from about 2005 to 2020. It is the iteration of the internet that gave birth to social media as most of us know it today. If you subscribe to this timeline, then we are in year one of what’s next. Maybe it’ll also run for another 15 years or maybe it won’t. But either way, getting in on the ground floor is usually a pretty valuable thing. When Dixon tweets, I listen.