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 capital of Ethereum

    Few people in Toronto seem to be talking about the important role that this city has played and is playing when it comes to cryptocurrencies (specifically Ethereum). And if you believe, as I do, that Ethereum and other blockchain technologies have the ability to form the backbone for an entirely new kind of world, then this is kind of a big deal.

    The Financial Times recently published this article about “Wall Street’s crypto whisperer.” It is about a guy named Joseph Lubin who is the founder of a crypto company called ConsenSys and previously the co-founder of Ethereum. Lubin is from Toronto.

    If you read the article, you’ll see that Lubin is a pretty bright guy (and now a billionaire with his crypto assets). Born in Toronto, he ended up going to Princeton to study computer science. He worked on Wall Street for a bit (hence the whisperer moniker), but also did a bunch of other interesting stuff, including moving to Jamaica with a girlfriend and working on music production.

    In 2013, he was back in Toronto and went to a Bitcoin meetup in the city. The article says it was in a downtown warehouse (which makes it sound pretty cool and underground). And at this downtown warehouse meetup, he met a guy (actually a teenager) named Vitalik Buterin. Vitalik had just written a white paper on what would ultimately become Ethereum and he gave Lubin a copy. Lubin was so “blown away” when he read it that he decided to join the movement.

    The two (and presumably others) would then go on to live together in shared houses in Toronto, Miami, and Zug (Switzerland), and work on this new smart contract technology. Today, Ethereum has a market cap of nearly $400 billion (as of September 12, 2021).

    Even if you ignore for a second that we’re talking about crypto technologies, this is still a fascinating city building story. It is fascinating because it shows the value of in-person urban interactions (again, the two allegedly connected at a meetup in a downtown warehouse). And it is fascinating because the Toronto braintrust has been instrumental in advancing a technology that could arguably end up powering not only the future of the internet but perhaps the world.

    At the same time, it strikes me that we need to be much better at both celebrating and encouraging these kinds of new ideas locally. Are we out in the world telling this story to the best of our abilities? Have we properly positioned Toronto as one of the most important places for cryptocurrencies and innovation in general? Mayor Suarez of Miami has been a great promoter of his city in this regard.

    “Innovation” isn’t usually neat and tidy. It happens on the fringe and it is often not obvious at the outset. Imagine what an Ethereum pitch would have sounded like back in 2013. But this is how new ideas start. And Toronto has proven to be full of them.

    Photo by Narciso Arellano on Unsplash

  • Productizing the delivery of new housing

    One of the co-founders of Juno — a new mass-timber and modular housing company — was recently interviewed by Dezeen. Prior to cofounding Juno, BJ Siegel was Apple’s design director and spent 19 years designing and working on their stores. And so this is the lens that he and his partners are bringing to the real estate development space. (I also just learned this morning that their head of real estate is a former classmate of mine from Penn.) Here is an excerpt from the Dezeen article that speaks to their goal of productizing the delivery of new housing:

    The third is Apple really challenged us to think about the way we deliver the project more like the way they deliver products through a kind of owner-furnished direct source supply chain model.

    And that actually spurred a lot of investigation as to how to translate that work from a product into this industry [real estate development], which is really kind of not focused on that.

    So that really was a big, big focus.

    The company recently announced that they have broken ground on their first project in Austin, Texas. It is a five storey 24-unit residential project that is being positioned as “middle-income, market-rate” housing. They’ve reduced the building down to about 33 standardized parts and are using a secret type of mass timber that is manufactured in the US. Supposedly it’s better than cross-laminated timber, but the company is keeping it as part of their secrete sauce right now.

    Juno is not the first company to identify this gaping problem in the development and construction space. The typical construction process is antiquated, inefficient, and filled with far too much waste. Which is why modular / pre-fabricated housing has been a goal of architects, builders and others for generations. Eventually we will figure out how to better productize the delivery of new housing and bring down its costs. And in my view that will be a great thing for consumers.

    Rendering by Engraff Studio via Dezeen

  • Does new housing supply need better economic incentives?

    I watched a bit of the English leadership debate the other night. Eventually I got frustrated and went to bed, but I understand that housing affordability and overall affordability were important topics.

    What is clear, to anyone who cares to look, is that in most big cities we are not building enough new housing. According to the above Economist article (linked in the above tweet), the “rich world” has seen new housing production drop by about 50% (relative to population) since the 1960s.

    There are many reasons for this. But part of the problem is bureaucracy. Things move exceedingly slow. And another part of the problem is community opposition. Urban sprawl can be easier to swallow because there’s an out-of-sight-out-of-mind phenomenon at work. Stuff may be happening, but it’s not happening in my backyard.

    But now that so much of what we do is centered around intensifying existing neighborhoods, we are faced with a battle between the incumbents (existing residents) and the future residents of a community that don’t have nearly as much say — if any at all.

    What I like about the Economist article is their line of thinking for how to address this dynamic, which, at the end of the day, is rooted in what I will call expected selfishness.

    The approach is around aligning incentives. How could we better structure the delivery of new housing so that more stakeholders stand to directly benefit? Because as we have seen with laneway housing here in Toronto, homeowners will gladly build in their backyard when they stand to benefit directly.

  • The history (and future) of the grocery store

    Slate just published a new thought piece on the evolution of the grocery store. It starts with the first “self-service” Piggly Wiggly in Memphis (an innovative approach at that time) and ends with the important functions that grocery stores serve today and will likely serve in the future.

    The shopping experience has become increasingly omnichannel (i.e. online & in-store), which means that grocery stores are in the midst of transforming from simple retail stores to hybrid retail and last-mile distribution hubs. (Related post here.)

    All of this is central to how we think about this real estate asset class and we are to happy share it publicly in this new thought piece. Slate plans to publish more of these and so, if you’re interested, I would encourage you to subscribe at the bottom of the page.

    Full disclosure: I am personally long Slate Grocery REIT.

  • Jimmy the Greek Reopening Index

    Since the summer, I have been using the lunch line at Jimmy the Greek (in First Canadian Place) as a crude measure for the reopening of the CBD in downtown Toronto. It is partially a joke. Those of you who know me will know I am a fan of Jimmy the Greek (and large filling lunches in general). But at the same time, it is a probably a fairly decent (but again crude) proxy for the utilization rate of the offices that sit above and around Jimmy. Pre-COVID the lunch lines were always long and there was usually nowhere to sit. In the spring of this year, I was often the only person there, single-handedly keeping Jimmy alive. But things picked up throughout the summer months and there was a significant spike this week, following Labor Day (see above tweet). This was the spike that many/most of us were predicting and it showed through in the Jimmy the Greek Reopening Index.

  • The creative agency behind One Delisle

    We have been working with Vanderbrand for many years. They are the creative agency behind both Junction House and One Delisle. We love the work that they do. It’s beautiful, and they have always managed to get our vision behind each project.

    In the case of Junction House, we wanted something clean and simple that at the same time responded to the creative edginess of the Junction neighborhood.

    And in the case of One Delisle, we wanted something elevated but that wasn’t traditional or typical. One Delisle is all about pioneering architecture and the brand needed to reflect that (we ended up creating our own typeface that will be carried through into the completed building).

    If you’re interested in learning more, Vanderbrand has just updated their website to include a full “case study” on One Delisle. You can check that out over here. Below are a few of my favorite images.

  • [Book] Survival of the City

    I jus pre-ordered a copy of Edward Glaeser and David Cutler’s new book called, Survival of the City: Living and Thriving in an Age of Isolation. (I’m usually a hard copy kind of guy, but I decided to try this one out on Kindle / my iPad). The official release date is September 7, 2021, so if you’re reading this post in your inbox, the book is now available online.

    I’m not familiar with the writing of David Cutler (he’s a public health expert), but I am a follower of Edward Glaeser and have written about his work on a number of occasions. Glaeser’s last book, Triumph of the City, was a kind of celebration of the wonders of urbanism. After reading it, you couldn’t help but feel that cities are our best chance at creating healthy, sustainable, and wealthy communities.

    But in listening to Glaeser throughout this pandemic I have noticed that his commentary on the future of cities hasn’t been filled with unbridled optimism. You get the sense from him that cities are at a crossroads. This is not to say that city life will not persist, because it will. Cities are powerfully resilient. But not all cities are created equal. Some will continue to flourish in this new economy, but others will not.

    This is one of the arguments that they make in this new book and I’m looking forward to reading it once it lands in my Kindle app.

  • Optimistic and excited

    With seemingly so much happening in the world these days — everything from COVID to climate change — it is perhaps easy to feel a little discouraged about the current state of affairs. But I am an optimist. And as I mentioned on Twitter a few weeks ago, I haven’t been this excited about the future of tech and the internet in a long time.

    We are seeing the auto industry quickly transition to electric vehicles (though, in my opinion, not driving at all is still better for our cities than driving something that is electric). Norway has created the world’s first ever zero emission, autonomous cargo ship. And LIDAR vision systems are looking pretty promising as one of the technologies that will ultimately power fully autonomous vehicles.

    I believe in the resiliency of cities and, as I have been arguing on this blog all throughout COVID, I think the claims about the demise of our cities have been greatly exaggerated. In fact, I think this pandemic has forced us rethink a lot of things about our urban environments, including how we allocate and use our public spaces (think patios). Some of these changes have been for the better and they’re not going to go away.

    I think the benefits of working in close proximity to others are too great to have everyone working remotely. Yes, we have learned that decentralization is possible. But there’s an overwhelming amount of research telling us that we’re all more innovative and productive when we cluster together in cities and in offices.

    I have been back in the office almost 100% of the time since it has been possible to do that. And I am much happier and more productive as a result. There’s also research suggesting that there are psychological benefits to a reasonable commute. It creates a break in our day, allows us to detach from our work, and gives us time to process stuff in our mind.

    I think things like digital fashion and augmented reality are going to have profound impact on the way we consume things. You could also argue that there’s a sustainability angle to more digital and less physical. And of course, I am excited about the transformations that I believe cryptocurrencies and blockchain technologies will continue to bring to many different industries (if not most).

    This morning I was reading a Financial Times article about cryptocurrencies in the developing world. It it perhaps no surprise that many of these countries are providing to be early adopters. People are leapfrogging over to cryptocurrencies because their existing currencies and financial systems aren’t effective enough. That has lead to adoption and penetration that looks something like this according to FT:

    There is, of course, many other things to be optimistic and excited about. But I’ll leave that for the comment section below. What are you excited about these days?

  • What is the premium for a home in a walkable community?

    According to this RedFin data from 2019 — which looked at normalized sale prices and Walk Scores above 50 — it is about 23.5% or $77,668 for 16 major US metro areas. Again, this is 2019 data and so things may have changed a bit, especially with the whole COVID thing.

    It also varies by metro area in this data set. The premium in Boston, for example, is almost 30%. Whereas the premium in Oakland is actually a slight discount (-1.3%). There are going to be local conditions that play a role.

    But as a whole there is an economic trend here that makes intuitive sense to me. Though it’s not just a question of how pricey your home is. You also need to consider your transportation costs, the value of your time, and the health benefits of living in an environment that promotes consistent and moderate activity.

    When you factor all of these things, maybe “premium” isn’t the right way to look at this.

  • How clustering makes us all more productive and innovative

    Earlier this year, Enrico Moretti, who is a professor at UC Berkeley, published this research paper looking at the effect of high-tech clusters on productivity and innovation. (I am unclear if there is any relationship to the Italian brewing company Birra Moretti.)

    One of the things he looks at in the paper is the decline of Kodak. Headquartered in Rochester, New York, Kodak famously missed the transition to digital photography. And so by the late 1990s, they were forced to start letting people go. The result was an almost 50% decline in the size of the entire “high-tech cluster” in Rochester.

    But what Moretti goes on to test in his paper is the impact that this employment decline had on productivity and innovation outside of Kodak and outside of the photography sector (but within Rochester). And what he found was that between 1996 and 2007, the productivity of non-Kodak inventors dropped by about 20%!

    This, of course, is one of the great features of cities. Even if you’re not working at some big company with lots of smart people, just being in the same city, on the same block, or within the same office building, can make you more productive. It turns out that business ecosystems are pretty interconnected. Spillovers are important.

    For more on this topic, check out this recent Wired article by Viviane Callier. In it she makes the case that remote work is going to negatively impact productivity and innovation over the long run.

    Photo by Yassine Khalfalli on Unsplash