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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  • An imperfect laneway worth replicating

    We stumbled on Bar Volo last night on our evening walk (pictured above). It’s on St. Nicholas Street, which I guess is technically a street. But it feels and acts more like a laneway. I was naturally pretty excited by this discovery and so I tweeted this out. I was then called out for glorifying this laneway because: 1) this is only one small storefront, 2) the rest of the laneway is kind of pooey, and 3) there are other, better, examples of complete laneways in the city such as throughout Toronto’s Yorkville neighborhood. Okay.

    What got me excited is that this is a recent development — there’s a residential building above this welcoming bottle shop — that managed to successfully create fine-grained urbanism and activate a laneway frontage that could have very easily gone underutilized. Now imagine if every new development with some sort of laneway frontage did things as meaningful as this. Piece by piece, we would be building another layer to our city. (I like to think that we’re contributing to this vision with our laneway towns at Junction House. They are, by the way, 100% sold out. Go laneway living.)

    It’s easy to get excited by the bigger urban moves. A new tall building or a Ferris wheel on the waterfront, perhaps. But sometimes the answer is as simple as a small brewery, a narrow and imperfect laneway, and a roll up garage door.

  • A roadmap for the global energy sector

    The International Energy Agency (IEA) has just published what it is calling the first comprehensive roadmap for transitioning the world to a net zero energy system by 2050. Turns out, it’s only going to take a complete overhaul of pretty much everything to hit this important target. We are going to need to start investing some $820 billion each year (starting in 2030) on our electrical grids to support the electrification of the global economy. 90% of electricity generation is going to need to come from renewables, with 70% likely coming from solar PV and wind alone. 60% of global car sales will need to be electric by 2030. We’ll need to completely halt the sale of internal combustion engine vehicles by 2035. And by 2040, we will need to have retrofitted at least half of our existing building stock.

    Make no little plans. For a copy of the report, click here.

  • Impostor cities

    Canadian cities are well known in the world of film for their ability to stand-in for other global cities. They rarely play themselves, which actually pisses me off. Because I take it as a sign that we’re not doing nearly enough to make Canadian cities the most beautiful and remarkable cities in the world. Canadian cities should play starring roles. Movies should want to feature them, rather than repurpose them.

    That said, it’s an interesting phenomenon to explore. And that’s exactly what the Canadian pavilion will be doing this year at the Venice Biennale. The exhibition is called Impostor Cities and it will explore the various buildings and cityscapes that have been featured in films but that most people probably had no idea were Canadian.

    It is perhaps a new perspective on Canadian cities, bringing our stand-ins into the limelight. And it’ll be available online and onsite (yes, real life) starting May 22. I’m sure it’ll be great. I just hope that it makes us realize how embarrassing it is that our cities aren’t being celebrated in the way that they should be. Let’s be bolder. Let’s build greatness.

  • Ray: Architecturally-inspired homes at the intersection of art, culture, and community

    Back in 2008, Dasha Zhukova and Roman Abramovich hired starchitect Rem Koolhaas and founded a new contemporary art museum in Moscow called the Garage Museum. Supposedly this was the first philanthropic institution in Russia dedicated solely to contemporary art. (Here’s a short video in case you’re curious what it looks like.) After it opened, the founders apparently had a realization about the way people like to consume art. Yes, people like to look at art and ponder deep things. But it turns out that people also like just being around art and other art-like things. People started coming to the Garage Museum not only to view the various exhibitions, but also to just hang out.

    This insight is now being used to inform a new real estate development company, also by Dasha, called Ray. The mission of the company is to create “architecturally-inspired homes at the intersection of art, culture, and community.” Their first two projects are in Harlem and Fishtown, Philadelphia, but apparently they have something cooking in Miami as well. What Ray hopes to do is integrate art and culture in a more meaningful way through cultural programming, exhibitions in their buildings, artist studio spaces, and other creative ideas.

    There’s also an affordable housing angle. According to the WSJ, Ray’s Harlem project is a joint venture with L+M Development Partners. I don’t know any of the specifics of this deal, but I know L+M, because one of their founding partners, Ron Moelis, was a professor of mine in graduate school. L+M is focused on affordable and mixed-income housing and uses tools like the Low-Income Housing Tax Credit (LIHTC) to make these sorts of projects financially feasible. They aren’t, otherwise. I learned all about them in school and I always found it to be a great way to get the private sector building affordable housing.

    “Art and culture, community, and accessible pricing.”

  • From office to residential in London

    It was recently announced that the City of London — the historic town center and primary CBD of the region — is aiming to create at least 1,500 new residential units in the Square Mile by 2030. Part of its strategy is to convert disused office buildings into residential. Currently, the City has about 7,850 residences, which is a drop in the bucket and whole lot smaller than its 19th century population of 125,000.

    Tony Travers, director of LSE London, is quoted in FT saying that the City is really facing “twin challenges.” You’ve got Brexit, which caused prime office cap rate rates to stagnate in the UK, and you’ve now got the whole work from home thing. Nobody really knows how this latter piece will fully shake out when it’s all said and done, but we shouldn’t forget the power of agglomeration economies. It’s what powers cities.

    Calgary is another example of a city that is looking to encourage change. Last month a $1-billion plan was approved to help convert office buildings into housing. (Shout out to Steven Paynter of Gensler who is quoted in the article talking about what makes for a suitable office conversion project.)

    What’s interesting about these announcements is that oftentimes cities cling to their non-residential spaces out of fear that once that supply gets converted it will never come back. That is certainly the case here in Toronto with its office replacement policies, although many years ago when downtown living wasn’t nearly as cool, there was a similar push to encourage more residential development in the core. Looks like that idea worked.

    We know that office space isn’t going away. Zoom is an awful substitute for in-person interactions. People need to congregate (and tend to like doing it). Urban agglomeration economies drive innovation. Bigger cities with higher population densities tend to create more wealth for their inhabitants. So perhaps the takeaway from these announcements should be that, yeah, office space is vital, but it’s okay to do a little rebalancing once in a while.

  • Houses with large yards and where you have to drive to places

    The National Association of Realtors in the US has a “Community and Transportation Preference Survey” that it conducts usually every two years. Last year (2020), wasn’t supposed to be a survey year, but given the pandemic, they decided to run it in June and see if people’s preferences had changed at all during that time.

    Last June feels like eons ago to me and I bet that if you asked people how they were feeling today it may be slightly different. Nonetheless, the survey asked 2,000 adults from the fifty-largest metro areas a bunch of questions about where and how they live and where and how they might want to live in the future.

    The topline results can be found over here. But for a bit of context, 58% of respondents were people who lived in a single-family detached house; 26% of respondents were people who lived in a building with two or more apartments and condos; and the rest of the respondents were split across townhouses, rowhouses, mobile homes, trailers, and other. (I’m kind of curious about the 2% who answered with other.)

    One of the questions that I thought might be interesting to this audience is this one here about housing preferences going forward:

    The question asks the respondents to imagine that they are moving into another home. It then asks about priorities and, more specifically, about their preferred trade-off between amenities and walkability versus a large detached house with a big yard.

    Overall the split in preferences has remained close to 50/50 over the last three surveys. But there appears to be a small uptick toward large homes and less amenities. I wouldn’t be surprised if the pandemic contributed to this thinking last summer. But who knows if this will persist. At the same time, actions speak louder than words.

    My response to the above question would be less space, greater walkability, and more amenities. I have no desire to live in a low-rise grade-related house, especially one that is disconnected from the city. I like urbanity. What about you?

  • There is no such thing as a free lunch

    Inclusionary zoning has been on my mind this week and so I thought I would revisit some of my old posts on the topic. I wrote about it here, here, here, here, here, and probably in a bunch of other places that I am forgetting right now. A number of these posts go as far back as 2015-2016.

    As well-intended as inclusionary zoning may be, I have never been able to get my head around it. There are lots of cities with inclusionary zoning polices in place and what history generally tells us is that it tends to reduce overall housing supply and increase market rents/prices.

    This makes intuitive sense when you consider that inclusionary zoning is in effect a tax on new development. And one of the only things I remember from my economics classes is that it’s generally good practice to tax the things we want less of. You know, things like cigarettes and carbon.

    This is why I have also been a strong supporter of road pricing over the years on this blog. Traffic congestion is bad (demand also happens to be relatively inelastic). So tax it and redirect the funds toward transit.

    Housing supply, on the other hand, isn’t bad. It’s pretty good and fairly useful. So in my simple mind, I don’t know why we would want to apply a tax to it instead of figuring out way to simultaneously encourage and incent the supply of new affordable housing. Here’s one idea.

  • Cities in the 2020s

    Since the beginning of this year, the London School of Economics has been running a debate series called, Cities in the 2020s: How are cities responding to profound global change? The next event is about localizing transport and it’s scheduled for May 20, 2021. If you’d like to attend, click here. It’s free and open to all. The one thing I would add is that I am getting the strong sense right now — as cities, other than Toronto, begin to reopen — that people are starting to remember just how much more fruitful in-person interactions are compared to being on screen. There’s no comparison. In fact, earlier today I had in-person work interaction that resulted in a positive outcome that I am certain would not have happened otherwise. And as an ENTJ (business school made me take these personality tests), I find that I derive a lot of my energy from being around other people. As long as these sorts of things remain true, I believe that we will stay tethered to our cities and reliant on things like mass transit.

  • Visionary vs. operational

    Fred Wilson wrote a great post last month about leadership. In it, he compares what he calls visionary leadership to operational leadership. Here’s a snippet:

    I like to keep things simple and in my simple mind, leadership comes in two flavors, visionary leadership and operational leadership. Founders are almost always visionaries (if they aren’t, run in the opposite direction) and hired CEOs are almost always operators.

    The post goes on to explain the dynamics between these two types of leadership. Vision, he argues, needs to come from the top. You need someone setting direction at a high level. Operational leadership doesn’t have to be this way, and often isn’t. You can hire for it.

    In some special cases, you have leaders who are both. Another snippet:

    Leaders who can provide both operational and visionary leadership are a rare but special breed. When you find one, get on their bus and stay on it for as long as you can. It will be an incredible trip.

    I have seen all of this play out in the real estate development space.

    There are people who are great at identifying new sites (land) and coming up with fresh and innovative ideas, but it is clear that they need an operator or two around them. There’s nothing wrong with this pairing.

    Development is also a very long and slow game and you need people who can operate — deeply in the weeds — over extended periods of time. Persistence and tenacity are crucial. Patience I guess, too.

    If this topic is of interest to you, I recommend you check out the rest of Fred’s post.

  • What if versus should be city planning

    Witold Rybczynski makes an interesting comparison between military and civilian (city) planning in a recent blog post called, “The Fog of Life.” Here’s an excerpt:

    Good military planning, as I understand it, is based on preparing for “what if,” that is, developing different scenarios. What if this happens, or that happens? City planning is different, more like advocacy, that is, what should happen. This advocacy is based on certainties: open space is good, density is good—or bad, depending. The problem is that what planners think should happen—separation of pedestrians and cars, superblocks, megastructures—often runs into trouble when it hits the fog of life.

    These are two very different perspectives. “What if” planning responses assume that a thing has already happened. You’re not working to affect a particular outcome, you’re responding to one that already exists. Does this necessarily make this approach more reactive than proactive?

    Either way, what should happen implies that the thing isn’t currently happening, but that it should — presumably because the thing is nice and desirable. It could also imply that the thing is sort of happening, but just isn’t happening quite enough.

    Let’s use the example of 3-bedroom condominiums and apartments, which is a topic of discussion that has been circling in Toronto for as long as I’ve been in the business. Developers here, are generally encouraged or mandated to build a certain number of larger family-sized suites in every new housing project. Oftentimes this number is 10% of the total unit count.

    The reasoning behind this is sound. Cities should be inclusive and they should work for the young, the old, the single, and for families, among others. The problem is that, for a variety of reasons, the market, when left to do its own thing, tends to build more small units than large units. At least that’s the case here in Toronto. (I’ve talked about some of the reasons why in previous posts.)

    There is a view that if only developers built more large units that more families would choose to live in apartments. It’s an issue of supply and availability, and also a question of design. You need to design for families too. This you could say is a “what if” approach. Families want to live in multi-family buildings; so let’s build more and better family-sized housing.

    But is this really the case or is there some advocacy going on here? All things being equal, does the market want low-rise or does it prefer higher density? It’s a fascinating set of questions, but unfortunately all things aren’t equal. It’s not just a question of availability and design, it’s also a question of economics. Large family-sized units cost money.

    I suppose this is the fog of life.