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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  • From social housing to highly desirable in Stockholm

    Feargus O’Sullivan is back with another Bloomberg CityLab article about “the iconic home designs that define our global cities.” In this recent article he focuses on the Barnrikehus of Stockholm (and also talks about Sweden’s housing market in general). Originally built in the 1930s, the slab-like midrise buildings were largely intended to address two pressing problems: 1) the need for affordable housing and 2) Sweden’s incredibly low birthrate (supposedly the lowest in Europe at the time).

    The Barnrikehus template was deployed on the edges of Stockholm and other Swedish cities. The designs were/are fairly simple. Very little ornament (this is Scandinavia). Four or five storeys usually. And no more than about 12 meters deep. This allowed for better natural ventilation, which was important for stymying the spread of tuberculosis. The rents were also heavily subsidized and declined even further with every child in the family. In other words: the more kids you had, the less rent you had to pay.

    The suites were fairly compact, with many around the 430 square foot mark. This kind of space might have housed a family of six according to O’Sullivan. But compared to the other available housing options at the time, this was a significant improvement. Perhaps not surprisingly, these “child-rich houses” (which is how the name translates) developed the same kind of social housing stigma that was prevalent in many other countries and cities around the world.

    But that perception changed over time and, today, these rent-controlled apartments are apparently highly sought after. (Here’s a listing to give you a taste of what they’re like.) Originally on the fringe of cities like Stockholm, they are now very well located and offer a high standard of living. (You also can’t go wrong with white walls and pale woods.) To learn more about the evolution of Stockholm’s depression-era housing, click here.

    Photo by Jon Flobrant on Unsplash

  • Returning to an office-centric culture

    Earlier this week, Amazon announced that it plans to return to an “office-centric culture” as its baseline. Its rationale was that being in an office allows the company to better “invent, collaborate, and learn together.” All of this was laid out in an announcement that was distributed to its teams globally. On the other end of the spectrum, Twitter continues to double down on working from home. The company, which is currently hiring, is even trying to target talent that may be disgruntled by the fact that their current company is planning for them to return to the office. Two very different approaches. So which one is right?

    This is, of course, a great debate right now and the right answer probably depends on a myriad of different factors, some of which are likely specific to the company. Dror Poleg has been trying to think through this problem with something he calls the talent equation (because it’s all about talent). It works like this: level of in-person interaction x overall size of talent pool = innovation and financial success. The basis behind this equation is pretty simple. In-person interaction is great for business. This much we know. But you also need the right talent interacting. Allowing remote work is one way of expanding the size of your talent pool. But again, you do this at the expense of in-person interaction.

    In-person interaction is what makes cities the great organisms that they are. And I believe firmly in this side of the equation over the long-term. Even right now I find that when I go into the office, my call and Zoom volumes go down dramatically and I have more time to think, collaborate, and do, you know, actual work. This is because many interactions don’t require a Zoom meeting when you’re in the office. You stop by someone’s desk. You ask a thing (usually pretty quickly). And then you go off and action that thing. But I also acknowledge that for some companies, access to the right talent — and lots of it — may be a real challenge, particularly in smaller cities.

    Like Amazon, I am a supporter of office-centric work cultures. But I do think that Poleg’s talent equation is a useful way to think about this debate right now.

    Photo by Shridhar Gupta on Unsplash

  • The Koblick House by Richard Neutra

    I came across the above photo this morning. If you can’t see it, click here. It’s a photo of the Koblick House in Los Angeles designed by Richard Neutra and Gregory Ain for art professor Harry Koblick. Built into the hills of Silver Lake in 1937, the house is a three-storey duplex with about 1,620 square feet according to some sources. (I couldn’t find any plans or drawings, but I’d really like to see the section.) The upper unit has 2 bedrooms and 1 bath. And the lower unit has 1 bedroom and 1 bath.

    Richard Neutra was a prolific modernist and designed numerous “international style” buildings, like the Koblick House. His work was included in the seminal 1932 MoMA (New York) exhibition on modern architecture, which was an important moment for modernism in the United States. It helped to import the international style from Europe at a time when exhibitions did things like that. It is perhaps easy to forget that ideas didn’t spread as quickly around the world back then.

    I love the simplicity of this house. The double car garage that services the two units. The side stair that leads to the front door. And the two large terraces that probably look out over some kind of landscape. Over 80 years later and it still feels contemporary. Perhaps some of you will be equally inspired by this archive photo.

  • Second home and investor mortgage applications accounted for 14.1% of all applications in February

    As a follow-up to my recent post about the rise of the second home, here is a chart (via the WSJ) showing second home and investor mortgage applications as a share of all applications in the US. In February of this year (2021), second home and investment properties accounted for 14.1% of all applications. This is a record number going back to January 2010.

    What’s also interesting about this chart is that, but for COVID, it shows a general decline over the last decade. I’m not sure what the split is between vacation and investment properties, but can we conclude that pre-COVID Americans were becoming less interested or perhaps less able to own a second home? And could the reason be that instead of owning a second home, more people simply started relocating permanently?

    There is also an obvious seasonality to these applications. Each of the above valleys tend to correspond to the spring and summer months. It’s almost as if every fall/winter we start thinking to ourselves, “Right, winter. Let’s look for a place somewhere else.” Is it that, or are there other forces at work here?

  • Coupe d’une maison parisienne

    This is an interesting article by ArchDaily, looking at the “evolution of the house plan in Europe” between 1760 and 1939. The article focuses on London, Paris, Amsterdam, and Moscow and includes floor plans, photographs, as well as well-known illustrations like the one shown above. Created by Bertall in 1845, the drawing shows a section through a Parisian house and is called The Five Floors of the Parisian World.

    What it shows is the declining opulence that used to exist in Paris’ apartment blocks as you moved upward. If you were rich, you lived on the second floor, right above the ground floor lobby. The ceilings were higher on this floor and maybe had a balcony overlooking the street. If you lived on the third floor it meant that you were a less rich. And if you lived in the top floor attic, you were poor. That is what this comic is showing.

    Now, all of this changed over time as new technologies, namely the elevator, were brought to multi-family buildings. All of a sudden it became convenient to live higher up and all of a sudden people wanted better views and to get further away from the chaos of the street. What I’m curious about, though, is how posterity dealt with the lower ceiling heights on these upper floors.

  • Are Amazon’s private labels any different?

    Amazon is sometimes criticized for its private labels. The way this generally works is that Amazon uses the data that it collects from its platform to see what customers are buying. It then goes out and makes its own version of these products and sells them in competition with the other products in its marketplace. The reason why Amazon (and others) do this is because the margins are generally better on private labels, even though they are often positioned to the end customer as being a value-oriented alternative. That is, they’re cheaper.

    Some people think that Amazon shouldn’t be doing this, particularly as its third party marketplace continues to grow. This side of its marketplace deals with inventory that Amazon doesn’t own. It is the stuff of third party sellers who come to the platform to access Amazon’s customer base and reach, and to possibly use its fulfillment services. This marketplace now makes up about 60% of Amazon’s sales volume and so it has become a dominant part of its business. It’s a way to grow without having to spend money on additional inventory.

    Is it, then, acceptable for Amazon to mine this data, replicate products, and compete with its own customers? The truth is that this isn’t all that new. As Benedict Evans points out in this recent post, retailers have been doing this for more than a century. The above table taken from a 1932 report on “chain store private brands” shows that about 80% of stores in the US at this time were selling private label brands. Furthermore, it represented about a quarter of their overall sales. Is this time any different?

    Table via Benedict Evans

  • The views from Capital Point

    These are two photos taken from the roof of our Capital Point project (office strata) in Burnaby, BC. They represent the views from about 19 storeys up. In the first photo you can see downtown Vancouver and the mountains that surround it. And in the second photo you can see the Metrotown town center (second largest in the region) and the SkyTrain station that services it. It’s certainly hard to beat British Columbia on a beautiful sunny day.

  • It’s okay for urbanism to be a bit messy

    The urban-to-rural transect is a New Urbanist planning framework that prescribes a smooth continuum of settlements that go from least dense to most dense. The six zones are as follows: natural (T1), rural (T2), sub-urban (T3), general urban (T4), center (T5), and core (T6).

    Part of this framework is about rejecting single-use Euclidean zoning. Instead of segregating uses, New Urbanism looks to return to a mix of uses within close proximity of each other. This is a good thing.

    But the transect also advocates for a certain orderliness. There should be a smooth transition as you move outward from T6 toward T1. It is about placing things in their useful order and maintaining a certain kind of character.

    Witold Rybczynski makes an interesting observation about this in a recent post called “urban discontinuities.” The point he makes is that some of the most remarkable urban moments are the result not of smoothness, but of “odd juxtapositions.”

    Think:

    – Mount Royal (T1) in the middle of downtown Montreal (T6).

    – The North Shore Mountains (T1) that terminate views from within the building canyons of downtown Vancouver (T6)

    – The walls of tall buildings (T6) that frame Central Park (T1) in Manhattan

    – The wonderful ravines (T1) that cut through Toronto’s urban fabric (T6)

    These are contrasting zones in the transect bumping up against each other. And it turns out that most of us really like these moments. But I think that the bigger point to be made here is that urban environments aren’t always neat and tidy, and that’s because they are a constantly evolving organism.

    That’s not a bug. It’s actually a feature to be celebrated.

  • Need vs. want and what that means for pricing

    Seth Godin recently posted this four quadrant chart on his blog. It is for plotting different products based on price and based on want vs. need. In his post, he asks his audience to think about what they’re offering and which quadrant it fits within. It can only be in one.

    I am fascinated by questions of pricing. At at some point on this blog, I wrote about a pricing class that I took at Rotman while I was doing my MBA about a decade ago. It stands out to me as one of my favorite university classes.

    So let’s consider these four quadrants.

    In the top left, you have inexpensive products that are wants and not needs. This quadrant is where you’d place those novelty sunglasses you picked up for your friend’s theme party. Fun for that moment, but if they break or you lose them, that’s probably okay.

    In the top right are expensive wants. Seth uses the example of a Hermès purse. The need is a place to put your belongings, but that’s not how these sorts of items are priced. The real value, arguably, comes from their “signaling” and how they make the owner feel.

    This is the luxury goods category. Demand will likely be cyclical and sporadic, and so you’ll need to make sure that you have fat margins.

    In the bottom right are expensive needs — like a pacemaker. Seth’s point is that these products need to work exceptionally well, all of the time. In the case of a pacemaker, it is truly a matter of life or death. At the same time, there’s going to be less price sensitivity.

    In the bottom left are the inexpensive wants. Low cost products that people really want and are infinitely useful. Seth’s example is Amazon Web Services.

    This quadrant of products is attractive because demand will naturally be extremely high. Cheap and invaluable will do that. However, Seth’s caution is that you still need to sustainably deliver the goods. These aren’t novelty sunglasses.

    I find it helpful to think of products as existing in only one quadrant. But most offerings aren’t going to exist all they way in one corner. It’s perhaps important to consider the “job to be done.” (To borrow from the late Clayton Christensen.)

    Take, for example, housing. On a fundamental level, it’s a need. We all need shelter. But it can also be a want, or have aspects of want. I need a place to live. But I want a place in the mountains. This subtle difference means something very different when plotted precisely.

    Image: Seth Godin

  • Accessory dwelling unit (ADU) supply in California

    This recent article by Bloomberg CityLab, about “how California set off a backyard apartment boom,” has some interesting stats about the extent in which accessory dwelling units (ADUs) are quickly being adopted and delivered across the state.

    For one, a majority (87%) of jurisdictions have enacted at least one ordinance related to ADUs, though many have several. These policies might include everything from by-right zoning to some form of financial assistance if you build. Here is a graph showing the cities and counties that have created ADU ordinances since 2013:

    All of this has translated into housing supply. In 2019, California homeowners brought over 12,000 accessory dwelling units to the market (based on permits issued). Though a relatively small quantity based on the state’s overall housing deficit, this number is surely growing thanks to policies and programs, like this one here, that are working to remove the barriers to building.

    For the full CityLab article, click here.