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Building under the Gardiner Expressway

For a very long time, there was a great debate in Toronto about whether or not the elevated Gardiner Expressway should be removed from downtown and replaced with something else. As recently as five years ago, that debate was centered around removing the eastern portion of the expressway and replacing it with a large surface boulevard.

But that ship has sailed. A controversial decision was made not to remove the “Gardiner East,” but instead reroute it (that wasn’t my first choice). At the same time, wonderful new city building initiatives, such as The Bentway, have started to reclaim the long overlooked spaces that sit underneath it.

Another good example of this is the “West Block,” which was recently unveiled at the northeast corner of Bathurst St and Lake Shore Blvd W. New retail uses (such as the above LCBO) and new public spaces (note the above stair/seating combo) have been tucked underneath the expressway’s structure, creating a beautiful contrast between old and new.

It reminds me of some of the urban spaces that you might find in other dense urban centers such as Tokyo, because this may be the first fully fledged retail space located underneath the Gardiner. I think it is. But here’s what’s counterintuitive: the more we embrace the Gardiner in these ways, the more it will recede into the background.

At some point in the near future, these spaces will be filled with people. People eating outside at restaurants. People sitting on the above steps enjoying an illegal drink (because of our antiquated liquor laws). And when that happens, I’m sure most won’t even consider what’s above their head.

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A new $162 million fund dedicated to climate change

This week, Union Square Ventures, which describes itself as a “thesis-driven venture capital firm,” announced a new $162 million Climate Fund. The thesis for this fund is pretty simple. They want to invest in companies that either provide mitigation for or adaption to the climate crisis. The thinking behind this approach is as follows. They want to invest in companies that directly attack the causes of climate change (mitigation), but they are also recognizing that the climate crisis is not some distant thing. It’s already here, which is why it’s important to also focus on companies that are dealing with the consequences of it (adaptation).

One of their first investments is in a company called Leap. What Leap does is provide the connective (software) tissue between local energy devices/applications and the broader energy markets. For example, let’s say you have a Leap-enabled smart thermostat. If the grid is in need of power, it might automatically reduce your local energy consumption so as to help with load balancing on the broader network. In exchange for this, you would earn money for your contributions. In effect, Leap acts as a kind of virtual power plant.

Why does this matter? Well, it matters because two important things seem to be happening with energy production: (1) It’s moving toward renewables and (2) production and storage are both decentralizing. Assuming this trend continues, there will be an increasing need for software to help manage energy consumption, production, load balancing, the broader energy markets, and so on. That’s where companies like Leap come in. It’s also why many are arguing that Tesla is so valuable. More than an EV company, it is creating a new decentralized renewable energy network through its car batteries, powerwalls, and solar panels.

That does sound valuable.

Photo by Jason Blackeye on Unsplash

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How to get rich (and why talking about money is okay)

I’ve written about this before on the blog, but one of my qualms about architecture school was that it was too often taboo to talk about business and money. Why? Talking about and understanding the realities of the world doesn’t have to mean that you’re compromising on good design. Constraints are often good for design innovation. Similarly, I’ve always felt that personal finance should feature more prominently in schools at an early age. It should be considered a basic life skill.

In any event, I came across this tweet thread last night by Naval Ravikant talking about how to get rich (without getting lucky). It’s from 2018, but the lessons — and there are many — obviously haven’t changed. (For those of you who may not be familiar, Naval was the co-founder of AngelList and was an early stage investor in companies like Uber, Twitter, and Opendoor.)

When you see a headline like this it’s perfectly normal for your bullshit radar to go off. (In fact, it is one of his points.) But this thread is not bullshit. It’s about building wealth. Owning equity instead of renting out your time. Working hard. Taking a long view. Leveraging your time and skills. Understanding compound interest. Partnering with people of integrity. Being accountable. And becoming the best at what you do because you’re pursuing genuine curiosity (among many other great points).

Here are a couple of his tweets. But I would encourage you to have a full read.

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Average price of a home in the Toronto region increased 13.5% last year

The Toronto Regional Real Estate Board released its 2020 housing figures this week. And I suspect that the numbers are probably directionally similar for many city regions around the world.

2020 saw more home sales than 2019 with 95,151 homes changing hands. This represents an 8.4% increase compared to last year. December was also a record month with 7,180 sales — a 65% year-over-year increase!

The average selling price in the Greater Toronto Area also reached a new record of $929,699. This represents a 13.5% increase compared to last year. Once again, December was a record setting month with an average selling price of $932,222.

When you look at sales and average prices by home type, the biggest drivers were low-rise homes outside of the city. No surprises here.

But consider the price spread that now exists between condos and detached homes. In the City of Toronto (“416”), we’re talking about an average price delta of nearly $850k. That would be an expensive home in many other markets.

Of course, condos tend to be smaller than detached homes. And so different prices per pound. But total price matters a great deal and historically a widening spread has moved many buyers over to the condo market.

I suspect we will see that happen again this year.

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Project Profile: Side Gallery Barcelona

Side Gallery opened up a new 700 square meter exhibition space in Barcelona last month that is worth showcasing. It’s a beautiful space. Designed by Spanish architect Guillermo Santomà, the space sits within an old 19th century factory that used to house an Italian pasta company. It’s minimal and stark white, but the architecture of the former factory still comes through. There’s also a prominent greenhouse featuring flora that is local to South America. Fitting given that the gallery focuses on Latin American design. Have a look.

I also love these images from the architect, which (I think) use light to completely transform the space.

All photos via Side Gallery and Guillermo Santomà

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How much home can you afford?

Each quarter, publishes a report that looks at the annual income required to quality for a residential mortgage in the 50 largest metropolitan areas in the United States. To do this, they look at the median home price for each city and then apply a 28% debt-to-income ratio (principal and interest payments divided by before tax salary). They also assume a 20% down payment and a 30-year fixed-rate mortgage. In their latest report, that comes with an interest rate of 3.15%.

Below is a chart showing what they consider to be the 10 most affordable and the 10 least affordable metros (chart via the New York Times). I don’t think the cities on this list will necessarily surprise many of you (though I didn’t think Pittsburgh was this affordable), but it is interesting to see it all quantified. It’s also worth thinking about what might happen to these figures as that 3.15% number comes down. Shockingly, the price of highly-levered assets tends to be correlated with financing costs.

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The most unremarkable streets in Toronto

Within Toronto’s urban structure you have regular streets and you have things known as “Avenues.” (This is among a bunch of other stuff such as Centres and Employment Areas.) What this Avenue designation does is tell you that it may be a suitable location for a new mid-rise building, which is something that I have written a lot about on this blog. Here in Toronto, this means that you would then need to consult the “Mid-Rise Building Performance Standards.” Indeed, if you dust off these standards and turn to the introduction, you’ll find the following: “The Performance Standards are intended to provide simple, straightforward guidance for those seeking to develop midrise projects on the Avenues.”

But if you want to find some of the most truly unremarkable streets in this city, you need to look at the arterial roads that didn’t quite make the cut to be an Avenue. I don’t want to generalize, but they are generally exceedingly ugly. You can’t help but feel like Toronto has simply outgrown the low-rise building typologies that, in most cases, still remain on these streets. In some cases, they’re also directly adjacent to a subway station, which is kind of like running a great big movie theater with only a handful of seats inside. Maybe one day they’ll grow up to be Avenues. But don’t hold your breath. So what’s another possible solution? Toronto-based PHAEDRUS Studio has an idea. It’s called the Hi-Lo Hybrid.

Initially designed for a specific client and a specific site, it also happens to be something that could be deployed all across the city. What they have shown here is a 5 storey infill building on your typical long and narrow Toronto lot. As designed, it could house 4-8 units, as well as some non-residential uses, on a lot that previously only had 1-3 units. It would make a lot of sense for some of the ugly streets that I’m talking about. But let’s be honest: it would be almost impossible to get approved. One of the biggest issues would probably be the adjacency/overlook issue that it generates with the neighboring backyards. It’s probably also too tall.

One of the main reasons why, I think, laneway suites work and are now permissible as-of-right in Toronto is that they replace existing garages. (ADU’s for the Americans.) They reallocate space that was previously used for cars to humans. And so the incremental height / density is not all that great. They, for the most part, preserve precious neighborhood character. What the Hi-Lo Hybrid proposes is not so incremental. It’s bold. It would be a massive fight. I know that and you know that. But bold is generally what you need when you’re trying to do great things and when you’re trying to shape the future. And so with that, I’ll leave you all with some words from the late American architect, Daniel Burnham.

“Make no little plans; they have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us. Let your watchword be order and your beacon beauty.”

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Indian Institute of Management rethinks plans to demolish Louis Kahn-designed dormitories

Last month the Indian Institute of Management in Ahmedabad put out an “Expression of Interest” for the design of new student housing at its main campus. In it was the assumption that 14 of its existing dormitories would be demolished and replaced with something new.

The problem with this assumption is that these dormitories were designed by one of America’s most noteworthy architects: Louis Kahn. And so there was immediate public outcry. Architectural historian William J.R. Curtis — who seems quite fond of real estate developers — had the following to say in this op-ed piece in The Architectural Review:

Such is the smash-and-grab approach of developers in a world of astronomical land values and real-estate profiteering, especially in Modiland, the heartland of the Gujurat economic ‘model’. The price of everything, the value of nothing, quick returns on loans and investment above anything: such is the virus of neoliberalism as it spreads so quickly, far and wide across the globe. Timeless architecture has no role to play, and preservation is a pesky nuisance that gets in the way of profiteering. The public interest, social values and any long-range sense of history are thrown to the winds.

The Architectural Review also started a petition to save Kahn’s IIMA’s dormitories. But just like that, the school came forward with an announcement that it had decided to pull its Expression of Interest and that it would go back and deliberate on what to do next. (The dorms were apparently built using “second class bricks” and are currently in a state of extreme disrepair.)

As a developer and fake architect, I think I have a fairly good appreciation for both perspectives. Restoring old buildings is both difficult and expensive (the two usually go together). But I also grew up studying the work of Kahn. He happened to teach at the University of Pennsylvania until his death, though this was well before my time there.

I’ve also visited a number of his projects including the Salk Institute for Biological Studies in La Jolla, California and the National Parliament House in Dhaka, Bangladesh. Many credit Kahn with introducing modern architecture to Bangladesh with this project. It has unquestionable cultural significance.

Some things are worth saving.

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My 2021 predictions

Life will feel a lot more normal by spring/summer (Q2). By this time, the various vaccines should be broadly available (at least in the developed world). This is something that never happened during the Spanish Flu. From what I have read, the Spanish Flu lasted about two years and there were four major waves, the second of which was by far the most deadly. Ultimately, a vaccine was never found. It just petered out as people developed immunity. But medicine then was not what it is today, so surely we are destined to do better.

What happens with working from home is going to be one of the most important outcomes of 2021. Right now it feels like tech vs. commercial real estate. The tech industry has been quick to renounce offices (while many large tech companies continued to lease more space through 2020). And the commercial real estate industry has naturally pointed out that we’re all still going to need physical offices.

My view is that, yes, people appreciate the flexibility of being able to work remotely, but that we’re greatly exaggerating the extent to which work is going to disperse in the short-term. I think it comes down to three main things. 1) It’s nice being around other humans, both in the office and for those after work drinks. 2) Collaborative and knowledge-intensive endeavors work better when people are in the same room. And 3) corporate politics will encourage people to return to the office. Who do you think is going to get promoted first, the person who Zooms in from the Caribbean for meetings or the person who shows up to the office and grinds it out every day?

As the world returns to normal, we will, however, see an explosion in global travel. Many will be questioning how Airbnb’s sky-high valuation makes any sort of sense, but it’ll have the right story for what’s going on in the world (some people call these “story stocks”). The reality is that there will be a massive amount of pent up demand that starts to come out as soon as people start to feel safe and governments start to allow people to travel en masse. I’m already looking forward to the 2021-2022 ski season, which I fully expect to be a blockbuster season.

Because of this, we will see a decline in recreational real estate. The kind that was fulfilling people’s need for local travel during this pandemic. Instead, people will turn their attention to more international experiences and try and make up for lost time. Many will also come to realize that the whole working from home thing didn’t stick as expected and so they’ll start deriving less utility from their property outside of the city. Expect a kind of reversion to the mean when it comes to prices.

Urban/downtown real estate will strongly rebound in the second half of 2021. As restaurants reopen, as people return to offices, and as urban life in general resumes, we will see an increase in demand for condos/apartments, and probably larger urban spaces given the run-up in prices for single-family homes that many cities saw last year. (A bit more on this point can be found over here.)

The trends that are being accelerated as a result of this pandemic are not going to stop, though their rate of increase will temper. The apps and platforms that people started using in 2020, perhaps for the first time, have established new habits. People’s credit cards are now on file and it’ll be very easy for those online habits to remain. But the opposing force to all of this will be the strong desire for socializing, travel, and novel experiences. It’ll be the more routine stuff that will continue to live entirely on our phones.

The restaurant/food industry will bounce back in a slightly different form. Sadly, many businesses will have failed. But we will also see an explosion in new ideas and new concepts, satisfying our demand to be out socializing and trying new things throughout the new roaring twenties. Ghost kitchens and on-demand food delivery companies will continue to disaggregate how some restaurants are setup. Companies like Uber will see their ride-sharing businesses quickly snap back, which will more than offset the decline in food delivery as people resume eating out.

Public transit ridership probably won’t return to its pre-pandemic levels until at least the fall. Possibly late fall. This is going to be a serious problem for the various levels of government that subsidize virtually all public transit authorities. Many transit networks have seen ridership declines of 70% or so and, if my timing projections are correct, that will have been the case for about a year and a half.

The migration from high tax states (like California and New York) to low tax states (like Texas and Florida) will continue. This trend was well underway before COVID-19 and so I don’t see it reversing. What is perhaps more interesting to consider is how this dispersion of economic activity will ultimately play out against some of the centralizing/polarizing forces of the global economy. Urban agglomeration economies aren’t going to go away.

To end, I will say that I think it’s safe to assume that we’re all looking forward to the world getting back to normal, whatever that happens to mean. But ironically, once that happens, I reckon that some of us might look back on this period of time and feel hints of nostalgia. Perhaps you learned a new skill or perhaps you were able to spend more time with love ones. Time and distance may better reveal these silver linings.

Onward, my friends. What a time to be alive.