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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  • How should mid-sized cities really compete?

    Jennifer Keesmaat – the former chief planner of Toronto – recently published an article in Maclean’s called: Toronto’s unaffordable. Why can’t Halifax or Saskatoon take advantage? Her argument: 

    “The hard truth is that many mid-sized cities won’t win the future because they are stuck on a suburban growth model. If the future is green and walkable, they will be left behind.”

    The model city that is held up is Portland – a terrific mid-sized city of only 640,000 people that has used progressive land use policies to build a livable and dense urban center. (In all fairness, the Portland MSA has over 2.4 million people.)

    Now, if you’re a regular reader of this blog you’ll know that I have a penchant for dense urban centers. I live and I work downtown. And I would happily trade square footage for a more sensible commute and lower transportation costs.

    But after I read the article, I couldn’t help but think that progressive land use policies, alone, aren’t enough. Cities, like social networks, experience network effects. That’s why there’s so much talk these days of winner-take-all urbanism.

    All of this is not to say that progressive urban policies are a bad thing. Quite the opposite. I just think there are many other factors at play if we’re talking about taming the hegemony of our global cities.

  • Amazon’s cashier-less grocery store finally opens

    This morning the first Amazon Go store opened to the public in downtown Seattle. It’s more convenience store than grocery store, but the big deal is that there are no cashiers and no lines.

    You enter the store through a gate and with your phone and Amazon’s app. As you walk around the store and pick up items they get automatically added to your online cart on Amazon.

    So everything goes right into the offline bag you’ll be leaving the store with. Place an item back on the shelf and it is instantly removed from your “cart.” Walk out of the store and you’re automatically charged.

    It’s not yet clear how exactly the technology works, but Amazon says that all of this is accomplished through sophisticated computer vision (cameras), machine learning, and lots of sensors. 

    What’s really remarkable is that it doesn’t rely on every product having a special chip or sensor attached to it. I would think that was one of the biggest hurdles to overcome in order to remove the pain point of grocery store lines.

    Now that this is up and running, I can only imagine the customer behavior data that they must be collecting. Heat maps of every shelf showing conversion rates for every imaginable customer segment. (Are tall people more likely to buy products displayed higher up?) Correlating people’s food purchases to their broader Amazon shopping habits. And the list, I’m sure, goes on. 

    There is even speculation that Amazon will begin licensing this technology to other retailers, similar to what it does with Amazon Web Services. That seems like a reasonable assumption given the data play we just talked about. Assuming the tech works, it’ll get copied. So they may as well embed themselves.

    In case you were wondering, the Bureau of Labor Statistics pegs the number of cashiers in the US at about 3,555,500 (2016 number).

    And this number is projected to remain more or less flat until 2026.

    That doesn’t feel right to me.

  • The scale of Apple’s iOS economy

    This is an interesting post on the size of “the iOS economy.” 

    About 70% of customer spending on Apple’s App Store goes to developers. The remaining ~30% is kept by Apple. 

    In 2017, iOS developers earned $26.5 billion. This is up about 33% from the year prior and is higher than McDonald’s revenue in 2016. Cumulatively, Apple has paid out about $86.5 billion to developers.

    And this past new year’s day, a new record was set with $300 million in App Store purchases. According to Horace Dediu, this year should average closer to $100 million per day.

    Also, this year’s App Store revenue is expected to surpass the film industry in terms of global box office sales. And we’re only talking about Apple. This does not include Android revenues.

    Click here to check out the full post.

    Photo by Ben Kolde on Unsplash

  • Why are apartment rents in Seattle dropping?

    This week I saw it reported that in this decade alone, the Seattle area is set to deliver more new rental apartments than it did in the prior 50 years combined. 

    And as a result, the sentiment is that new housing supply is finally starting to keep pace with demand and put downward pressure on rents. 

    Do you remember who was the crane capital of the US a year ago? They may still have that title.

    In some of the most desirable neighborhoods of Seattle – where much of the new supply is coming online – rents dropped 6% compared to the prior quarter. At the county level, this last quarter was by far the biggest drop of the decade according to the Seattle Times.

    Funny how that works.

    It’s also worth noting that the US as a whole is building far more rental apartments than condominiums. Here is a post I wrote in August 2015 which pegged condos as a percentage of overall multifamily construction at around 5.5%. That’s a tiny percentage.

  • Class action litigation filed against GoPro

    Snowboarding season is starting late for me this year. But that doesn’t mean it will be any less epic. So far this season Jackson Hole has had 221″ of snow.

    This year I’m introducing a GoPro gimbal stabilizer into the mix. Here is a good example video of the difference a stabilizer makes – buttery smooth video footage. I am a big nerd when it comes to gear and tech, and I guess many other things as well.

    But judging by GoPro’s stock right now and the cliff it fell off of at the beginning of this month, I may be in the minority when it comes to worrying about buttery smooth snowboarding videos.

    Sales over the holiday season were disappointing and they recently announced that they’re discontinuing the Karma drone. GoPro is now said to be shopping for a buyer.

    Part of the problem may be their narrow action sports use case. When I’m on a mountain, I love my GoPro gear. But when I’m not snowboarding, I struggle to find consistent value in it. We all just use our phones to capture photo and video.

    To make matters worse, class action litigation was recently filed against GoPro, and the company’s CEO and CFO. Investors are claiming that they failed to disclose, among other things, that demand for the GoPro brand had declined dramatically.

    Who do you think would be a good buyer for GoPro?

  • My even shorter Amazon HQ2 shortlist

    Amazon released its shortlist of HQ2 cities this morning. Below are the 20 metropolitan areas. They were selected from 238 bids, so this shortlist represents 8.4% of the original pool.

    • Atlanta, GA
    • Austin, TX
    • Boston, MA
    • Chicago, IL
    • Columbus, OH
    • Dallas, TX
    • Denver, CO
    • Indianapolis, IN
    • Los Angeles, CA
    • Miami, FL
    • Montgomery County, MD
    • Nashville, TN
    • Newark, NJ
    • New York City, NY
    • Northern Virginia, VA
    • Philadelphia, PA
    • Pittsburgh, PA
    • Raleigh, NC
    • Toronto, ON
    • Washington D.C.

    I saw some people on Twitter say that they were surprised to see Toronto and Miami on this list. I was not. If you remember, I publicly predicted on this blog that Toronto would be selected for Amazon HQ2.

    That said, I thought it would be fun to guess at an even shorter list from Amazon’s shortlist. I have no knowledge of Amazon’s actual selections process, but if I had to guess, here is who I would cross off the list:

    • Atlanta, GA
    • Austin, TX
    • Boston, MA
    • Chicago, IL
    • Columbus, OH
    • Dallas, TX
    • Denver, CO
    • Indianapolis, IN
    • Los Angeles, CA
    • Miami, FL
    • Montgomery County, MD
    • Nashville, TN
    • Newark, NJ
    • New York City, NY
    • Northern Virginia, VA
    • Philadelphia, PA
    • Pittsburgh, PA
    • Raleigh, NC
    • Toronto, ON
    • Washington D.C.

    That leaves us with a list that looks like this:

    1. Boston, MA
    2. Miami, FL
    3. Montgomery County, MD
    4. Newark, NJ
    5. Northern Virginia, VA
    6. Toronto, ON
    7. Washington D.C.

    So why this list? I’m probably wrong, but my reasons are as follows:

    – I think Amazon will opt for a metro area on eastern time.

    – There seems to be a predilection for areas around Washington D.C., so I left Montgomery County and Northern Virginia. 

    – As wonderful as it is, New York City feels too center ice for Amazon – at least in my view. But maybe Newark places them in the catchment area.

    – The area needs to be of a certain scale so Amazon doesn’t overpower it and they have enough human capital to draw from.

    – Miami is my sleeper bet. Most people think of it simply as a resort town, but there’s a huge percentage of foreign born residents and powerful arts/design scene.

    – Talent is number one, which is why I left Boston and Toronto and why I continue to believe in Toronto. Toronto is more dynamic than Boston.

    If I had to pick just three from the above shortlist, my bets would be, in alphabetical order: Boston, Toronto, and Washington D.C. What are yours?

  • It doesn’t matter what Bitcoin is trading at right now

    Steven Johnson has a terrific piece in New York Times Magazine called: Beyond the Bitcoin Bubble. Here is a snippet:

    The only blockchain project that has crossed over into mainstream recognition so far is Bitcoin, which is in the middle of a speculative bubble that makes the 1990s internet I.P.O. frenzy look like a neighborhood garage sale. 

    But the point of the article, as its title suggests, is to talk about what all of this craziness could mean for the future of the internet and how, in some ways, it could be a return to what the internet was always intended to be.

    The real promise of these new technologies, many of their evangelists believe, lies not in displacing our currencies but in replacing much of what we now think of as the internet, while at the same time returning the online world to a more decentralized and egalitarian system. If you believe the evangelists, the blockchain is the future. But it is also a way of getting back to the internet’s roots.

    Some are calling this new, decentralized internet version 3.0. We are currently living with internet 2.0. Practically speaking though, what could this shift really mean for us?

    One example that is given in the article has to do with urban mobility – a topic that is particularly relevant to this audience. 

    Internet 2.0 has created a winner-take-most economic model. And in the case of mobility – at least in the world of apps – that winner is Uber. But with internet 3.0 and the blockchain, this could be possible:

    Just as GPS gave us a way of discovering and sharing our location, this new protocol would define a simple request: I am here and would like to go there. A distributed ledger might record all its users’ past trips, credit cards, favorite locations — all the metadata that services like Uber or Amazon use to encourage lock-in. Call it, for the sake of argument, the Transit protocol. The standards for sending a Transit request out onto the internet would be entirely open; anyone who wanted to build an app to respond to that request would be free to do so.

    Cities could build Transit apps that allowed taxi drivers to field requests. But so could bike-share collectives, or rickshaw drivers.

    I don’t know about you, but I find this perspective a lot more interesting. I recommend you read Steven’s article. It will help you cut through a lot of the Bitcoin noise.

  • How to act like an entrepreneur

    I really like the post that Seth Godin wrote on his blog today called: The four elements of entrepreneurship.

    He defines entrepreneurs through their actions and behaviors. In his view, this is what they do:

    1. They make decisions.

    2. They invest in activities and assets that aren’t a sure thing.

    3. They persuade others to support a mission with a non-guaranteed outcome.

    4. This one is the most amorphous, the most difficult to pin down and thus the juiciest: They embrace (instead of run from) the work of doing things that might not work.

    As far as I can tell, that’s it. Everything else you can hire.

    He then goes on to say:

    All four of these elements are unnatural to most folks. Particularly if you were good at school, you’re not good at this. No right answers, no multiple choice, no findable bounds.

    Perhaps this is why many VCs seem to favor young founders. They’re not old enough to think they know what will work and what will not work.

  • “Liberate these objects from their containment”

    Architect Rem Koolhaas recently unveiled a backpack that he designed for Prada’s autumn winter 2018 menswear collection. 

    It looks like this: 

    image

    It’s more of a frontpack. Actually, maybe the right name is chestpack.

    What stood out for me, though – perhaps more than its frontality – was the way that Rem Koolhaas described his reasoning behind the design.

    Here is an excerpt from Dezeen:

    “Today, waiting in line for a typical airport check of carry-on luggage, it is surprising to note how the shapeless container of the backpack, is inhabited by strict, orthogonal devices like the laptop, the charger, books, toilet bag, and how awkward it is to liberate these objects from their containment in the backpack,” he said.

    “This project proposes a reinterpretation of the backpack, more suitable to the contemporary urban citizen,” he continued. “The frontal position gives a more intimate sense of ownership – a better control of movement, avoiding the chain of oblivious collisions that the backpack inadvertently generates.”

    Leave it to an architect to talk about a backpack like the wearer is about to go to war.

    P.S. I’m a fan of Koolhaas. I just found this funny.

    Image: Prada

  • Where the young and educated are moving to in the US

    City Observatory tracks something that they call “The Young and Restless.” It refers to the segment of the US population that is between 25-34 years old and has a bachelor’s degree or higher.

    We know that people in this age bracket tend to be relatively mobile and that the likelihood of moving decreases as people age. So it’s a potential leading indicator for the city regions of the future. It also adds a bit more nuance to the urban vs. suburban growth debate. 

    According to City Observatory, between 2012 and 2016 the number of 25 to 34 year olds with a 4-year degree living in one of the 53 largest largest cities in the US increased by 19%. This is compared to a 4% increase in the overall population in these cities.

    This increase in young well-educated adults is also happening 50% faster in the largest cities. So the young and educated still seem to be demanding city living, even if the world is arguably still suburbanizing.

    Below is a snapshot of City Observatory’s latest data. I’ve sorted the list by total change in population (2012 to 2016). Happy to see Philadelphia near the top. If you do it based on percentage, Detroit wins with a 64% increase.

    For the full list of cities, check out City Observatory.