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.

Subscribe

  • Why I write about tech on my city building blog

    I had a friend ask me this week about how I decide what to write on this blog. His comment was that I tend to write about a variety of different topics. He wondered: Isn’t it better to focus on one particular niche?

    The simple answer is that I write about what interests me. And secondary to that is any concern around what will get the most clicks. In fact, I try not to fall into the trap of worrying about the latter. Sometimes it can be paralyzing to fixate on what will appeal most to the tens of thousands of people who read this blog on a regular basis.

    The reality is that my interests are much broader than, say, just design and real estate; though these two topics are clearly central. 

    I learned a long time ago while studying architecture and art history that what we make as a society is generally a product of the cultural milieu at the time. In other words, the built environment doesn’t happen in a vacuum. It is the physical manifestation of what we believe to be true at a particular moment.

    Today, it’s pretty hard to ignore the importance of tech. Think of some of the most valuable companies in the world right now: Apple, Google, Amazon, Facebook, and so on. Now, technology has always shaped our cities, but what makes this moment different is the decisive shift toward software.

    It’s arguably no longer about who can build the best mousetrap. It’s about who can build the best software layer on top of that mousetrap.

    In 2011, venture capitalist Marc Andreessen (previously the co-founder of Netscape) published a widely shared essay called, “Why Software Is Eating the World.” And over the past 6 years he has been proven to be very right.

    The 3 main points he aimed to make with that essay are as follows:

    1. Every product or service that can become software will become software.
    2. Every company will have to become a software company.
    3. The winning companies will be the best software companies.

    Depending on your industry, this may sound ludicrous to you. Certainly in 2011 it probably seemed that way. 

    But a perfect example of this phenomenon is the iPhone. The phone itself is manufactured in China, albeit where a lot of great hardware innovation is taking place. 

    But at this point, phones have become fairly commoditized. The profits that Apple makes from the iPhone disproportionately come from the software layer and the app ecosystem it has developed.

    You could make a similar argument with Tesla. Autonomous navigation – which most of us can agree will have a profound impact on cities – is largely a software challenge. 

    And so if you believe that autonomous vehicles will be a fundamental part of the future of mobility, then it’s not that hard to believe in point number three: the winning car company will also have to be the best car software company.

    Some industries have been less touched by tech and software – real estate being one of them. But if Andreessen is right and it’s not a question of if, but a question of when, then it behooves all of us to think about the potential impacts.

    I love how Andreessen ends this podcast discussion with Barry Ritholtz of Bloomberg and so I’m going to repeat it here to close out this post. He says: “There are no bad ideas. There are only early ideas.” 

    And that’s why I write about tech on my city building blog.

    Photo by Michal Pechardo on Unsplash

  • The year of the condo

    Over the past 5 years or so, real estate headlines in the Greater Toronto Area have often focused on the rapid appreciation of low-rise housing. High-rise housing simply wasn’t appreciating at the same rate – at least in aggregate terms.

    But 2017 has brought a different story. 

    If you look at BILD’s “New Homes Monthly Market Report” (data provided by Altus Group as of July 2017), you can see that high-rise pricing is now on a similar trajectory to low-rise pricing.

    Here is that graph:

    image

    This sharp uptick in pricing is also apparent when you look at the average price per square foot of new high-rise inventory. As of July, it was $764 psf across the GTA. See below.

    At the same time, average unit sizes have also jumped up to 871 square feet. So not only are new high-rise homes becoming more expensive on a normalized basis, they are also getting bigger, which further increases prices.

    image

    I recognize that we’re only seeing data up to the end of July, but, from the looks of it, 2017 is shaping up to be an extraordinary year for the condo.

    Of course, part of the reason this is happening is because remaining inventory for both low-rise and high-rise product is hitting 10-year lows. We’re back to the topic of supply.

    If you’re curious how some of these numbers have changed from the month prior (June 2017), check out this post.

  • $2-billion real estate king

    The Globe and Mail just published a piece called: How Morguard CEO Rai Sahi became Canada’s $2-billion real estate king. It’s a Globe Unlimited piece, so some of you may not be able to access the article. 

    But here’s a snippet that talks about the moment Sahi left his job at the Bank of Montreal and went out onto his own as an entrepreneur:

    In 1981, Sahi spotted an opportunity: Advanced Extrusions Ltd., a small manufacturer of aerosol cans and toothpaste tubes based in Penetanguishene, Ontario. Along with several partners, he bought the business for $7 million. Quickly, Sahi and his partners kicked Advanced into high gear by installing a high-speed assembly line and taking advantage of the low Canadian dollar to boost exports to the United States. Revenues doubled, and CCL Industries Inc. bought the company in 1985 for a reported $22 million. He then used the proceeds from the Advanced sale as a launchpad to buy control of two transport companies, combined them, and sold them to Winnipeg-based Federal Industries for $70 million, much of it in shares.

    The reason for this Globe article is no doubt because Sahi’s Glen Abbey golf course is in the news right now. He acquired the course by buying ClubLink when they were in a cash crunch and has since put forward plans to redevelop the land. 

    On Monday night, Oakville city council voted unanimously to seek a heritage designation for the course.

    I don’t know much about golf courses, but I do think Sahi’s story is an inspiring one. Here is a guy who moved to Canada at the age of 24 and started out by selling insurance door to door. And today his net worth is estimated at $2 billion.

    Full disclosure: I used to work at Morguard.

    Photo by juan gomez on Unsplash

  • Crowd Surf

    When Snap Inc. announced its Q2 financial results earlier this month, it reported 173 million daily active users – an increase of 21% year-over-year. But this fell short of what was expected. Analysts were expecting 175.2 million DAUs. 

    (Snap defines a DAU as anyone who opens the Snapchat app during a defined 24 hour period.)

    Regardless of your position on this stock, one thing is clear about the company: they are very creative and they continue to innovate.

    The company is currently testing a new feature called “Crowd Surf.” What it does is automatically stitch together related Snapchat Stories from the same location to form seamless videos. 

    It made its debut at a concert in San Francisco. The real magic is how Crowd Surf was able to assemble a continuous audio track using an assortment of 10-second Snapchat Stories, all taken from different locations at the concert and all from different users.

    Click here and scroll down for a preview video.

    To accomplish all of this, Snap takes a “sound print” of the audio playing in a particular location from people’s Stories. It then filters each of the clips so they sound more alike and autogenerates a stitched together video.

    You obviously need a critical mass of users and content for this to work, which is why the feature was introduced at a concert. But it’s certainly a remarkable way of creating valuable content from decentralized user inputs.

    I guess the only question is: How long until Instagram copies this?

    Photo by Yvette de Wit on Unsplash

  • Supply, not foreigners

    The chief economist at the Canada Mortgage and Housing Corporation (CMHC), Bob Dugan, recently published a piece in Macleans called: why the foreign buyers tax isn’t making Vancouver more affordable.

    Here’s an excerpt:

    One year after the implementation of the foreign buyers tax, monthly sales to foreign investors now hover around 4 per cent of all sales. But our latest Housing Market Assessment, released in July, still shows a red flag for Vancouver—with particular concern given to overvaluation and price acceleration. Average prices in Vancouver have rebounded to where they were before the tax’s implementation. In between, there was a marked drop, but it appears to have been temporary. In short, Vancouver is largely right back to where it was before the tax.

    He goes on to argue that while there are many factors affecting home prices, “supply is by far the chief factor.” This, of course, is a refrain you hear from everyone in the real estate business, so I’m not going to belabor the point.

    But I would like to point out some of the percentages. 

    Before the tax, foreign sales in Vancouver (to buyers who do not have a permanent address in Canada) were thought to sit at roughly 10%. Immediately following the tax, when everyone was trying to assess the impact, this dropped to ~0.9%. And now it’s back up to somewhere around 4%, according to the article.

    Arguably, there has been a slight reduction. Though who knows how accurate these percentages are. There is now a strong incentive to hide foreignness. 

    Regardless, CMHC doesn’t believe it’s working.

  • Thom’s Trent

    image

    This afternoon I walked Trent University’s campus with my father on our way back from the cottage. It is embarrassing that it has taken this long.

    Trent University straddles the Otonabee River in Peterborough, Ontario. It admitted its first students in 1964 and by the early 1970s the renowned Canadian architect Ron Thom had completed the campus plan and its original college buildings, including Champlain College, Lady Eaton College (originally a female-only dormitory), the Bata Library, and the Chemistry Building.

    The photo at the top of this post is one I took of the south elevation of Champlain College, on the north edge of the west bank’s main plaza. (Yes, the sign on the far left says “no skateboarding.”)

    Rob Thom is perhaps not as well known as other Canadian modernists such as Arthur Erickson. But his two masterpieces – Massey College at the University of Toronto and this campus – were instrumental in helping to define modernism in Canada. It is a shame that alcohol and illness ended his life at the young age of 63.

    The first thing that struck me was the rubble aggregate walls. I immediately went to touch them. (See, again, above.) That, combined with the very clear Prairie influences and the terracotta colored pavers, gave the campus grounds an incredible warmth.

    Also notable was the connection to the natural landscape. Around the corner from where I took the above photo was a staircase leading down to the river. At the bottom of the staircase was a broad set of concrete steps and a handful of young people jumping in and out of the water.

    If you happen to find yourself in this part of southern Ontario, I would encourage you to check out Thom’s campus. And maybe bring your bathing suit.

  • Lifelogging

    Swarm recently released version 5.0 of its mobile app. Blog post here. Instead of gamification (leaderboards and so on), the emphasis is now on lifelogging – a more personal collection of all the places you’ve been.

    Here’s what that looks like:

    The most notable change is a front and center map that shows you all of your check-ins. You can also zoom in and really explore where you’ve been, geographically. Swarm refers to it as a “virtual memory book.”

    Lifelogging is absolutely the main reason why I use Swarm and why it still finds itself on my home screen. One of the reasons I enjoy blogging is that it’s a public diary. Swarm is a modified version of that for me. So this change feels right.

    My other Swarm use cases are being able to share check-ins to Twitter and serendipitous encounters with friends.

    But the more I use Swarm the more I think that divorcing this use case from Foursquare (this happened in 2014) was a mistake. If Swarm is now about lifelogging (instead of just playful check-ins) and if Foursquare is about finding the perfect place to go out, then why not merge these experiences? 

    Tell me where I should be going, let me make lists of places I want to go, and then let me log it to my diary along with tips for other people.

    At the time of the divorce, the data seemed to suggest that very few people did both of these things within the consolidated app. People either checked-in or they looked for a place to go. Rarely did they do both.

    Perhaps that would be different with lifelogging.

  • One hour drive

    I’m taking next week off so that I can respond to emails from various places in Ontario and Quebec instead of from my desk. The out of office messages really fly at this time of year, so it’s usually a pretty good time to try for a recharge.

    Because of that, this post feels appropriate. 

    Sahil Chinoy of the Washington Post recently looked at anonymous cell phone and vehicle data (from Here Technologies) to see how far you could drive in one hour if you were trying to escape the downtown of various U.S. cities on a Friday afternoon in the summer.

    This exercise was done for 3 departure times on July 28, 2017: 4pm, 7pm and 10pm. The mappings all leverage 3 years of historical speed data.

    Here is a first set of maps showing a few cities in the northeast and in the mid-atlantic. Every city is shown at the same scale so that they can be easily compared.

    image

    And here is a second set of maps showing a few, more car-oriented, cities.

    image

    Not surprisingly, older transit-oriented cities like New York don’t do well in this contest. No matter what time you leave, it’s hard to make it past 30 miles. Whereas in the case of Vegas, it doesn’t really matter what time you leave. You should be able to clear 50 miles.

    That’s the other interesting thing to note about these maps – the spread between distances at the various times.

    I’m sharing these because I’m a sucker for diagrams, but I don’t think they tell the whole story. The modal splits and the population and employment densities are all very different across these cities. New York’s core competency is in moving lots of people in trains, not in cars.

    Although, perhaps the ironic thing about these diagrams is that a tighter drive radius might actually say something about how efficiently land is being used.

  • Seattle vs. Vancouver

    A reader recently shared an article with me called: Why Seattle builds apartments, but Vancouver, BC, builds condos. Thanks for that.

    It’s a good summary of the differences between these two markets and why over the last five years less than 4% of all new residential units built in Seattle have been condos. The story is obviously very different in Vancouver.

    It’s also a good reminder that incentives matter. Capital has a funny way of flowing to where the returns are greatest.

    Chart: Sightline Institute

  • A story about Toronto

    Marcus Gee of the Globe and Mail recently published “a made-up story about Toronto that never appeared, but should.”

    It goes like this:

    Toronto city hall is pressing a prominent developer to put up a taller building.

    Mayor John Tory is telling Big City Condo Corp. that the condominium it has planned for the downtown corner of Maple and Oak streets is simply too small. The proposal calls for a 25-storey residential tower. Mr. Tory said it could easily rise to 40 or even 50 storeys.

    He dismissed complaints from locals who said the tower would overshadow the neighbourhood and put too many more cars on the street. The intersection is well served by public transit, with two lines crossing there. The mayor called it a golden opportunity to create urban density.

    He insisted the city must build up instead of out if it wants to avoid more sprawl. “We love tall buildings,” he said. “We need more of them. We can’t keep spreading out and out and out. We need to grow up, and I mean that quite literally.”

    Again, this is made-up. And if you’re from Toronto, you knew that. 

    We are still grappling with the urban intensity that should come along with being an important global city.

    Photo by Redd Angelo on Unsplash