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

  • A generation of architects

    The New York Times just published a piece called “a generation of architects making its mark at dizzying speed.” It’s a current list, albeit not an exhaustive one, of notable architects and their projects. 

    Included on this list is One Spadina, home of the Daniels Faculty of Architecture, Landscape, and Design at the University of Toronto, which was designed by Nader Tehrani and the Boston practice NADAAA.

    Some of the best architecture in the city is being built on this campus.

    One thing you’ll notice about this summary of architects is the emphasis on age. Architecture is a slow process. This is true for buildings in general. So historically it has been the case that architects usually don’t hit their stride until later in their career.

    The youngest architect on the list is Bjarke Ingels at 42. An outlier for sure. He saw tremendous success in his 30s, and even in his 20s with the firm PLOT. I think great storytelling had a lot to do with this.

    Tehrani is 53. And the author rightly points out that Frank Gehry didn’t become Frank Gehry until he renovated his own house at the age of 48.

  • Transit advertising according to the numbers

    This morning I saw this tweet about Toronto streetcar advertising. The author has a “big problem” with public transit being fully wrapped in ads and so she decided to tweet her local Councillor to see if these could be somehow limited in size.

    My first thought was: I wonder how many people would accept higher fares in exchange for fewer/no advertising. Is this something people care about? Because personally, I’ll take the lower fares in exchange for someone trying to monetize my attention. I mean, every social network I use is already selling my attention off as their product.

    But then this got me thinking about what the actual numbers look like. So let’s look at some of those for not only Toronto, but also for Hong Kong, since many people view that as the gold standard as far transit authorities go.

    For the year ending December 31, 2016, the Toronto Transit Commission (TTC) posted a total operating revenue of $1.204 billion. This represents about 41% of total revenue – the rest comes from subsidies.

    If you drill down into operating revenue, advertising makes up $28 million or about 2.33% of total operating revenue. So a pretty small number. If you tried to shift this number over to “passenger services” revenue (transit fares), it actually wouldn’t increase fares by that much. But presumably fares are already at some profit maximizing number.

    Switching to Hong Kong’s MTR Corporation, their numbers have to be unpacked a little differently because the group has a number of diverse business lines, including property development.

    For the year ending December 31, 2016, total revenue from Hong Kong Transport Operations was HK$17.655 billion (almost all fare revenue). Advertising falls within the Hong Kong Station Commercial Businesses group and that company posted revenues of HK$5.544 billion for the same time period.

    To try and create some sort of comparison, I’m ignoring all of the other segments within MTR.

    Within Station Commercial Businesses, advertising revenue alone makes up HK$1.09 billion or about 20% of that group’s total revenue. The rest comes from station retail rent (the biggest chunk), telecom, and some miscellaneous station income. 

    If you add up Transport Operations and Station Commercial Businesses, total revenue was HK$23,199 billion for the year ending 2016. Advertising comprises about 4.70% of this – so more than double that of Toronto.

    It’s also worth noting that MTR’s station retail rental revenue is about 3.4x that of its advertising revenue. In the case of Toronto, the TTC actually makes more money off advertising than it does from “Property Rental.” I’ve always thought this was a missed opportunity. Transit and land use go hand in hand.

    In any event, I’m far less fussed about advertising on transit. But what are your thoughts? Let me know in the comment section below.

    Photo by Tomo Nogi on Unsplash

  • Morning bagel run

    image

    This morning I woke up and decided that I could go for a bagel with lox and cream cheese. I figured, it’s the weekend, I’m going to treat myself. So I walked across the street to St. Urbain Bagel Bakery (see above photo).

    My Montreal friends reading this are probably thinking that this is no substitute for a Fairmount or St-Viateur bagel. But I enjoy St. Urbain. They are my go-to place for breakfast in the market.

    What I really value, though, is the ability to walk across the street and grab a bagel for breakfast. It’s a pretty simple action. Nothing complicated about it. 

    But in our world of constant traffic jams, cars that should soon drive themselves, and near-instantaneous online delivery, it can be easy to forget that there’s still something really nice about just walking down the street in the morning and saying hello to a human.

    I feel lucky that my neighborhood allows me do this. Not all do.

  • Educational attainment and urban success

    We know that educational attainment matters a great deal for the economic success of our cities. In fact, by some measures, it is the single most important factor.

    City Observatory found that 60% of the variation in per capita income across large U.S. metro areas could be explained simply by the percentage of the population with a 4-year college degree.

    So education matters a lot.

    Many of you have probably seen this entertaining TED talk by Sir Ken Robinson called: Do schools kill creativity? It has almost 47 million views at this point. 

    Well, he was recently interviewed by Ingrid Peritz of the Globe and Mail and I have to share the following quote, because I think it’s terrific (particularly the part in bold):

    “We need to recognize that children have a huge range of natural abilities and they all have them differently. Our education systems are designed to focus on a small band of those. If you have a narrow conception of ability, you end up with a very big conception of disability or inability.”

    More people with a college degree seems to be a pretty good thing. But the solution doesn’t start there. Logically, it starts much earlier – with children. 

    All of this matters not just because people with a degree should, on average, make more money and have a higher quality of life. 

    But because it’s heartbreaking to think that some young child with incredible talents might be being mislabeled as inept simply because we have a system that is, well, inept.

    I recommend you read the interview with Ken.

    Photo by Christian Fregnan on Unsplash

  • My prediction for Amazon HQ2

    “Now the trick is that we gotta look like we don’t need this shit and they give us the shit for free.“ –Mike Peters

    This is a line from one of my favorite movies, Swingers. Short video clip here. Mikey and Trent are in a Las Vegas casino trying to play it cool. They’re looking to make a scene at a table and Mikey throws out this gem of a line. He knows that people want what they can’t have and that confidence matters.

    I was reminded of this line today after Amazon announced its HQ2 Request for Proposal (full RFP document here) and every city, from Chicago and Toronto to Philadelphia and Dallas, started swooning over the prospect of housing Amazon’s second headquarters in North America. 

    But to be clear, I do not think this is a bad idea. I actually think Amazon HQ2 is an incredible city building opportunity that would generate countless positive externalities for the selected city. I’m thrilled that Mayor John Tory will be personally “leading the charge” with respect to Toronto’s response.

    Over $5 billion in construction and as many as 50,000 employees making on average over $100,000 per year. Amazon is looking for about 500,000 sf of space in phase 1 (2019) and up to 8,000,000 sf in total. Based on the RFP, they seem to be pegging their capital investment at somewhere around $600 per square foot.

    If I’m being as objective as possible, I honestly believe that Toronto is the city to beat in his competition. I think it will come down to access to talent. Human capital is the lifeblood of a company and Trump’s immigration policies simply put U.S. cities at a disadvantage in this regard.

    Of course, Toronto is also awesome. So that’s my prediction: Amazon HQ2, Toronto.

  • REM

    image

    “A building has at least two lives – the one imagined by its maker and the life it lives afterward – and they are never the same.” -Rem Koolhaas

    Tonight I went with a developer friend to see the documentary REM at the Hot Docs Cinema on Bloor Street. It’s a documentary about the Dutch architect Rem Koolhaas, directed by his son Tomas Koolhaas. Trailer here.

    The film is essentially 75 minutes of introspection on the part of Rem. It’s him ruminating over a continuous piece by the American composer Murray Hidary. At times it was hard to hear what Rem was actually saying.

    If you’re looking to learn the specifics of his designs and process, then this movie is not for you. Though there’s lots of footage of his buildings. It also does not make clear just how much influence he has had professionally. I mean, everyone from Bjarke Ingels to Jeanne Gang once worked at his firm.

    The film is really about getting inside the mind of Rem as he travels the world. What struck me is Rem’s profound curiosity for seemingly everything. He really is obsessed with analyzing, documenting, and reporting. He refers to it as a compulsion.

    I also like the idea put forward that architecture represents a particular moment in time. If you’re precise about things, you may be right the moment the building is complete.

    But from that point onward, everything begins to change around it and you will be wrong. That’s what the quote at the top of this post is getting at.

    So I enjoyed it – but probably because I’m an architecture geek and Rem is arguably the most influential living architect today. But I’m not going to tell you that this film is a must-see.

    P.S. Who knew, Rem Koolhaas flies economy.

    Photo by Pavan Trikutam on Unsplash

  • MONAD, Vancouver

    image

    Earlier today, Nithya Vijayakumar, of The Pembina Institute, pointed out the above housing project to me on Twitter through this 2013 Dwell article (worth a read).

    The project is called MONAD and it’s a 4-unit, 12,600 square foot prefabricated multi-storey building in Vancouver on West 4th Avenue. 

    The site itself is 33′ x 110′, which just so happens to be the same size as a typical single family lot in the city. However, this one sits on a main street.

    Completed in 2011 and designed by Lang Wilson Practice in Architecture Culture, the development was intended to be a pilot project and a rethink of urban living.

    There are real diseconomies when you develop at this scale, but if you make it high-end enough the math just may work. What a beauty.

    Above image from LWPAC. More photos here. 

  • Thoughts on labor, and the end of summer

    Well, just like that, the unofficial end of summer. Labor Day weekend. But I agree with Shawn Micallef: “Defy the crowd and keep enjoying summer.” There are still weeks of it left.

    But given that it is Labor Day weekend, here are two things to think about. 

    The first is a Financial Times article by Lawrence Summers where he argues that America needs unions more than ever and that, indeed, the central issue of American politics today is the “economic security of the middle class.”

    Here is an excerpt that speaks to declining bargaining power on the part of labor:

    “But I suspect the most important factor explaining what is happening is that the bargaining power of employers has increased and that of workers has decreased. Bargaining power depends on alternative options. Technology has given employers more scope for replacing Americans with foreign workers, or with technology, or by drawing on the gig economy. So their leverage to hold down wages has increased.”

    It’s also worth mentioning that only about 6.4% of private sector workers in the U.S. are in a union today. This is a decline of almost two-thirds since the 1970s and is a good segue into the second thought of this post.

    Two years ago Fred Wilson wrote a post on his blog (which he reblogged today) where he argued that “labor needs a mechanism to obtain market power as a counterbalance to the excesses of markets and capitalism.” 

    But, that this mechanism needs a refresh. He calls it Union 2.0.

    “However, like all bureaucratic institutions, the “Union” mechanism appears anachronistic sitting here in the second decade of the 21st century. We are witnessing the sustained unwinding of 19th and 20th century institutions that were built at a time when transaction and communications costs were high and the overhead of bureaucracy and institutional inertia were costs that were unavoidable.”

    This makes perfect sense to me. 

    At the same time, we can’t forget – and this is how Summers ends his article – that, today, “the most valuable companies are the Apples and the Amazons rather than the General Motors and the General Electrics.”

    That tells me that what may have worked in the past will likely not work in the future.

    Photo by Jonas Viljoen on Unsplash

  • LESS IS MORE OR

    Last night I went by the Toronto-Dominion Centre to check out the above public art project by French artist Aude Moreau. The message on the buildings is “LESS IS MORE OR”, which is a play on the architect Mies van der Rohe’s famous adage: “Less is more.” Here, the “or” is meant to make you question it.

    All of this is to celebrate the 50th anniversary of the Centre. The first tower was completed in 1967 and is one of Mies’ last projects before he died in 1969. His original plan included two towers and the banking pavilion at the corner of Bay and King, but three more towers were later added.

    This is Toronto architecture at its absolute best. And it may not have happened without people like Phyllis Lambert. I am so glad it did.

  • Clean disruption of energy and transportation

    I just came across the below talk by Tony Seba about the coming “clean disruption” of energy and transportation. The talk follows his book of the same name. Click here if you can’t see it below. It runs about an hour, but I would encourage you to give it a watch. 

    [youtube https://www.youtube.com/watch?v=2b3ttqYDwF0?rel=0&w=560&h=315]

    The first few minutes will be things I’m sure many of you have heard before, such as the failure of Kodak to embrace digital cameras (film business considered too valuable), Moore’s Law, and so on. But he then moves on to cost curves, battery storage, solar power, and autonomous electric vehicles (A-EVs).

    You all know that I am fascinated by these topics, so here’s one piece that stood out for me: 2021 is his prediction for the year in which A-EVs become real and disrupt both internal combustion engine (ICE) vehicles and individual car ownership.

    Obviously this won’t happen overnight, but Tony’s belief is that 2021 will be the year that the economics of A-EVs become so compelling (10x) that it will crush our current business models.

    The argument is that on-demand ride hailing/sharing and A-EVs will converge and that Transportation as a Service (TaaS) will provide our mobility needs at a fraction of today’s costs. We’ve talked about this prediction before on the blog, but never has a timeline been attached to it.

    All of this reinforces two thoughts that I’ve been having over the past few years. One, I will probably never buy another combustion engine vehicle. And two, I should probably avoid buying another vehicle, period, until the next wave of business models becomes clearer. Leasing likely makes more sense at this stage if you need a car.

    In fact, Tony believes that with the collapse of individual car ownership, the resale value of cars could become negative. That is, you’d have to pay people to take a car off of your hands, because everyone will recognize the cost advantage of just using TaaS.

    We are doing everything we can to future proof our development projects so that they are ready for electric vehicles. But if A-EVs and TaaS completely erase individual car ownership within the next 5 years, then all of us in the industry are going to need to do much more to ready our buildings and cities.