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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  • So how’s Uber doing?

    A travel expense management company called Certify recently analyzed over 10 million ground transportation receipts across North America for the 3-month period ending last September (2016). 

    And what they found was that, for the first time ever, Uber and Lyft exceeded traditional taxis and rental cars when it came to business expenses. Uber was at 48% and Lyft was at 4%. So together, these two platforms have more than half of this particular market.

    If you compare this to Certify’s data from the same quarter last year, “ride-hailing services” previously accounted for 34% of receipts, whereas taxis and rental cars were at 22% and 44%, respectively. So Uber is up in a big way.

    This may not be surprising for a lot of you, but I thought it would be valuable to check-in on what the numbers say. 

    I’m hit with two thoughts. Firstly, it’s not a question of mobile apps superseding traditional taxis; it’s a question of one company taking over. And secondly, people seem to be favoring Uber over driving themselves around. I know I’ve been heading in that direction.

    Those are two powerful trends.

  • BARED: Howard Cohen, Context Development

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    Howard Cohen was initially trained as an architect. But throughout his schooling he gradually became more interested in urban design and city planning. So after graduating in the late 1960’s from the University of Manitoba with a degree in architecture, he took a job within the planning department at the City of Winnipeg. There he helped to author the “Downtown Winnipeg Plan” and quickly earned the reputation as one of the most creative people in the department.

    But after about a year and a half on the job, he decided that he wanted a change in scenery and so he quit and took off to Europe with his wife. Upon returning, with no money to his name, he managed to strum up two potential job opportunities; both of which were, thankfully, not in Winnipeg. One was an architecture job in New York City and the other was a planning position for a neighborhood on the east side of downtown Toronto known as Trefann Court.

    Since planning had become more interesting to him than architecture, Howard decided to fly to Toronto for the job interview. He vividly remembers staying at the Sutton Place Hotel – which is today being converted to condos – and walking down Bay Street to City Hall for his interview. He also remembers being so nervous that he had to smoke a joint prior to, in order to calm his nerves. The interview was with the chief planner, deputy chief planner, and with local residents from the area. They offered him the job on the spot.

    He accepted the position in 1970 and stayed at the City of Toronto until 1978. Howard was contemporaneous to figures such as John Sewell – the former mayor of Toronto who was also heavily involved in Trefann Court. Howard features prominently in John’s book: “How We Changed Toronto – The inside story of twelve creative, tumultuous years in civic life, 1969-1980.”

    Interestingly enough, during his time at the City, some of the land use policies that Howard was championing were actually quite contentious within the development community. For instance, Howard believed that Toronto’s downtown residential neighborhoods – neighborhoods such as Cabbagetown – should be preserved, and not razed and turned into replicas of St. James Town. This is an outcome that I am sure most of us today now appreciate.

    However, this is not to say that he was anti-development. Howard also firmly believed that high-density residential should be encouraged throughout the core of the city. We take this for granted now, but he remembers being called a zealot at an Ontario Municipal Board hearing because of his belief that people may actually want to live at the corner of Bay Street and Dundas Street. This was supposed to be a place for working and shopping, but definitely not living.

    Towards the end of his tenure at the City, Howard had become for all intents and purposes the chief planner of Toronto. He was the guy. However, without the actual title he was starting to get restless and decided to look elsewhere for opportunities.

    In 1972, the federal government formed a new Crown corporation known as the Harbourfront Corporation. This was after having expropriated over 100 acres of derelict industrial land along Toronto’s waterfront. The mandate was to revitalize the central waterfront, but after failing for 5 years to make anything meaningful happen, responsibility was ultimately turned over to local leadership.

    Shortly thereafter, Howard left the City and became the first head of Harbourfront Corporation. As coincidence would have it, he was offered the position on the same day that David Crombie – who was mayor at the time – called him to formally offer him the role of chief planner. However, Howard felt that there were more exciting challenges at Harbourfront and so that’s where he went.

    One of his first tasks at Harbourfront was to write the business plan that would set the course for the corporation and allow it to become self-sustaining. The model became about leveraging the value of the corporation’s land to not only create a thriving mixed-use community, but to also create a set of cultural institutions along the waterfront.

    The legacy of Howard’s work can be found in the Power Plant Contemporary Art Gallery, the Harbourfront Centre outdoor skating rink, the Queen’s Quay streetcar, as well as a number of other initiatives ranging from cultural programs to development projects. Some of his development deals included the affordable housing built at Bathurst Quay, the Admiral Hotel, and the Queen’s Quay Terminal developed by Olympia & York – a pioneering mixed-use development that to this day serves as one of the most important anchors on Toronto’s waterfront. It was also through these development projects that Howard would increasingly get into the mindset of a developer – something that would obviously serve him well later on.

    Despite being a financial success, Harbourfront Corporation was ultimately disbanded, partly due to controversy over some of the high-rise towers being developed along the waterfront. At this point, Howard was 44 years old and had spent his entire working career in the public sector. With the experience he had gained at the City and at Harbourfront Corporation, he decided that it was time to move over to the private sector and make some money. He went to work for a developer.

    Howard landed at Murray Goldman’s development company – the Goldman Group – and would spend 4 years there as President. He didn’t necessarily have all the finance and marketing chops, but he did have a lot of other relevant experience. Perhaps his best known project of this era is the Castle Hill townhouse complex at the foot of Casa Loma.

    After stepping down from the Goldman Group in the early 90’s, Howard then turned to consulting. This was a period of time when many in the industry were licking their wounds, but Howard managed to amass a diverse set of clients, including Innis College at the University of Toronto and the nascent Design Exchange. Initially hired as a consultant in 1992, Howard would later get asked to head up in the Design Exchange in 1994. He would spend 2 years in this role and raise over $7 million in donor money during one of the worst recessions in recent history.

    As his consulting business chugged along, Howard would later reconnect with an architect by the name of Lloyd Alter. Lloyd had done some work for the Goldman Group when Howard was there and they decided to join forces and create a larger consulting business known as Cohen & Alter. Business was good for the two of them. They were busy.

    They hadn’t really planned on getting into the development business, but then one day an agent came knocking with a small piece of land on Niagara Street. It was located in today’s King West neighborhood. Barbara Hall was mayor at the time and the city was starting to talk about new policies to open up “The Kings” to revitalization. “The Kings” being the two shoulders of downtown Toronto: King Street West and King Street East.

    Toronto was still in a recession at the time and nobody wanted the site. It was also fairly non-consensus to think that people would want to live in these gritty old parts of downtown. Only zealots believed this to be true. So the agent told Howard and Lloyd that they could option the site for $1 – basically tie it up for free.

    This was the birth of 20 Niagara.

    Since the recession had also left architects without work, they managed to get Peter Clewes (today of architectsAlliance) to defer his fees on the project. The deal was that when the project got off the ground, everyone would get paid. It was the ultimate in bootstrapping.

    Around this same time, Howard and Lloyd met Tom Schwartz, who would become a kind of mentor and advisor to the aspiring developers. Tom, who today is the President and CEO of CAPREIT, was already a successful developer through the founding of Intraurban Projects in 1976.

    Tom introduced Howard and Lloyd to a company called Equivest, which was owned by Gerry Schwartz (of Onex fame) and Stephen Gross. Equivest would become the financial backer for their fledgling project and set the stage for a go-forward funding model.

    Howard and Lloyd would also turn to a guy named Brad Lamb to sell the project. Brad had just started his own brokerage after working under Harry Stinson – a real estate broker turned developer who is perhaps best known for his cheesy late night infomercials. Brad had two employees at the time and would go on to personally sell 20 Niagara Street.

    20 Niagara launched in 1996.

    The project contained 30 condo units and was about 40,000 square feet. It took a year to sell the first 20 units – at some absurdly low price – and ultimately didn’t make any money for both Howard and Lloyd. Howard would spend the next two projects paying back the hangovers from 20 Niagara. It did, however, give birth to Context Development.

    Howard and Lloyd ended up parting ways after 20 Niagara, but the partnership of Howard Cohen, Stephen Gross, and Peter Clewes would go on to build some of the most design-forward and contextually sensitive projects in the city. The core philosophical beliefs were that housing of every varietal belongs downtown and that modern architecture has a place in the mass market. Again these principles may seem obvious today, but they weren’t as obvious in the late 90’s.

    Context Development would later develop adaptive reuse projects such as the Kensington Market Lofts and the Tip Top Lofts, award winning projects such as the Mozo, and wildly innovative projects such as the District Lofts (pictured above). This 14-storey “twin tower” condominium used Le Corbusier’s “skip-stop” system to create two-storey through units. Context would also go on to develop two buildings that I have personally called home – one of which I am sitting in right now as I write this post.

    For me, the story of Context has always had a particular resonance. As a trained architect who then entered the development business, Howard’s story showed me that I too could leave the world of architecture and do something positive for cities. He was a significant inspiration for me early on in my career when I was figuring out which path I wanted to take.

    Every developer brings their own background and sensibilities to their projects. And in the case of Howard’s projects, I know that Toronto is a better city because of it. Thank you, Howard.

    Image: District Lofts via Context

    ———————————————————

    This is the third post in my blog series called BARED (Becoming A Real Estate Developer). If you’d like to be featured in this series, send me an email or tweet me. The links are at the top of this page. Also, email subscribe to this blog to stay in the loop.

  • 4,000 years of urban history

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    The Guardian recently published an extract from a book by Greg Clark called, Global Cities: A Short History. 

    The article and book cover 4,000 years of urbanization. More specifically, Clark explains why some cities become global leaders, others do not, and why it is common for cities to rise and fall over time – at intervals that are only becoming shorter.

    Below is an excerpt that talks about Amsterdam’s rise in the 17th century; a period of time known as the Dutch Golden Age. In the 1600′s, Amsterdam became the undisputed financial capital of the world and spawned the very first stock exchange. (Though, let’s not forget about Tulip Mania.)

    “Amsterdam took over the mantle from Antwerp and Genoa as Europe’s major commercial city during the 1600s, and it developed many of the technologies that underpin today’s global cities. The overthrow of the Spanish elite, which had hampered the interests of powerful local merchants, granted more freedom to Dutch traders. Soon after, the blockade of Spanish Antwerp triggered a flight of capital and talented entrepreneurs to Amsterdam.“

    "The protestant city became prized for its safe port, political stability and access to inland waterways. It maximised its appeal by guaranteeing equal protection to all merchants, wherever they came from, while developing standardised institutional norms. A relaxed attitude toward interest-bearing loans spurred the development of modern finance in Amsterdam, including maritime insurance, making the city both the logistical hub and the trade financier of Europe.”

    Certain things have changed. Maritime pursuits were once paramount to a city’s success, whereas today, connectivity happens in a myriad of other ways. But other things have not changed. 

    As I read through the article, I couldn’t help but notice a few reoccurring themes. Being closed to innovation and immigration didn’t work in the past and I don’t believe it works today.

  • Monocle Travel Guide: Toronto

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    The latest Monocle Travel Guide is out (#17) and it is none other than Toronto. I haven’t picked up a copy yet, but I will. I’m always intrigued by how other people perceive this city because I obviously can’t be objective. Toronto is home.

    Here is the video that accompanied the launch of the guide. If you can’t see it below, click here.

    [vimeo 191633284 w=640 h=360]

    Thrilled to see husband-and-wife team John and Juli of Mjölk featured in the video. They have a wonderful shop (and home) in the Junction focused on high-end Scandinavian and Japanese design. They also have their own collections which are produced locally in the city.

    If you haven’t seen their home – Mjölk House by Studio Junction – you need to.

  • One becomes four

    The New York Times posted an interesting article today talking about how roommates in the city are dividing and conquering expensive rentals using temporary walls. This is obviously not a new practice. But it’s a good case study in what people will do in order to make living in a specific location affordable – in this case, Manhattan.

    The first example is a one bedroom apartment that was converted to a 4-person apartment. Here is the floor plan (from the New York Times):

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    The living/dining room was divided up using a T-shaped partition wall – which is required to stop 2 feet shy of the ceiling – to create two additional bedrooms. The original bedroom is then shared via two twin beds. Et voilà. Now you have an apartment where the $3,750 per month rent becomes less than $1,000 per person.

    Probably the most annoying thing about this setup would be the lack of acoustic privacy. Since the partition walls don’t go all the way up to the ceiling (photo here), you’d obviously hear everything. One person in the article described it as living in the same room as all of your roommates, but not being able to see anyone.

    Of course, there’s also a space consideration:

    Mr. Meyer, 23, has the smallest room by far. “It kind of feels like you’re living in Harry Potter’s cupboard,” said Mr. Meyer, who is in his freshman year at Columbia after serving for three years in the Israel Defense Forces.

    The roommates, three of whom grew up together in Toronto, don’t mind the close quarters or the lack of privacy. “It’s definitely not for everyone,” Mr. Meyer said. “When you live with your best friends, it couldn’t be better. We hardly spend time in our rooms.”

    I saw a lot of this here in Toronto while I was in undergrad. 55 Charles Street West was always a great candidate for these sorts of hacks because the units are large and because the building is filled with solariums. Inevitably, they became additional bedrooms. 

    (Sidebar: My understanding is that there was a period of time in Toronto where solariums were excluded from gross floor area calculations. So developers used to always put them in to capture more area. That’s why buildings of a certain vintage always seem to have them.)

    In any event, the above certainly makes the case for more micro units and co-living arranagements. Many people seem willing to deal with a variety of living situations in order to live where they want to live. Urban affordability is certainly a global concern.

  • The functional economic geography of the US

    PLOS One recently published a paper and a set of maps that looks at commuter flows across the United States (over 4 million data points). The objective was to identify all of the country’s “megaregions.”

    Here is one of those maps. I think it says a lot.

    We often think of cities as having discrete boundaries and population counts, but the reality is that studies and maps such as these provide a much better sense of the overall economic geography of a place.

    It’s worth noting that the commuter dataset used for this study is from 2006-2010. So things may look a bit different today. The full report can be found here.

  • Opendoor.com is so risky that it may just work

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    I have been writing about the startup Opendoor.com for over 2 years now. And I continue to believe that they are the most promising disruptor in the residential real estate space. 

    Here is the first post that I wrote back in July 2014 after they raised their first round of funding. Here is the second post that I wrote after they launched in Phoenix. And here is another post that I wrote 6 months ago where I argued, once again, that they are doing something worth paying attention to. (This last post explains how the platform works.)

    Well, about a week ago it was announced that they have raised another round of funding: a $210 million Series D. In all likelihood, the company’s valuation is now over $1 billion. Here’s the Techcrunch announcement where the message was: huge ass number; risky business model.

    In response to this, Ben Thompson wrote a terrific and widely shared blog post called, Opendoor: A Startup Worth Emulating. I love his post because he says what I have firmly believed and argued for many years: Zillow and Redfin are not disruptive real estate startups.

    This is what he says about Zillow:

    “And yet, the most successful real estate startup, Zillow (which acquired its largest competitor Trulia a couple of years ago), is little more than a glorified marketing tool: the company makes most of its revenue by getting real estate agents — the ones collecting 6% of fees, split between the buying and selling agents — to pay to advertise their houses on the site. Certainly a free tool that makes it easier to find houses in a more intuitive way is valuable — Zillow has acquired the sort of userbase that allow it to build an advertising business for a reason — but at the end of the day the company is a tax on a system that hasn’t really changed in decades.”

    And though very risky, he argues that Opendoor is far better positioned to shake up the status quo. 

    Here are two of his key points:

    “Sellers are uniquely disadvantaged under the current system, which is another way of saying they are an underserved market with unmet needs.” [Sellers are the side of the market that Opendoor is specifically targeting.]

    “Opendoor has a new business model: taking advantage of a theoretical arbitrage opportunity (earning fees on houses sold at a slight mark-up) by leveraging technology in pursuit of previously impossible scale that should, in theory, ameliorate risk.”

    And here’s what that could ultimately mean for the industry:

    “Opendoor has many more reasons why it might fail than Zillow or Redfin, but its potential upside is far greater as a result. First is the immediate opportunity: sellers who can’t wait. However, as Opendoor grows its seller base, especially geographically, its risk will start to decrease thanks to diversification and sheer size; that will allow it to lower its “market risk” charge which will lead to more sellers. More sellers means both less risk and an increasingly compelling product for buyers to access, first with a real estate agent and eventually directly. More buyers will mean lower marketing costs and faster sell-through, which will lower risk further and thus lower prices, pushing the cycle forward. It’s even possible to envision a future where Opendoor actually does uproot the anachronistic real estate agent system that is a relic of the pre-Internet era, and they will have done so with realtors not only not fighting them but, on the buying side, helping them.”

    I’m with Ben on this.

  • Take it and go

    Given the option, I will buy online as opposed to offline. About the only thing I consistently buy in-person is groceries. Food shopping remains a persistently in-store activity for most of the market. Though some European countries seem to have much higher online food shopping rates.

    It is for reasons like this that Amazon opened a new small-format grocery store this past Monday called Amazon Go. The big game changer – which is currently making the rounds on the internet – is the fact that there are no check out counters. You simply check-in with their app when you walk into the store and then leave with whatever you want. Your phone will automatically charge you for whatever you picked up.

    Finally! Grocery store check outs suck. (The store is currently in beta and will not open to the general public until 2017.)

    But perhaps even more meaningful is all the data that Amazon will be collecting about our grocery shopping habits. This will scare some of you, I’m sure. But I can tell you that there are a slew of things that I buy regularly. And I bet that if you analyzed the data, the purchases would happen at fairly regular intervals: bananas every x days, orange juice every y days, etc.

    So once Amazon Go learns what I like to buy, I am sure that it will then start to try and sell it to me online, along with some sort of subscription. If it can assure me that the produce is fresh and the expiry dates are far out (if they’re not, I want to be able to take a picture and get a refund), then there’s probably a good chance that I, as well as others, could be converted to online food shoppers.

  • Laneway suites consultation

    I just got home from the Citywide Laneway Suites Consultation meeting that was held this evening at the Evergreen Brick Works here in Toronto. (I guess I do find time to go to public meetings.) 

    For those of you who are interested in laneway housing, or an equivalent housing typology, here are a couple of takeaways from the event.

    There’s political support. Councillor McMahon and Councillor Bailao were there voicing their support for laneway suites. Both see it as an opportunity to diversify the housing stock and increase the supply of affordable ground-related housing in the city.

    Laneway suites (in the context of this current groundswell) are being thought of as secondary suites – exactly like basement suites. This is a smart approach that gets around a number of the hurdles that laneway houses currently face in the city.

    Because of this, the idea is that both the main house and the laneway house will remain under the same ownership. No property severances. No selling off the back lot.

    Other than this, nothing was really put forward in the way of guidelines. The whole point of these public meetings is to solicit community feedback and then roll that into a set of laneway suite design guidelines that will allow these homes to be built “as of right.”

    Obviously there are a number of questions around building height; minimum lot size; window orientation (laneway and/or backyard?); maximum number of secondary suites on a property (would both a basement and a laneway suite be allowed?); and so on.

    The next step is a report that will get submitted to the city in the new year. So if you haven’t already, please complete this Lanescape survey. We’ll see where all of this goes, but right now you can certainly feel the momentum.

    I also don’t think this is a Toronto-specific topic. Many other cities have adopted similar policies and I am certain that many more will do the same in the future. 

  • I love work

    I spent this morning drafting the third post in my BARED blog series. First one, here. Second one, here. If any of you would like to be featured next, or know of someone who you think should be featured next, please send me an email or tweet.

    At this point, I need to move onto other things today. But I did want to mention a post that Ev Williams (Blogger, Twitter, Medium…) recently penned where he talks about keeping technology in check and the drain of being always connected.

    Here are two interesting excerpts:

    “I’ve spent the last 20 years breathing and building the internet. So I have a good sense for the benefits of always-available instant access and all it entails. I also have a strong appreciation for the drain being constantly connected can cause on your health and sense of well-being.”

    “Building companies requires a ton of work — and I love work. But I’ve also found that working 24/7 no longer produces the best work product or the best life experience (not that it ever did).”

    This really resonates with me, as I am sure it does for many of you. I like being always connected. I like waking up every morning and writing a blog post. I like saying yes to things. And I, like Ev, love work. 

    But it can be draining when your ambition seems to exceed your body’s ability to keep on going. And when that happens, you no longer produce your best work, which is the whole point. 

    So in the end, I think we all need these little checks and balances. Exercise is number one for me. It is well worth the time it takes. What do you do for balance?