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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  • The master plan

    I’m going through and dissecting Elon Musk’s second “Master Plan” this morning. 

    I love how he drops earth-shattering news in such a casual and honest way. Two days ago he tweeted that he was planning to pull an all-nighter to complete the “master product plan.” And then yesterday, he outlined his vision in a simple – and at times personal – blog post for how Tesla is going to change the world. It all feels very genuine.

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    There are so many interesting snippets from the master plan, that I’m simply going to quote them all here. There’s lots to think about and discuss.

    A reminder of the broader vision:

    The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippy thing – it matters for everyone.

    By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse. Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better.

    The solar roof and other electric vehicles that Tesla has in the pipeline:

    Create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app.

    In addition to consumer vehicles, there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport. Both are in the early stages of development at Tesla and should be ready for unveiling next year.

    Thoughts on self-driving vehicles:

    Even once the software is highly refined and far better than the average human driver, there will still be a significant time gap, varying widely by jurisdiction, before true self-driving is approved by regulators. We expect that worldwide regulatory approval will require something on the order of 6 billion miles (10 billion km). Current fleet learning is happening at just over 3 million miles (5 million km) per day.

    The most important reason is that, when used correctly, it is already significantly safer than a person driving by themselves and it would therefore be morally reprehensible to delay release simply for fear of bad press or some mercantile calculation of legal liability.

    Once we get to the point where Autopilot is approximately 10 times safer than the US vehicle average, the beta label will be removed.

    Why an even lower cost vehicle (compared to the Model 3) may never be necessary:

    You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.

    And finally, Uber has a new competitor (that, to me, is a good thing):

    In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are.

    I’ll provide my thoughts on all of the above in a subsequent post. I’m out of writing time for today.

  • Within-city house price gradients

    The Federal Housing Finance Agency recently published a working paper where they looked at within-city house price gradients for a selection of US cities over a 40 year period. The goal of the study was to address what they call a “persistent blind spot” in local house price measurements.

    Here is their diagram showing annual average real appreciation from 1990 to 2015 for 9 US cities: 

    The darker areas indicate more appreciation. They are generally clustered around each city’s CBD.

    And here is an excerpt from the paper’s conclusion:

    “In an area with a highly elastic housing supply, a permanent housing demand shock is first capitalized into prices, but over time as quantities adjust, prices return to pre-shock levels (see Glaeser, Gyourko, Morales,
    and Nathanson, 2014). In contrast, near the CBD, where buildable sites are less available and regulation is presumably more onerous, a permanent demand shock can outpace supply responses, leading to permanent price increases.”

    What stood out for me was this last sentence. It’s a reminder of the perfect storm that many cities now find themselves in.

    When everyone wanted to live in the suburbs, it was fairly easy to just build more homes. Supply was relatively elastic. And this kept prices in check.

    However, the same is not true for city centers. Supply is relatively inelastic, meaning it’s much harder to build more homes when demand increases. And demand has been increasing.

    So what we have today is a situation where many central cities are operating with basically a perpetual supply deficit. Hence the the comment about “permanent price increases.”

    I don’t want to oversimplify the situation, the potential solutions, and/or the well-documented mistakes, but there was arguably a middle class price benefit to mass produced sprawl.

    What should we be doing today to address housing affordability concerns?

  • What I’m doing next

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    A number of you have asked if I’m moving to New York. I can see why that was inferred from some of my posts, but that was actually not my intention. I am not moving to New York. (Sorry New York friends. I’ll visit soon.)

    Toronto is home base. I hope it’s clear how much I love this city. Sure, I’m a big fan of New York and Miami and Vancouver and Berlin and Tokyo and Jackson (to name some of the places I have on my phone’s weather app), but I made a deliberate choice to station myself here.

    Because unlike some of the other industries I write about on this blog, city building is hyper local. What I do involves the built environment. And that doesn’t generally happen via a laptop on a beach in Bali (at least not for extended periods of time).

    It happens by being on the ground, interfacing with local communities, meeting face-to-face with the city, and poring over drawings with smart people who know far more about their respective disciplines than I ever will. It is a collaborative and local effort. It’s about getting into the details.

    And so to be successful in this business, I think it helps to find a home and take long bets. I’m not saying that I will never work on projects in other cities (I have and I would), but I am saying that I’m not moving to New York right now and that home remains Toronto.

    On that note, here’s what I have to tell you. Later this year I’ll be joining Slate Asset Management as VP of Development.

    A bit about Slate:

    Slate is one of the most active acquirers, owners, and managers of real estate in Canada right now. Founded in 2005 by two brothers (Blair and Brady), Slate has over $3 billion of assets under management across over 16 million square feet and over 130 properties.

    All of this is done through four main investment vehicles: 

    1) The first is Slate Advisors. It acts on behalf of and alongside private institutional investors — such as Greystone.

    2) The second is Slate Office REIT (TSE:SOT.UN). It is a pure play Canadian office REIT focused on downtown and suburban properties all across the country.

    3) The third is Slate Retail REIT (TSX:SRT.U). It is a pure play REIT entirely focused on grocery-anchored U.S. retail properties. (Remember how many times I’ve written on this blog about how grocery has one of the lowest online shopping penetrations?)

    4) And the fourth: Slate is also starting a grocery-anchored retail platform in Germany. It is similar to #3, except that it’s in Germany.

    Most recently, Slate has been in the news because of the position it has taken at Yonge + St Clair in midtown Toronto — a perfect example of “finding a home and taking long bets.” Slate, in partnership with Greystone, owns all 4 corners of the intersection and about 60% of the properties along the St. Clair corridor.

    Here’s a diagram of those Slate buildings:

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    In case you didn’t put two and two together, the 8-storey mural I wrote about two weeks ago is going up (right now) on the side of a Slate building (1 St Clair Avenue West — shown above). The British street artist known as Phlegm is doing it.

    Up until today, the focus of Slate has largely been on acquiring undervalued / overlooked real estate and creating value through re-leasing and overall repositioning. That will certainly continue. But given what I do, I am sure you can posit what’s also next.

    I’m genuinely excited to be joining such a talented group of real estate professionals. As I mentioned last week, I wasn’t in the market for anything new. I was heads down working on cool projects. But life happens. And Slate quickly demonstrated to me that the incredible success they have seen to date is precisely because of how progressive, nimble, and entrepreneurial they are.

    On that note, I have “one more thing” to share today.

    In parallel to all of this, and with the support of Slate, I am also starting a boutique city building company called Globizen. The name is derived from Global + Citizen.

    The objective is to build a company that embodies everything I write about on this blog. I want it to be lifestyle and design-driven. I want it to leverage technology to improve the way that cities and the building industry operate. And I want it to function as a vertically integrated real state + design firm, focused on sustainable urban infill development. Think of it as city building by and for the responsible global citizen.

    It’s still early days, but the thinking is that this new platform could compliment the larger Slate platform in some way. It’s too early to say how exactly, but everyone is open to having those discussions. And that’s what matters at this stage.

    I am going to end with a quote. It’s by Partner and Co-Founder, Blair Welch:

    “On all of our deals we have had people say ‘can’t’ to us. They say ‘Can’t be done, can’t do that, can’t raise money, etcetera.’ At Slate, we don’t do ‘can’t’ well.”

    I like that a lot. So here’s to finding a home, taking long bets, and not saying can’t. Onward my friends. 

  • Urban pet peeve: copycatting

    One of my biggest pet peeves is when cities copy things from other cities. 

    Let me give you an example. Whenever I see one of those red double decker tourist buses roaming around Toronto, I always look to see if it’s the type that has London signage and destinations plastered all over it. And when it is, I cringe. (I saw one earlier today.)

    Why would anyone design a tourist bus that makes you feel like you’re half in another city? I don’t get it. The whole reason people are getting on that bus is because they’ve come to visit this city. It should make you feel like you’re here and nowhere else. It should feel locally authentic.

    To be clear, I’m not saying that we shouldn’t be learning from other cities and building on top of other’s great ideas. That’s precisely what we should all be doing. I’m talking about kitschy copies with little additional thought put into them. And I can think of many examples beyond just tourist buses.

    Am I just being pedantic?

    What about you? Any urban pet peeves?

  • If man had developed a third arm, where might this arm be best attached?

    Roman Mars of 99% Invisible recently published an excellent episode called The Mind of an Architect. It has to do with a set of research studies completed in the late 1950s by an organization at the University of California, Berkeley known as the Institute of Personality Assessment and Research (IPAR).

    IPAR was founded by a personality psychologist named Donald MacKinnon. He initially worked for the precursor to the CIA and founded IPAR with the intent of studying “combat readiness and efficiency.” But over fears of how creative the Soviets were getting, the focus of IPAR shifted to instead studying creativity.

    And architects were deemed to be an ideal test subject (from 99percentinvisible.org):

    “Researchers saw architects as people working at a crossroads of creative disciplines, a combination of analytic and artistic creativity. As professionals, architects had to be savvy as engineers and businessmen; as aesthetes, they also acted as designers and artists.”

    So over a series of weekends in the late 1950s, some of the most celebrated minds in architecture – including people like Philip Johnson, Richard Neutra, and Louis Kahn – were studied and picked apart. 

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    They were asked to do quick sketches, create mosaics, and they were asked questions such as this one: “For the next 45 minutes we would like you to discuss this notion: if man had developed a third arm, where might this arm be best attached?”

    In the end, here’s what they concluded:

    The researchers began to notice certain patterns across creatives of all professions and genders, including a tendency to nonconformity and high personal aspirations. They also found many creatives shared a preference for complexity and ambiguity over simplicity and order. Creatives could make unexpected connections and see patterns in daily life, even those lacking high intelligence or good grades.

    In short: IPAR found that creative people tend to be nonconforming, interesting, interested, independent, courageous and self-centered, at least in general. Many of these traits may seem obvious today, but they were not necessarily obvious prior to these studies. Back when their tests were being conducted and findings presented in the 1950s and ’60s, the very idea of a “creative personality” was a novelty in academic and public discourse.

    The findings may not be groundbreaking to us today, but the documents and recordings produced during the study are certainly interesting. If you’re into this topic, there’s also this book you can pick up.

    Oh, and if we are to have a third arm, I would like mine to run almost parallel to my existing dominant arm (right). That way I could double up on my most potent dexterity. It would also be far less intrusive than an arm on one’s head or in the middle of one’s back. Then again, it would ruin our symmetry as humans. And perhaps that third arms need to be celebrated instead of being masked.

    What would you suggest?

    Image: Institute of Personality and Social Research, University of California, Berkeley / The Monacelli Press (via 99% Invisible)

  • How sexy is your city?

    I recently penned an article for Building Magazine called How Sexy Is Your City? The subtitle is: The next generation of talent will require cities to take a next generation approach to city building.

    I know that we’re all hitting our limit in terms of people talking about millennials, so I’d like to reassure you that – excluding the actual article tag – the word “millennial” only shows up twice in the piece. 

    I also don’t write long-form articles very often. I’ve had people suggest that I do that periodically on this blog, but I find the time commitment to be exponentially greater than for the short, glib pieces I usually write here. 😉

    So if you can bear two more instances of the word “millennial” and you’ve been looking for something longer, you are in luck. Also, if you’d like to subscribe to Building, you can do that here.

    Image: Doublespace Photography via Building

  • Rinse and repeat

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    Venture capitalist Matt Turck has a post up on his blog that is packed full of information about the New York City tech ecosystem. (He has also written similar posts about Berlin and Paris.)

    His overall thesis is that New York – as a startup/tech hub – is only now starting to catch up to the hype of 4 or 5 years ago. He now refers to NYC as the de facto Number 2 after the Bay Area.

    If you’re interested in all of this, you can go read his full post. But I would like to pull out 2 points. The first is about the “rinse and repeat” cycle that happens over time that allows cities to become substantive startup hubs:

    As any student of emerging tech ecosystems knows, the key dynamic to success is the “rinse and repeat” cycle. You need several waves of successful tech companies to go through the whole cycle of founding, financing, scaling and significant exit.   Post-exit, the hope is that successful founders, employees and investors then contribute back both money and expertise to the next generation of tech startups, a few of which eventually become highly successful themselves and then provide money and expertise to the following generation.

    The trouble is, each successive cycle takes years, because the average successful startup takes 5 to 10 years to get to a large exit.

    One key reason the Silicon Valley has become such a powerful network is that this “rinse and repeat” cycle has been happening there for decades, at least since the 1940s and 1950s (Hewlett Packard), with a real acceleration in the 1970s and 1980s (Apple IPO, founding of Kleiner Perkins, etc).

    I’ve written about this idea before, but didn’t refer to it as “rinse and repeat.” I’m thinking about adopting that terminology going forward.

    The second is a list of New York-based startups. Matt uses it as an example of how entrepreneurial activity in New York is operating across a broad cross-section of different industries. That’s an important characteristic to identify.

    However, I also thought you might find it valuable to see what startups are out there, particularly if you happen to work in one of the below verticals/horizontals. I certainly went right to the real estate line.

    Fintech: Betterment, IEX, Fundera, Bond, Orchard, Bread
    Health: Oscar, Flatiron Health, ZocDoc, Hometeam, Recombine, Celmatix, BioDigital, ZipDrug
    Education: General Assembly, Schoology, Knewton, Skillshare, Flatiron School, Codecademy
    Real estate: WeWork, HighTower, VTS, Compass, Common, Reonomy
    Enterprise SaaS: InVision, NewsCred, Sprinklr, Namely, JustWorks, Greenhouse, Percolate, Mark43, Movable Ink
    Commerce infrastructure: Bluecore, Custora, Welcome Commerce
    Marketplaces: Kickstarter, Vroom, 1stdibs
    On Demand: Handy, Via, Managed by Q, Hello Alfred
    Food: Blue Apron, Plated, Maple
    IoT/Hardware: littleBits, Canary, Peloton, Shapeways, SOLS, Estimote, Dash, GoTenna, Raden, Ringly, Augury, Drone Racing League
    AR/VR/3D: Sketchfab, Floored

    I was happy to see my friends at Floored in the above list. They are under AR/VR/3D, but they service the real estate industry.

  • Two open real estate development positions

    I recently alluded to some life changes on this blog. Well, I am now ready to share: I am leaving my development position at CAPREIT.

    I wasn’t intending to leave. I wasn’t looking to leave. And frankly, I felt conflicted. But sometimes life has a funny way of presenting opportunities that you just have to say yes to. As my mother likes to tell me: “Life is what happens to you while you’re busy making other plans.” More on this in a later post. Stay tuned.

    What I would like to talk about today are the opportunities that this may create for some of you. There are now two open development positions at CAPREIT. Both positions would be based in downtown Toronto (St. Lawrence Market).

    The first opportunity is essentially a Director level role where you would be responsible for growing the development team at CAPREIT. You should be able to lead a team, identify new development opportunities, create pro formas, assemble/manage consultant teams, secure development approvals for complex urban infill sites, and generally lead projects and people through the entire development lifecycle. For more information and to apply, click here.

    The second opportunity is at the Coordinator level. You would be reporting day-to-day to the above person and you should have working knowledge of the development process. For more information and to apply, click here.

    I would just like to add that in both cases you would be working on some very exciting urban infill projects and you would be joining an organization with great people and a great corporate culture. I mean this sincerely. If you have any questions about the two roles, feel free to reach out to me directly. And if you’re in the market, consider applying.

  • View From A Blue Moon

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    I don’t surf. I would like to learn, but I haven’t yet done that. I snowboard. That’s my thing. It’s what I look forward to doing every single winter. 

    But even as a non-surfer, I can’t begin to tell you how much I enjoyed the movie View From A Blue Moon. A friend told me about it last weekend and I immediately rented it on my Apple TV. (That’s the only thing I have to watch things.)

    It’s a movie about John Florence, who is arguably the world’s best surfer right now. He’s from Hawaii. But in addition to John’s incredible surfing abilities, it’s the cinematography and soundtrack that make this movie so special. 

    As soon as the movie ended, I immediately went on Soundcloud to find all of the songs. Quentin Tarantino once said that when you pick the right song for a particular scene/movie, you can then never listen to that song ever again without thinking of the movie. That’s how I now feel about this song.

    Here’s the trailer (apparently it’s the first surf movie filmed entirely in 4K):

    [youtube https://www.youtube.com/watch?v=bTqVqk7FSmY?rel=0]

    If you’re at all interested, I highly recommend you give it a watch. There are also some great urban shots for all of the city geeks who read this blog. Let me know what you think if you end up watching it or if you’ve already seen it.

    Image: View From A Blue Moon

  • White and minimal

    The Douglas House by architect Richard Meier was just designated by the National Register of Historic Places. The house was originally designed in the late 1960s for Jean and Jim Douglas of Grand Rapids, Michigan. But it was more recently restored by Marcia Myers and Michael McCarthy. They purchased the tired property in 2007 and apparently had architecture professors knocking on their door shortly thereafter.

    Here is a beautiful photo (via Curbed) by James Haefner courtesy of the Michigan State Historic Preservation Office:

    I love the positioning of the house within the landscape. In fact, it’s built into such a steep slope that you actually enter the house at roof level via a bridge. However, once inside, you’re then able to look down to the living and dining areas, as well as out to the sundeck overlooking Lake Michigan.

    Interestingly enough (according to designboom), the Douglas family had originally purchased a lot for their new home in a residential subdivision. But when the developer of the subdivision prohibited them from working with a stark Modernist like Richard Meier (those damn developers), they decided to sell the lot and look for something else. Above is what they ultimately decided on.

    I’m glad they stuck to their guns. Otherwise this house probably wouldn’t exist today. And that would be a shame. I’ve always liked the work of Richard Meier. It’s always white and minimal and I like white and minimal. Simplicity can be surprisingly difficult to achieve. As the saying goes: “If I had more time, I would have written a shorter letter.”