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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  • Time-of-use electricity pricing is like congestion pricing for roads

    August 8, 2025 · View original

    At the risk of sounding obvious, pricing is fundamental to the functioning of markets. It determines profitability, it allocates resources, and it influences customer behavior, among other things. Take the example of electricity pricing.

    In Ontario, we use something called time-of-use (TOU) pricing. What that means is that electricity rates vary according to the time of the day and the time of the year. In the summer, the expensive peak usage period is the afternoon (because of air conditioning) and in the winter it’s the morning and early evening (because of heating and lighting when people are generally not at work).

    What this pricing strategy does is incentivize customers to change their consumption behaviours. Instead of doing laundry during a peak period, maybe you set a timer and have it run during a low-peak period. In other words, it helps to flatten the demand curve. This is valuable for utility providers because peak periods are more expensive to supply and they also create the risk of brownouts and blackouts. So you worry about peak demand.

    With this in mind, let’s now switch and talk about highway congestion. The parallels are almost identical, and yet, most highways are free to use, which means we do absolutely nothing to manage peak demand. Instead, we encourage the equivalent of brownouts where demand greatly exceeds supply, traffic crawls, and roads become practically unusable. Why is that? Why should highways be viewed any differently?

    In the case of highways, there are even alternatives such as transit (thought not always, of course). But if you need electricity from a monopolistic utility provider, you’re paying whatever rates they charge. As you might expect, the answer is not technical or economic. We know with 100% certainty that pricing congestion will reduce it. The reason we don’t do it is political. Free roads are preferred to functioning roads.

    Cover photo by Hooman R. on Unsplash

  • San Francisco is the new Silicon Valley

    August 7, 2025 · View original

    What I have learned from this recent New York Times article is that if you have a company with “AI” in the name — such as OpenAI, ScaleAI, Adept AI, Hayden AI, or Harvey AI — then you probably need to lease office space in an area of San Francisco (around the Mission District) that is now being called The Arena. Here’s a map from the article:

    The struggles of San Francisco’s office market have been well publicized. At the beginning of this year, San Francisco had the highest office vacancy in the US at approximately 27.8%. But beneath this headline, AI firms have leased more than 5 million square feet in the city since 2020. And CBRE is forecasting that AI-related companies will lease another 16 million square feet between now and 2030. So here comes the boom following the bust — which is the bipolar way in which San Francisco generally likes to operate.

    But what is also interesting is that, even in this brave new world of AI, blockchains, and remote work, agglomeration economies are alive and well. AI companies are choosing to physically cluster in The Arena because there are economic benefits to doing so. There are mountains of research to support the fact that it will make these firms more innovative and more productive due to knowledge spillovers. You don’t want to be isolated from your competitors — you want to be cheek by jowl. Physical proximity matters and, therefore, cities matter.

    So much so that the New York Times is now asking: What if San Francisco is the new Silicon Valley? In other words, could its center of gravity be right now moving from the suburbs to the city? That makes perfect sense to me.

    Cover photo by Josh Hild on Unsplash; map from the New York Times

  • Parked cars don’t move people

    August 6, 2025 · View original

    Most of the major streets in the older parts of Toronto look something like this:

    That is, the right-of-way width is 20 meters. The built form lining the street is retrograde. There are 4 lanes for driving cars (sometimes streetcars run in the two inner-most lanes). And 50% of the entire road is allocated to on-street parking. Now to be fair, on-street parking is usually prohibited during “rush hour.” So no stopping and parking during periods like 7-9am and 4-6pm.

    But I think this approach to traffic management has become far less relevant today. It made more sense when everyone was driving to an office for 9am and then leaving for the suburbs at 5pm. But today, people want to work from home so they can go to the gym at 11am, go grocery shopping at 1pm, and then get a perm at 3pm.

    What I find curious about these decisions is that bike lanes seem to get most of the blame for traffic congestion. We say things like, “nobody really bikes in Toronto except for the 2 weeks of the year when it’s nice. So we shouldn’t allocate valuable road space to them!” But very rarely do people seem to direct their frustrations toward the parked cars that sit on our roads for, what, ~83% of every day?

    One approach allows people to go places and the other is dedicated to storage and immobility. This also says nothing about the relative benefits of people biking: it’s objectively a more efficient way to move people, it can improve overall traffic flows by taking people out of cars, and it improves health outcomes (saving taxpayers money).

    This is not to say that bike lanes don’t also impact vehicle road capacity. But it’s a question of what’s most optimal for moving the greatest number of people. And I would bet you that on-street parking is far more disruptive to overall traffic flows than bike lanes. Parked cars, it turns out, aren’t very good at moving people across a city.

  • The Tate galleries in London have seen a 27% decline in patronage — is Brexit to blame?

    August 5, 2025 · View original

    Compared to 2019, the Tate galleries in London are seeing ~2.2 million fewer visitors, representing an approximately 27% decline in patronage. Much of this is coming from a decline in international/European visitors. They’re at 61% of pre-COVID levels, whereas domestic visitors are at 95%.

    One of the biggest groups to fall off has been young visitors (aged 16-24) from the EU. Between 2019-2020, the Tate Modern alone welcomed 609,000 people from this segment. By 2023-2024, this had dropped to 357,000 and it remains depressed.

    So now the Tate is cutting its staff and blaming two macro changes: the pandemic and Brexit. Though some people are arguing that it’s really because the programming has been too woke and stuff.

    In my mind, the Brexit excuse makes the most sense because it has clearly created additional friction. If you’re a school traveller in France and want to visit the UK, you now need to complete a school trip information form (I’m assuming this wasn’t the case before).

    And if you’re a student from any another country, you need a passport. In some cases you may also need a visa. So it makes sense that schools and teachers might say, “yeah, let’s make our lives easier and just stay within the EU.”

    Based on a very cursory review of how other cultural institutions are doing, this possibly checks out. In 2019, the Centre Pompidou in Paris welcomed over 3.2 million visitors and in 2024 it welcomed 3.2 million visitors. In 2019, the musée d’Orsay and the musée de l’Orangerie welcomed over 4.6 million visitors, and by 2023, this number had jumped to over 5.1 million.

    Could it simply be better programming? Yes, of course. But it’s hard to argue that erecting barriers to become more closed off from the rest of the world, won’t, you know, make you more closed off from the rest of the world. Here we’re just talking about one cultural institution in the UK. But the lesson scales.

    I’m thinking of you right now, America.

    Cover photo by Clifford on Unsplash

  • Cycling dramatically reduces the risk of dementia

    August 4, 2025 · View original

    Cycling is good for you. This much is obvious. But what might be some of the lesser known benefits?

    Here’s a fascinating study (that I discovered through Lloyd Alter’s blog), which looked at the association between active travel modes and brain health — specifically dementia risk. For this study, the researchers analyzed nearly 500,000 people in the UK and then tracked them for a median period of 13.1 years. How people got around was classified according to the following groups: non-active (like driving or taking public transit), walking only, mixed-walking, and cycling and mixed-cycling. This latter category is meant to capture people who cycle exclusively and who mix it with other forms of mobility.

    Based on this, the researchers uncovered these cycling benefits compared to non-active travel:

    – 19% reduction in all-cause dementia – 22% reduction in Alzheimer’s disease – 40% reduction in young-onset dementia – 17% reduction in late-onset dementia

    Cycling was by far the best performing category. Why is that? Well, exercise in general is good for brain health. It increases blood flow and oxygenation to the brain, decreases cortisol levels (stress hormone), and reduces anxiety and depression, among many other beneficial things. But perhaps the most important feature for this particular discussion is that it’s simultaneously a physical and cognitive activity. In other words, it’s exercise, but your brain also has to do a lot of other stuff like balance the bike, avoid obstacles (such as car doors being flung open), and generally navigate an environment with many stimuli.

    This gives new meaning to biking for brain health. And it reinforces the case that bike lanes are actually one part mobility infrastructure and one part public health initiative.

    Cover photo by Mak on Unsplash

  • Clean, cool, and reasonably priced

    August 3, 2025 · View original

    YouTube video

    Here’s a recent video from The Wall Street Journal talking about the “secrets behind hotel design.” It’s interesting in that it gets into some of the ways in which designers are shrinking hotel rooms and then making up for it with amenities. This is a strategy you’ll find in many other real estate asset classes ranging from multi-family housing to co-living.

    But if you scroll through the comments, you’ll see that the responses are overwhelmingly negative. In fact, I was hard pressed to find any positive ones. Most people simply don’t like the idea of hotel rooms shrinking and of not having the same amenities. This is not surprising. The comments are similar to what you’ll hear people say about shrinking condominium suites.

    At the end of the day, though, the strategy outlined in this video is designed to cater to a very specific market: young travelers (roughly 25 to 40 years old) who want to stay somewhere fun and social — and at a reasonable price. Room size is the lever that helps bring rates down. But it’s not for everyone, and that’s why hotel companies have so many different brands in their portfolio. It’s so they can precisely target different customers and types of travel.

    Speaking from personal experience, I can tell you that my wife and I have stayed in numerous hotels where the entire room was basically just the bed. Here’s Tokyo from this past winter. And in one particular hotel in Paris, there wasn’t even enough space for me to fully open my carry-on suitcase. If I wanted to open and close the window beside our bed, I had to first close my suitcase.

    I’d happily stay there again. The place was well-designed, clean, had good bathroom products, was in a great location, and the pricing was reasonable, especially for Paris. As a hotel customer, I consistently value design and experience over square footage. And the market suggests that I’m not alone. Cool and reasonably priced is often a winning strategy no matter what industry you’re in.

  • The information asymmetries of the real estate industry

    August 2, 2025 · View original

    Touring and generally looking at buildings is, in my opinion, an important part of being a developer. Whenever I tour a project, I always learn something new. Because invariably, someone will say something like, “the building inspector made us do X.” Immediately after you then email all of your project teams and ask them if they’ve run into this same problem. And then, hopefully, you’re a little bit better than the last project.

    This kind of knowledge transfer is a good thing, but I also think it’s a reminder of just how opaque and fragmented information is within our industry. There’s a lot of information and experience that simply isn’t stored anywhere, other than in someone’s head or deep on someone’s hard drive never to be found ever again.

    Sometimes it might be part of a firm’s competitive advantage and they don’t want to share it with others. That’s fair. But in my experience, most people in this industry are more than happy to share what they know and where they’ve made mistakes. It helps us all get better. But might there be a more effective place to share this knowledge beyond individual conversations, conferences, building tours, and group chats?

    There has to be. And my prediction is that it will eventually live on a blockchain.

  • When should foreigners be allowed to buy homes?

    August 1, 2025 · View original

    Given how nice it is outside right now, some of you may be forgetting that Canada does have winter. And it is largely because of winter that we are the biggest foreign buyer of homes in the state of Florida (and the US as a whole for that matter). In 2024, Canadians bought over $2.4 billion worth of homes in Florida. And between April 2023 and March 2024, it is estimated that Canadians accounted for nearly 25% of all foreign home sales in the state (this is according to the National Association of Realtors).

    Because of this strong demand, I would imagine that many and perhaps even most Canadians would tell you that being allowed to buy a home in the US — or elsewhere in the world — is a nice freedom to have. (Although demand is waning because of the strong US dollar and because of the current geopolitical climate.)

    If we flipped this around and asked Canadians whether foreigners should be allowed to buy homes in Canada, I suspect that we might get a different leaning. And that’s why there is the Prohibition on the Purchase of Residential Property by Non-Canadians Act (which is currently set to expire on January 1, 2027). This was and likely still is the politically popular thing to have in place.

    Now, it could be the case that these two groups are mutually exclusive. In other words, the people who own homes outside of Canada (a small minority) do not overlap with the people who support a ban on foreign buyers (the majority). And so when looked at in aggregate, the majority of Canadians do in fact want this ban. That said, I would not be surprised if Canadians buy more homes abroad than foreigners buy homes in Canada, which would make our current policies, at the very least, mildly hypocritical.

    Whatever the case may be, it is in the news this week that some of the largest builders in British Columbia have just sent a letter to our governments arguing that the foreign buyer ban and BC’s foreign buyer tax need to be reconsidered — or modified to something that resembles Australia’s model. (Australia restricts foreign ownership to newly constructed homes and pre-sales. Foreigners can’t buy resales.) The letter was signed by 25 companies including developers like Amacon, Beedie, Strand Development, and Westbank.

    At the very least, I think there’s a strong argument to be made that pre-construction and new home sales should be exempt from the ban. Most people probably don’t appreciate that developers rely on pre-sales to finance the construction of new homes. It is significantly more challenging for end users to buy in this same way given how long projects take. We can certainly have a conversation about whether this is the optimal financing approach, but it is the way things work today.

    So my view is this: If foreign capital wants to finance new housing and help increase our overall housing supply, that’s a good thing. Let’s take their money and use it to build lots more homes for Canadians. With this approach, foreigners won’t be competing for our existing housing stock and, over the longer term, it is likely that most of these pre-sales will end up as new rental supply or as a resale home for Canadians.

    The alternative is building fewer new homes, waiting until there’s a worse housing shortage, and then turning the industry back on to deliver new homes in 5-7 years.

    Cover photo by Denys Kostyuchenko on Unsplash

  • NYC introduces European-style on-street garbage containers

    July 31, 2025 · View original

    Let’s talk some more about garbage.

    Manhattan Community District 9 has just become the first neighborhood in New York City to containerize 100% of its trash. This is being done through a pilot program that now requires all residents to dispose of their trash into either an individual bin (the kind you’ll find in most cities) or a new “Empire Bin.” Empire Bins are required for buildings with more than 31 units in the pilot district. Properties with 10-30 units can choose whichever bin they want. And properties with fewer than 10 units have to go with the smaller individual bins.

    The new Empire Bins look like this.

    > Tweet: As a New Yorker, these made me way more excited than I should be https://t.co/yRzRn5O9YJ

    These are stationary bins that live on the street and take up about half a parking space each. Each bin is also assigned to a specific property and can only be accessed by building staff using an access card. So these are not general purpose bins. In the pilot area, there are some 1,000 bins, replacing hundreds of parking spaces. And if this were to be expanded citywide, it is estimated that it would require the removal of more than 50,000 on-street parking spaces.

    In this instance, the use case is different than what we spoke about last week. The problem is not that large garbage trucks are taking up too much space inside of main street buildings. The problem is that these spaces don’t exist, and so NYC has had to default to an approach that is remarkably efficient for fostering a vibrant rat population: collect rat food, place it in easily accessible plastic bags, and then set it out on the street like a buffet.

    These efforts are about containerizing the city’s trash. And yeah, that makes a lot of sense.

  • How should we plan for a world of ubiquitous data centers?

    July 30, 2025 · View original

    As you know, Northern Virginia is now referred to as “data center alley.” It has, by far, the largest agglomeration of data centers in the world. The latest figures are somewhere around 200 completed facilities and some 49 million square feet, with a lot more in the pipeline.

    Here’s the global top 10 list via Bloomberg:

    And here’s a map of existing (blue) and proposed (purple) data centers via Loudoun County, Virginia:

    This has been an economic boon for Virginia. It’s estimated that the data center industry contributes up to 74,000 jobs and $9.1 billion in GDP to the state each year. But along with these benefits come some trade-offs, one of which has to do with the region’s built environment.

    Here are two zoom-ins of an area to the west of Dulles International Airport:

    These maps raise a question that is only going to become more important as time goes on: What’s the best way to insert large insular boxes into the fabric of a city or suburb? Of course, in some ways, this is not a new phenomenon. The suburbs are no stranger to this kind of built form.

    But it’s unique in that these boxes are not meant to be experienced in real life. They’re a physical manifestation of our online activities, juxtaposed against our offline lives. It’s two different worlds colliding. And already, it may be more appropriate to ask our question in the opposite direction: What’s the best way to plan a city or suburb around data centers?