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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  • Trust & attention

    Over the weekend I received a marketing email from a real estate company advertising their new mobile app. I didn’t download it.

    Nowadays, every company and brand seems to have a mobile app. If you don’t already have one for your organization, I bet many of you have thought about creating one. This is natural given how profound the shift to mobile has been.

    But I can’t help but feel like we are overestimating the kind of attention that many of these apps will receive. App usage is highly concentrated. We’ll spend hours on Instagram, but almost every other app in existence gets ignored.

    I love how marketer Seth Godin puts it: “the two scarce elements of our economy are trust and attention.” Attention is not scalable. Each of us have a finite amount of attention to give. And there’s lots of competition for it.

    At the same time – to borrow Godin’s thought process – a lot of people will sacrifice trust for the sake of attention. We overpromise because we become desperate. I mean, if you think about it, every company or organization is trying to figure out how to get you to pay attention to them.

    But I’d like to think that trust can also help you garner attention. Once I trust someone or some organization, I’m more likely to give them the time of day. They’ve earned it. And I feel like that’s where things are headed in today’s information economy.

    Trust and attention. Think about it. They’re pretty powerful things, no matter how you spend your days.

  • #WeTheOther

    We may not all agree on things like bike lanes and transit, but if there’s one thing that can generally unite a city it’s playoff sports. 

    I love the solidarity that it creates. You may have nothing else in common with the person sitting next to you at the bar, but suddenly you’re best friends because your team is winning.

    As I write this post, #WeTheOther is currently breaking the internet after CBS Sports ran a cheeky online poll asking: Who will win the NBA title? The four options were:

    1. Warriors
    2. Thunder
    3. Cavaliers
    4. Other

    For those of you who don’t follow basketball, there are only 4 teams left in the NBA playoffs right now! So in what was likely a deliberate snub to the Toronto Raptors, CBS conveniently obfuscated them in their poll.

    Here’s how Mayor John Tory quickly responded:

    What would sports be without the trash talking?

  • Rentberry brings open bidding to rental market in San Francisco

    A new startup out of San Francisco, called Rentberry, has just launched, allowing tenants to openly bid on rentals in the city. Think of it like a rental auction. Landlord lists property. And then tenants compete for it by submitting offers. 

    Not surprisingly – especially since we’re talking about San Francisco – there’s concern that this will do nothing but drive up the city’s already high rents.

    But I think the key detail is that the platform will make public the total number of applicants. As a tenant, it’ll even tell you how your credit score compares to those of the other bidders (presumably, so you can gauge how aggressive you might need to be on your bid).

    The real estate industry is rife with information asymmetries. So anything that improves transparency is something that catches my attention. If you’ve ever bought or rented a place in a competitive market, you know that one of the worst things you can hear from the broker is: “We have another offer.” (Even worse: “We have 12 other offers.”)

    It’s frustrating because it now means you’re competing. But even more frustrating is the fact that you have no way of assessing whether or not that statement is fact or fiction. Yes, I realize that there’s a code of ethics that’s supposed be followed, but you and I both know that games are played all the time.

    In fact, I think someone could easily make a full career out of just trying to correct the information asymmetries inherent in the real estate industry. Who knows what sort of impact they might be having on the market. So I’m excited to see how things pan out for Rentberry.

  • The birthplace of techno

    Detroit has been called the birthplace of techno. Beginning in the early 1980s – when the city was well in decline – the Detroit techno sound started to emerge, thanks to musicians such as Juan Atkins, Derrick May, and Kevin Saunderson. 

    Chicago had house music. And Detroit had techno music – among, of course, many other musical genres. But what I find fascinating about Detroit techno, in particular, was how it really reflected the ethos of post-industrial Detroit. It was high-tech. It was about machines. And it was obsessed with the future.

    Below is a clip from a 1996 French documentary called Universal Techno. Even if you’re not into electronic music, I think you should at least watch the segment starting at 1:40. I love how Derrick May talks about Detroit, and what should be this balance between the past and the future. It really reflects my own views on city building.

    [youtube https://www.youtube.com/watch?v=RSX_r0u3uzE?rel=0&w=420&h=315]

    If you can’t see the video, click here.

    I’m thinking about Detroit and its music because I’m headed there during Memorial Day weekend for the annual Movement Electronic Music Festival. It has been about 2 years since I was last in Detroit and so I’m excited to see the city in full swing.

  • What’s in a word? A lot.

    image

    One of the things I try to be aware of is the language that I use to describe things. Because the words and conventions we use can impact how we perceive things and they can also reinforce certain inherent biases. (I have a good friend who is an expert on this topic, so he has heightened my awareness.)

    For instance, I find that we tend to equate home and house. In other words, we’ll use the descriptors detached house and detached home interchangeably. And when we say that someone is a homeowner, it can sometimes, or often, mean that they have purchased a house.

    The same does not seem to be true for apartments and condominiums. Rarely do I hear people say that they live in an apartment home or a condominium home. It’s just an apartment or condo.

    This is meaningful because the emotionally charged word is home. It signifies a subjective (and usually comforting) experience, whereas the word house, I would argue, represents a building typology. And so by conflating the two, I often feel that we’re promoting a cultural bias that privileges houses as the ideal building typology. A true home is a house.

    The other word that I often think about in my business is unit. When we talk about multi-family buildings we often – and I’m definitely guilty of this – refer to each suite as a unit. We’ll say things like: “This is a 200 unit building and the unit mix is as follows…”

    Again, I am absolutely guilty of this. But at the same time, I often think about how this word, unit, is probably the furthest thing away from a home. Who wants to live in a unit? That doesn’t sound very pleasant. In fact, it sounds clinical. People want to live in a home. Now that’s a word with positive psychological associations.

    And so by reducing each home to a unit, I think it could be making us lose sight of the fact that each suite will eventually be lived in by someone who will then make it their home. Yes they can be considered a customer who are paying for a product (a great place to live), but I don’t think that should take anything away from its homeyness. 

    I live in a condominium and it is my home. What about you?

    Image: Flickr

  • Let there be light

    My condo has an east exposure. That means I get direct sun in the morning and no direct sun in the afternoon, once the sun has crossed over onto the other side of my tower.

    But a funny thing happens in the late afternoon and early evening. The sun reaches just the right angle and begins to reflect off the apartment across from me. That apartment is about 11m away.

    Once this happens, it then feels like I’m getting direct sun again. It floods my apartment. This may seem like a small thing, but I love it when this happens. It’s happening right now as I write this post.

    So I can only imagine what it must have felt like for the residents of Rjukan, Norway when they got their first taste of winter sun back in 2013.

    Rjukan is a small town of approximately 3,400 residents. It’s located about 2.5 hours west of Oslo and is situated within a deep east-west valley. 

    As a result of its geography, the town is cast in shadow for about half of the year, from September to March. The elevation of the sun is simply too low for direct light to reach down and into the valley.

    So what the town did was install a set of solar powered mirrors on top of the mountains. The mirrors – also called heliostats – track the sun and reflect it down into the town’s main square. Now the town gets winter sun.

    Interestingly enough, many residents opposed the mirrors before they were built. They viewed it as a frivolous expenditure. Petitions and Facebook pages were created. But now that the mirrors have been installed, most of the naysayers seem to have changed their tune.

    I think it goes to show just how important light is, but also how difficult change, of many varietals, can be.

    Image: Flickr

  • What it takes to unlock infeasible development land (and some thoughts on parking)

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    One of the questions that came up after my recent post about land pricing was: what is it going to take to develop underutilized land on the outskirts of city centers?

    So today I thought I would talk about a new development project that was also discussed at the Land & Development conference I recently attended. I think will begin to answer this question.

    The project today is known as the Rockport Weston Community Hub & Rental Building. And it’s going to include a community cultural hub, 26 live/work artist spaces, and 300 rental apartments. 

    It’s located in the Weston neighborhood of Toronto, which is designated as a “Neighborhood Improvement Area.” These are lower-income areas that the city considers to be “at-risk.”

    Given this, rents are naturally lower here than in other parts of the city, which means that it’s basically infeasible to develop here. There has been no large scale development in this community since the 1970s!

    To put some numbers to this, the developer said they were projecting rents somewhere around “two and a quarter.” So let’s assume for a second that the average apartment rents will be $2.25 per square foot. 

    At this rate, it means that a 600 square foot one-bedroom apartment will have a face rent of $1,350 per month. This may seem fairly high, but it almost certainly wouldn’t be enough to get a project like this off the ground under normal market conditions. At least, that’s the case here in Toronto with current cost structures.

    So what had to happen was a fairly complicated public-private partnership, which you can read all about here. But at a high level, there seems to have been 3 main economic factors that allowed this project to move forward:

    1) The developer was able to acquire the land for cents on the dollar. As I said in this post, land is expensive. So this helps a lot.

    2) The developer was able to make use of extra parking in an adjacent building. Assuming that underground parking could cost around $50,000 per stall, this is a huge cost savings.

    3) Lastly, the project is benefiting from the public invest made in the airport rail link that now quickly connects this site to both Pearson International and downtown Toronto.

    The moral of the story is that infeasible sites require some sort of subsidy or top up to make them work. Or, there needs to be an exceptional circumstance. Because if the rents aren’t there, nobody is going to build. It’s as simple as that.

    That said, here’s one idea…

    This discussion reminds me of a post I wrote a while back called, The hypocrisy of parking minimums. Frankly, I don’t understand why a city like Toronto still has parking minimums. If anything, we should have parking maximums.

    Underground parking is a huge cost that has to get carried by purchasers and renters in a new building. For example, let’s assume that 300 apartment suites would require 180 parking stalls (ratio = 0.6). Assuming $50,000 per stall, that’s a $9 million cost.

    So the second takeaway is that it’s probably time we took a good hard look at how we think about and plan for parking in our cities. Especially since the entire mobility space is being quickly disrupted.

    Image: Rockport

  • Towards a walletless society, almost

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    Today I am one step closer to not only going cashless, but also going walletless.

    This is going to be old news for those of you in the U.S., but yesterday, all 5 of Canada’s big banks signed on to Apple Pay. Before yesterday, you had to have an American Express credit card – which I do not have – to use Apple Pay in Canada. Now you can use a debit and/or credit card from these institutions.

    What’s great about Apple Pay is that it can be used anywhere that contactless, or tap, payments are currently accepted. And since this is pretty commonplace in Canada – more so than in the U.S. I think – Apple Pay can, at least in theory, be used almost anywhere.

    Being the early adopter and geek that I am, I went out for lunch today determined to test out Apple Pay. As I pulled out my phone to pay for lunch, the guy told me: “That’s not going to work. Other people have tried before.” But I tried anyway and, boom, it worked like magic. The transaction amount popped right up on my screen.

    I am pretty excited about this for a couple of reasons. 

    Firstly, it’s more secure. Apple Pay works in tandem with the iPhone fingerprint scanner. So even if I were to lose my phone, nobody would be able to charge anything to it. That’s not the case with a lost wallet. Anyone can tap a credit card to buy something.

    Secondly, Apple is working on allowing reward cards to be stored in its Wallet app. I am terrible about remembering to collect rewards and use gift cards, so anything that consolidates and simplifies is a positive in my view.

    Thirdly, I like to go to the gym and go cycling with just my phone and headphones. I don’t like carrying around my wallet. I’m always afraid that I might lose it or someone might steal it from a locker. So I try and leave it at home. Now I can do that and still pay for stuff – assuming my battery will last that long.

    Of course, it’ll be awhile until we can all really go walletless. I’m not aware of any significant push to digitize government IDs. But it will happen. (Does that mean there will be no more fake IDs for underage drinking?)

    As this transition happens, I can’t help but think of all the small businesses that only accept/use cash and probably hide some of their earnings. I suspect it’s going to be a lot harder to do that in the future.

    I’m also thinking about how transit agencies are going to have to quickly get onboard with this technology. Here in Ontario, we’re still rolling out a card-based payment system. And cards are about to disappear; perhaps sooner than most people think.

    Image: Apple

  • It sold for what?

    Today I spent the day at the Land & Development conference here in Toronto. If there was one running theme throughout the day, it was: “Holy shit, I can’t believe that X piece of land sold for $Y million. How will they (the developer) ever make the numbers work?”

    Outside of the real estate development community, there’s often the perception that developers are building everywhere and that there’s lots of land left in cities, like Toronto. When you see all the cranes in the skyline, it naturally seems like we’re building a lot. Things seem easy.

    But the reality is that it’s extremely difficult to find “land” in markets like Toronto and Vancouver. And by “land”, I mean properties that can be feasibly acquired/assembled, entitled, developed, and then brought to market. The way the speakers today spoke about land it’s as if it were a rare precious commodity.

    I say all this, not to complain about how tough things are, but simply to shed light on the process. A developer’s job is to take a piece of property and figure out a way to create additional value. But to do that, they need to find a suitable piece of real estate. “Land” is an input.

    This has implications for consumers, because inputs turn into outputs. And if one of the inputs is becoming scarcer, then it’s pretty safe to assume that the outputs, such as new housing, are also becoming scarcer.

  • Enemies of the High Line

    Despite not being the first example of infrastructural adaptive reuse, the High Line in New York has certainly kickstarted an urban trend. Cities all around the world now want their own “version of the High Line.”

    Philly is working on a new “rail park.” I toured the space last summer and it’s very similar to the High Line in terms of existing infrastructure. Rome and Toronto are both working on “under” spaces, which are beneath an old viaduct and elevated expressway, respectively. And the list goes on.

    But I think it’s worth remembering just how contentious the High Line was before it was built. For some people it was just an eyesore and a public safety hazard. Here’s a excerpt from a New York Times article dated 2002:

    “This is a terrific win for us,” said Michael Lefkowitz, a lawyer for Edison Properties, one of 19 businesses that own land beneath the High Line.

    Janel Patterson, a spokeswoman for the city’s Economic Development Corporation, said an agreement to share the $11 million cost of dismantling the High Line was being circulated among the property owners and the rail bed’s owner, CSX, of Richmond, Va. “It’s about eliminating a public safety hazard,” Ms. Patterson said, “but it’s also about enabling the city to move forward and better develop the area.”

    It’s also worth mentioning that former Mayor Giuliani supposedly favored demolition of the High Line. Former Mayor Bloomberg, however, did not:

    …Mr. Bloomberg said: "Today, on the West Side of Manhattan, we have an opportunity to create a great new public promenade on top of an out-of-use elevated rail viaduct called the High Line. This would provide much-needed green space for residents and visitors, and it would attract new businesses and residents, strengthening our economy. We know it can work … . I look forward to working with Friends of the High Line and other interested parties to develop a feasible reuse scenario.”

    The challenge with these sorts of things – that is, new ideas – is that we live in a world of proof and precedents. We want to see that it has been successfully done before, because, otherwise, we might be wrong. So now that New York has shown what is possible, it has cleared the way for other cities.

    Rethinking old infrastructure is a sound urban strategy. But we also shouldn’t forget that it’s less valuable to be right about something that every other city already believes to be true. The real value is created when you’re right about something that most other cities don’t yet believe.