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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  • Medellín wins 2016 Lee Kuan Yew World City Prize

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    Thanks to my friend Darren Davis, I just recently learned about something called The Lee Kuan Yew World City Prize.

    Named after Singapore’s first Prime Minister, the prize is a biennial award that honors cities who have made, “outstanding achievements and contributions to the creation of liveable, vibrant and sustainable urban communities around the world.” Along with the prize comes $300,000 (Singapore Dollars), which is about $287,000 Canadian as of today.

    The 2016 Prize Laureate is Medellín, Colombia.

    Over the past two decades, the city has transformed itself from one of the most dangerous cities in the world to one that has become a model for social inclusion and urban innovation. Here is a video that talks about the transformation. It’s a bit cheesy, but it does provide a high-level overview of their urban initiatives. A lot of them will serve as a reminder about the importance of urban connectivity.

    If you’re a regular reader of this blog, you may also remember that my good friend Alex Feldman (VP at U3 Advisors) wrote a guest post about Medellín after he visited the city for the World Urban Forum almost two years ago. That post was called, What cities could learn from Medellín.

    It’s worth mentioning that the runners-up for this year’s World City Prize were Auckland, Sydney, Toronto, and Vienna. In the case of Toronto, our “far-from-ideal transit” was specifically called out as a negative. Thankfully we are now working on road pricing, which will provide additional funding for transit. 😉

    Image by Jorge Gobbi

  • Fun Friday: Saltz, Zurich

    Earlier this month a new restaurant – called Saltz – opened up in Zurich’s historic Dolder Grand Hotel. (The building was originally built in the late 19th century, but an extension was added in 2008 by architecture firm Foster + Partners.) 

    Designed by artist Rolf Sachs, the 280 square meter restaurant is fitted out with an eclectic mix of unusual materials: neon, salt, rock, climbing rope, felt, and so on. And everything is intended to relate back to Swiss culture in some way.

    The interiors caught my attention as I was browsing through the press release this morning, so I have decided to post a few photos. All of the photography is by Nico Schaerer, courtesy of The Dolder Grand and artist Rolf Sachs.

  • Thoughts on inclusionary zoning

    Ontario is looking to pass legislation that would allow municipalities in the province to implement something known as inclusionary zoning. If passed and should municipalities decide to use this tool (Toronto almost certainly would), developers would then be required and/or incentivized to include some percentage of affordable housing in their new market rate developments. 

    Politically, inclusionary zoning tends to be popular. It’s believed to be a way for governments to create new affordable housing using relatively small public subsidies. Not surprisingly though, the development industry generally hates IZ. It’s another cost that needs to be added to the development pro forma – though some municipalities rightly offset these additional costs with additional density, breaks on levies, and so on.

    What I always think about when this topic comes up is the broader economic impact of the land use policy. Because I’m suspect that it’s as simple as: mandate affordable housing; get more affordable housing for free. Generally there are always trade-offs.

    So here’s some reading material for you all this morning.

    In a classic paper (1981) by Yale Professor Robert C. Ellickson – called The Irony of Inclusionary Zoning – he argues that these practices can actually increase general house prices:

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    As a counterargument Owen Pickford over at The Urbanist argues that IZ simply reduces land prices as a result of the new tax. Land, after all, is the residual claimant. Therefore, he believes it’s an effective affordable housing policy. (I’m not so sure I believe that land prices would decrease in practice.)

    There’s also debate about the effectiveness of inclusionary zoning to actually deliver affordable housing at a meaningful scale. City Observatory wrote a post that looked at the total number of units produced (through IZ) across a number of American cities and the results were spotty. It should, however, be noted that not all inclusionary zoning policies are mandatory.

    Finally, the Furman Center for Real Estate & Urban Policy at New York University published a housing policy brief back in 2008 that looked at this exact topic. While they admit that the data is scarce, they come to the conclusion that IZ had no meaningful impact on the prices and production of single-family housing in San Francisco, but that IZ seems to have slightly decreased production and slightly increased pricing in the suburbs of Boston.

    What this last point suggests is that inclusionary zoning policies are not all created equal. So like all difficult questions, the answer to this one is likely: it depends. If anyone can point me to better data on inclusionary zoning, I would love to see it.

  • Toronto exploring road pricing on downtown highways

    Road pricing is on the table in Toronto. (Somebody has to fund the expensive Gardiner Expressway East rebuild.) On March 11, 2016, the City issued a Request for Proposal for: “Options for Establishment of Toll Facilities on F.G. Gardiner Expressway/Don Valley Parkway.”

    As a vocal supporter of road pricing, I am happy to see us headed in this direction. And I bet that today’s post will just be the beginning of my ruminations on this topic.

    Because naturally, it raises a lot of questions:

    Should the pricing be fixed or variable? Similar to how Uber’s surge pricing model is intended to ensure that there are always enough drivers on the road, should our road pricing model strive to eliminate traffic congestion by increasing the price of the road as demand rises beyond road capacity? I like the idea of a “congestion charge” rather than just a road toll. There’s something very efficient about it.

    Who should pay? Should anyone and everyone who uses the road pay? Or should it just be be non-Toronto residents who aren’t already paying property taxes in the city? I would imagine that this latter scenario would be easier for Toronto politicians to get behind, since there will obviously be a segment of people who flat out don’t want road tolls/pricing. But if we stick with the principle that it’s a “congestion charge”, then everyone should pay. It doesn’t matter where you live when you are demand trying to exceed the available supply of road.

    (I’m running a Twitter poll right now with this exact question. At the time of writing this post, “everyone should pay” is winning.)

    Should electric vehicles be exempt from the road tolls or congestion charges in order to help accelerate our transition away from fossil fuels? With Tesla getting ready to announce its mass market Model 3 (price $35,000), I’ve been thinking lately that the car I currently own may very well be the last gasoline car I ever own.

    It’s still early days for road pricing and our mayor doesn’t seem to be a fan. So who knows how far we’ll get with this RFP. But I for one hope that we find the courage to make the difficult decisions and that this new revenue stream is leveraged for the purpose of building more sustainable forms of urban transport in this city. 

    Let’s make a 50 year decision and not an election cycle decision.

  • The value of a millisecond

    I’m reading a book right now called Flash Boys: A Wall Street Revolt. 

    One of my graduate school buddies recommended it to me on one of our annual ski/snowboard trips and I’m finally getting around to reading it. I’m only about half way through it, but I’m enjoying it so much that I have decided to write about it today.

    One of the protagonists in the book is a Toronto-native by the name of Brad Katsuyama. That’s probably one of the reasons I like it – although Michael Lewis makes all Canadians out to be overly polite and well-behaved. Is that what we’re like?

    The other reason I like the book is that a lot of it actually has to do with geography. Technology and the internet were supposed to make cities and location irrelevant. But as Flash Boys argues, location and physical connectivity matter a great deal in the world of high-frequency trading. Each millisecond matters.

    To illustrate this point, the book starts by describing the construction of a $300 million, 827-mile cable running as straight as humanly possible from Chicago to New Jersey in order to reduce data travel times from 17 to 13 milliseconds. That’s how much the milliseconds matter.

    This is also not a topic that I know a lot about and so it’s eye opening (and a bit disappointing) to learn about the sorts of things that happen in our financial markets. If any of you would like to borrow the book after I’m done (and are located in Toronto), leave me a comment below.

  • Developer Profile: The Adir Group

    In 2010, Gal and Tania Adir, aged 23 and 24, respectively, began renovating high-value apartments in central London.

    Today, they are known as The Adir Group and have about £50m in development under way.

    But more than just a developer, the group has grown to become “the parent company of a quickly expanding collection of complementary brands bound together by a desire to enhance people’s lifestyle through quality and beauty.”

    In addition to G&T (their residential development arm), they also founded Net.Works (a co-working space) and Nuper (a co-op living scheme). This last focus isn’t up on their website yet, but I read about it on Michael Mortensen’s blog. The goal of Nuper is to create affordable living solutions for young talent in London.

    I wanted to profile The Adir Group because I think it’s incredible how young they were when they got started (I was just starting graduate school at 23) and because I like their approach of creating a collection of complementary companies.

    I am excited to see where the next generation of developers (myself included) take this business. Already we are seeing some new approaches emerge.

  • A new era of (digital) globalization

    McKinsey recently published a report called Digital globalization: The new era of global flows.

    The overarching thesis is that we are transitioning to a data-driven global economy:

    “Flows of physical goods and finance were the hallmarks of the 20th-century global economy, but today those flows have flattened or declined. Twenty-first-century globalization is increasingly defined by flows of data and information. This phenomenon now underpins virtually all cross-border transactions within traditional flows while simultaneously transmitting a valuable stream of ideas and innovation around the world.”

    One of the benefits of this shift is that it has become easier for emerging economies and individuals from all around the world to participate.

    Of course, not all countries and cities are participating equally. In their report, McKinsey ranks the top cities according to five global flows. In each case a proxy was used:

    “Unfortunately, data on global flows are not available at the city level. However, we have obtained data that serve as proxies for each of our five global flows. Container port volumes approximate goods flows; airport passenger volumes serve as a proxy for goods, service, and people flows; the ranking of cities in the Global Financial Centers Index by the Z/Yen Group provides an indication of financial flows; the number of foreign-born residents in a city measures people flows; and Internet bandwidth approximates data flows.” 

    Using this methodology, they believe that the world only has 8 truly global cities right now: New York, Los Angeles, San Francisco, London, Singapore, Shanghai, Hong Kong, and Dubai. They are the colored cities listed below:

    I always take these city rankings with a grain of salt. This stuff is not easy to quantify and a lot depends on the methodology that you use. 

    For instance, Atlanta sits on the top of “goods, services, and people” because it has the busiest airport in the world according to passenger volume. (It’s the primary hub of Delta Air Lines.) But is that enough to assert that Atlanta is #1? Maybe. Maybe not.

    In any case, the report is packed full of information. If you’d like to take a look, click here.

  • Urban jungle

    Keeping with yesterday’s theme of urban density, here is a photo by Andy Yeung that I am embedding via his 500px page:

    Urban Jungle #04 by Andy Yeung on 500px.com

    https://500px.com/embed.js

    The photo is of Hong Kong and it was taken using a drone. Click here for other photos from his “Urban Jungle” drone series.

    If you remember the maps from yesterday, you might remember that Hong Kong had a peak residential density of around 111,100 people per square kilometre (2013).

    Above is what that generally looks like.

  • Residential population densities compared

    The following diagrams were taken from LSE’s Urban Age website. I’ve sorted them from lowest to highest peak residential population density. In each case I’ve also included the year of the dataset. 

    It’s amazing how much these simple extrusion diagrams can tell you about the city. It also shows you that high population densities don’t necessarily need to equate to tall buildings. Barcelona, in particular, stands out for me.

    Berlin (Peak residential density: 21,700 people/km2, 2009)

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    Stockholm (Peak residential density: 24,900 people/km2, 2012)

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    London (Peak residential density: 27,100 people/km2, 2013)

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    São Paulo (Peak residential density: 29,380 people/km2, 2009)

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    Mexico City (Peak residential density: 48,300 people/km2, 2009)

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    Barcelona (Peak residential density: 56,800 people/km2, 2013)

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    New York (Peak residential density: 59,150 people/km2, 2012)

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    Shanghai (Peak residential density: 74,370 people/km2, 2011)

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    Istanbul (Peak residential density: 77,300 people/km2, 2013)

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    Hong Kong (Peak residential density: 111,100 people/km2, 2013)

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    Mumbai (Peak residential density: 121,300 people/km2, 2013)

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  • School of Real Estate

    I’ve been getting a lot of (email) questions lately about what to study in order to become a real estate developer. So I thought I would reblog this post that talks about exactly that. I wrote it over a year ago and I almost forgot it existed.

    At the same time, I’m reminded of something: I think these questions really speak to the fact that there’s a significant opportunity (particularly in Canada) in terms of real estate development education. 

    Oftentimes when I get these questions, I end up recommending the Master of Science in Real Estate Development (MSRED) at Columbia, MIT, and USC. Why don’t we have something similar (and better) in Canada? We are falling behind.

    I have raised this with some Universities here in Toronto, but the response I got was that they felt the real estate courses being offered as part of their existing MBA programs were more than sufficient. I think we can do a lot better.

    One professor suggested that I line up a big donor and work with them to spearhead the creation of the (Insert Donor Name Here) School of Real Estate. I think that’s a great idea, but not something I have the capacity for right now.

    Hopefully somebody else out there is of the same mind.

    Post Update: 3 days ago the Schulich School of Business (York University) announced a one-year full time Master of Real Estate and Infrastructure (MREI) program – the first of its kind in Canada. 

    This is great news. 

    Now I would love to see the University of Toronto and Ryerson University (as well as others) step up and leverage their respective architecture schools. Schulich is already out of the gate on this one.