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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  • What’s next for Walmart?

    Today I was surprised to learn from Charlie Gardner’s blog that groceries now represent 56% of Walmart’s sales. This is a huge number that I frankly wouldn’t have expected. 

    Groceries have relatively low online penetration, which makes them great for brick-and-mortar retailers. I’ve written about this topic before in the context of big box stores and online shopping. But I clearly didn’t realize that it had become such a big segment for Walmart. 

    What’s also noteworthy about grocery shopping though, is that customers appear to be less likely to travel far distances for it, even for lower prices. This means that the radial impact of Walmart the supermarket is less significant and far tighter (~2 miles) than Walmart the discount store. Click here for that study.

    This is important because a big catchment area has been central to the Walmart model. They consume cheap land on the outskirts of cities and then offload the transportation costs (indirect costs) to consumers in exchange for everyday low prices (direct costs). Studies show that we, consumers, typically undervalue indirect costs.

    Charlie argues in his post that this does not mean that we should write off big box retailing. And I would agree. The Walmart Express concept may have failed, but they are clearly looking for ways to rethink their model. Urban stores will need to form part of that.

  • Towards a cashless society

    I increasingly never carry cash on me. I just never think to take out money and, when I do, I hate paying for things and getting change back. That change just ends up in a “change jar” in my apartment and then never comes out ever again. I keep telling myself that I need to buy coin rolls but that never seems to happen.

    Lucky for me, it’s pretty clear that many cities and countries are quickly headed towards a cashless society. It’s pretty easy to get by in most cities today without cash. Here in Toronto, I use Uber and my PRESTO card to get around. I can use my phone for many purchases like coffee. And I can use my credit/debit cards for everything else. I never really thought about it until recently, but I have unintentionally gone almost completely cashless.

    But of course it’s not just cash that is going to disappear; it’s also our physical wallets. Just this week Fred Wilson wrote a post on his blog about how he forgot his wallet at home and how Apple Pay came to the rescue at Whole Foods. I can’t wait until more banks roll this out in Canada. It’s also encouraging to see that under “coming soon” on the Apple Pay website, the Toronto Transit Commission is listed. I guess that means it will be integrated with PRESTO.

    However, this transition is not happening in the same way everywhere. There are many countries that still prefer cash. According to CNN (November 2015), only about 10% of people in Indonesia and the Philippines would prefer to pay with a credit card. And it’s for this reason that Uber now accepts cash in a number of countries. It’s what those customers wanted. I find this interesting though, because not having to carry cash is one of the main reasons I use Uber.

    Of course, there’s also the question of what happens to people who are currently not connected in anyway to electronic forms of money. I get asked by people on the street for change at least every day when I walk around Toronto. But there is actually no way for me to transmit the money I have to them. I don’t carry cash and I certainly don’t carry change.

    I would be curious how many of you have gone or are close to going cashless. And if you are operating cashless, did you even notice the transition happening?

  • Ziggurats and gondolas

    Yesterday was an exciting day for Toronto city building announcements. 

    Firstly, Alex Bozikovic of the Globe and Mail published an exclusive preview of architect Bjarke Ingel’s plan for King Street West. Here’s a photo of the architectural model (it’s by Landon Speers):

    My favorite quote from the article is this one from Bjarke:

    “It would be sad if the most diverse city in the world had the most homogenous real estate.”

    It’s true.

    For those of you who emailed me about the details of his talk next week (there were a lot of you!), I believe I emailed you all back. But in case I missed some of you, you can click here for the event details. I should have included it in my original post about BIG, but I thought the event was already oversubscribed.

    Secondly, a private company called Bullwheel International Cable Car Corp. has just proposed to build a $20 to $25 million gondola running from Danforth Avenue (near Broadview subway station) to the Evergreen Brickworks. The total length would be almost 1 km and it, allegedly, wouldn’t require any public money. Here is their website.

    The timing of this proposal feels a bit serendipitous to me. When I was in Park City, Utah a few weeks ago, snowboarding right into the town and then taking their “town lifts” back up to traverse the mountain, I remember thinking to myself: what a wonderful form of transportation this is.

    Of course, Park City has giant mountains and Toronto, unfortunately, does not. But we do have spectacular ravines and a spectacular institution known as the Evergreen Brickworks.

    But one of the challenges with our ravines is that they can be a bit hidden – particularly for visitors to the city. Part of this is because we are trying to figure out the right balance between natural preservation and active use. But that’s one of the things that makes this proposal so intriguing. It’s a way to celebrate our ravines and natural landscape, without physically encroaching it.

    Here’s a map of the proposed gondola path:

    What do you think about these announcements?

  • For Sale: Breuer House II

    image

    Breuer House II is currently on the market in New Canaan, Connecticut for $5.85 million. The house has 4 bedrooms, 4 full bathrooms, and 2 half bathrooms. It is 4,777 square feet and sits on 3.11 acres of land.

    Originally built in 1951, the house was designed by the Hungarian-born, Bauhaus-trained, and Harvard-teaching modernist architect, Marcel Breuer. It served as their family home until 1975, after which time it was sold and almost demolished. Thankfully it was instead purchased, restored, and expanded (by another Harvard architect).

    Marcel Breuer was a member of what is known as the Harvard Five. They were a group of five architects who either taught at or went to the Harvard Graduate School of Design and who had moved out to New Canaan to build experimental modern homes starting in the 1940s. Homes like Philip Johnson’s Glass House.

    Seeing the Breuer House II listed for sale this morning reminded me of how cool it must have been at the time for a bunch of radical architects to move out to a sleepy New England town and start building modernist boxes. I’m sure it pissed off more than a few people.

    Does anyone know of anything similar to this happening today? 🙂

    Image from Modern Homes Survey

  • A look at net migration by age group in Vancouver

    I’ve written quite a few posts about family formation and, more specifically, about where Millennials will move once they start having kids. 

    Many seem to believe that – despite the current Millennial love affair with urban centers – much of this cohort is destined to repeat the pattern of the previous generation. Meaning, once the kids come along, they’re headed to the suburbs in search of bigger and more affordable housing.

    If you look at the data, there’s a lot to support this prediction. Below is an interesting chart from Nathanael Lauster (Professor in Sociology at the University of British Columbia) that looks at net migration by age group for the City of Vancouver and the metro area.

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    What this chart shows is a flood of people in their late teens and early 20s migrating into the city (many of which are likely students), but then a fairly dramatic net loss of people leaving the city as they enter their 30s. The metro area, however, continues to grow – almost certainly because of people looking for more suitable family housing.

    But this data is from 2006-2011. We don’t yet have the 2016 census data. And I suspect that we will start to see an increase in the number of people opting to remain in the city across many different urban centers. 

    There are some very real economic pressures that successful cities today have to contend with. But I believe that the desire to remain in the city is there for a lot of young people.

  • Mr. Robinson — Architect as Developer

    I first learned about the work of Jonathan Segal back when I was in architecture school. And he was somebody I immediately admired. 

    At the time, I was struggling to figure out where I wanted to position myself between architecture and real estate development, and he was somebody who had seemingly figured it all out: he simply merged the two.

    For those of you who are unfamiliar with Jonathan Segal, he has made a name for himself by being a pioneer of the “Architect as Developer” business model. That is, he acts as both the architect and the developer/client.

    This business model isn’t going to suit everyone, but I suspect that we’ll see more of it in the future.

    Of course, it doesn’t just have to be an architect acting as a developer. It could also be an architect and a developer joining forces or some other permutation. Whatever the case may be, design and innovation are central to business today and that’s why I think this model will only become more relevant.

    Below is a short 3 ½ minute video about Segal’s latest project, called Mr. Robinson. It is located in San Diego. If you can’t see the video below, click here.

    [vimeo 155403927 w=500 h=211]

    If you’d like to see the typical floor plans or rent one of the apartments (they start at $2,400/month), click here.

    Now I’d be curious to hear your thoughts. Do you like the project?

  • Toronto’s rapid transit network by 2031

    Starting today and running until the end of March, the City of Toronto, the Toronto Transit Commission, and Metrolinx will be hosting several public meetings as they work towards planning out this city and region’s rapid transit network.

    Below are a few of the key maps from their presentation.

    Here is what Toronto’s rapid transit network looks like today (the hollow lines represent projects in construction):

    image

    Here is what will be built within the next 6 years:

    image

    And here is what they are recommending should be built within the next 15 years:

    image

    It’s hard not to get excited when you see maps like this. Of course, it’s a lot easier to draw lines on a map then it is to fund and execute on projects like this.

    But I think it all starts with us acknowledging that these initiatives are critical to both our economic competitiveness as a city region and our quality of life as citizens of it. Because if this is something we really want, then we can absolutely make it happen.

    Click here if you’d like to see the full presentation and also the public meeting dates/times.

  • Hot to cold

    Architect Bjarke Ingels will be in Toronto next week to talk about how architecture can create communities and about a new project that he is working on with developers Westbank and Allied REIT here in the city.

    The last time I heard Bjarke speak was when I was in undergrad and he had recently started a firm called PLOT with Julien De Smedt. That was over 10 years ago. So I am looking forward to this talk. If you’re also going to be attending, tweet me and let’s try and connect at the event.

    In anticipation of that, I thought I would share a book that his firm published about a year ago called, BIG, HOT TO COLD: An Odyssey of Architectural Adaptation. 

    What’s interesting about the book is that all of the projects are organized according to climatic location – literally hot to cold. That’s why the pages themselves start as red and end up in dark blue.

    It’s a direct response to the fact that modern architecture and modern building systems largely did away with regional and climatic variations. Buildings were designed, no matter their location, to look exactly the same. 

    To a certain extent, globalization makes this somewhat inevitable. But climate is climate. And I believe that architecture is stronger when it responds to local context.

    If you were in Toronto this past weekend – perhaps for the NBA All Star Game – you’re probably well aware that Toronto sometimes gets cold. So it will be interesting to see what kind of strategies they employ for their upcoming project.

    If you want to hear Bjarke talk about this book and some of their projects, check out this video from the Architectural Association in London.

  • Let’s fix the UPX train, together

    I am a big fan of the UP Express train that runs from downtown Toronto to Pearson Airport. 

    I love the station architecture, the branding and identity, the trains themselves (with wifi), and the local retailers they house at Union. I also happen to live a stone’s throw away from the downtown station. So I can go from door to bum in seat within 10 minutes.

    But despite all this, it has become clear that something needs to be done to fix the UPX train. Just last weekend a friend of mine and fellow urbanist, who was visiting Toronto from Vancouver, sent me a text message saying: “This UPX train is really nice, but why is it so expensive?”

    Indeed, that seems to be the general consensus. Here is the opening paragraph from a recent Globe Editorial article:

    Toronto’s high-end airport express train is a failure. A city that urgently needs better transit has been saddled with a deluxe boutique rail service that cost $456-million to build and runs nearly empty, 19 ½ hours a day.

    So today I thought we could collectively brainstorm some ideas for how Metrolinx – the public agency that operates the train – should address this issue.

    I’ll start by sharing my thoughts as a rider and then, hopefully, you all will share yours in the comment section below. I know that there are people from Metrolinx who subscribe to this blog, so I am sure your feedback will get through to them.

    My thoughts are twofold. Like many others, I think the pricing is off. But at the same time, I think there should be a focus on enhancing the value proposition of the service.

    Bur first, let’s talk about price.

    At the time of writing this, a one-way trip from Union Station to Pearson Airport on the UPX is $27.50. If you happen to have a PRESTO card, it’s $19.

    The alternative for many is probably a taxi. So let’s also look at some Uber fare estimates. For someone like me leaving the St. Lawrence Market area, I’m looking at $25.92 with UberPOOL (meaning I’m sharing the car with 1-2 other people) or $37.03 if I insist on riding solo.

    image

    Against the non-PRESTO fare, UberPOOL is a cheaper option and it’s door-to-door service. Against the PRESTO fare, UPX is potentially $6.92 cheaper. But if you’re someone who has to take the subway to the UPX station, then it’s only $3.67 cheaper (add $3.25 for the subway) and it’s not door-to-door service. So for the vast majority of people, I suspect that UberPOOL would win out in this particular scenario.

    If you happen to be traveling with someone, then UberPOOL and UberX are probably going to be cheaper no matter how you slice it. And again, you’re getting door-to-door service. So I think the consensus is right: fares need to come down.

    But I don’t think Metrolinx should be solely focused on price. They should also be thinking about ways to create additional values for riders. 

    One of my favorite travel experiences is that of Hong Kong’s airport train. There, they have airline check-in counters in the city so you can collect your boarding pass and check your baggage up to a day before your actual flight. This is a huge value add because it means you can check out of your hotel, liberate yourself of your luggage, and spend the day in the city before leaving on the train to catch your flight. You can’t do that with an Uber. And lugging bags around a busy city, sucks.

    My point with all of this is simply that you can’t expect people to pay more or roughly the same, if they are not getting additional value. And right now, the train isn’t door-to-door and taxis are. (Though, the train has a travel time advantage during peak times.) So you either make it cheaper or you create additional value. Or, you do some combination of the two, which is where my head is at.

    What are your thoughts? Please respond in the comments below so all the feedback is public. Thanks.

  • Out of sight, out of mind

    Henry Grabar has an interesting piece in the March 2016 issue of The Atlantic talking about Paris’s ambitious metro expansion. By 2030, and after $25 billion of investment, the Paris system will gain four new lines, 68 stations, and more than 120 miles (192 kilometers) of track. 

    To put this into perspective, this additional track length is roughly equal to Toronto’s entire subway and streetcar network, including all under construction and approved lines.

    But the real focus of Grabar’s article was on how this transit investment will really stitch Paris back together:

    “Three of the new lines will run north and east of Paris, through Seine-Saint-Denis, the poorest of the 96 departments in France. Among French cities with at least 50,000 people, six of the seven with the highest percentage of foreign-born residents are in Seine-Saint-Denis. Residents of Clichy-sous-Bois, where the riots that swept the region in 2005 began, will for the first time find central Paris within a 45-minute train ride. The town of Saint-Denis, the site of the standoff between police and the terrorists who struck Paris in November, will be home to the project’s largest train station. Designed by the Japanese architect Kengo Kuma, the junction is expected to handle 250,000 passengers a day.”

    Below is a map (from the same article) showing the location of Clichy-sous-Bois to the east of Paris and the area reachable within 45 minutes from this suburb, both today and in 2030 when the new metro lines open.

    Having traveled to Paris in 2006, shortly after the riots took place, I remember some Parisians telling me that this was not a Paris problem. They told me that this was a problem of the banlieues, but not of Paris. Seeing how separate Clichy-sous-Bois is today, that is probably how it felt to some or most. But based on the above, the Paris region is about to be stitched together.

    What I love about Grabar’s article is this idea that transit and connectivity represent a kind of citizenship for urban residents. And that even today, in our hyper connected world, physical access matters a great deal. Because without it, you might be out of sight, out of mind.

    On that note, here is how the article ends:

    Benoît Quessard, an urban planner for the local government, told me that he sees the expansion as not merely “an economic wager but also a social one.” In this sense, it will test an old Parisian belief about the Métro conferring, beyond convenience, a kind of citizenship on its riders. In 1904, four years after the first line opened, the writer Jules Romains predicted that the system would be a “living, fluid cement that will succeed in holding men together.”