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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  • Opendoor.com launches in Phoenix

    Yesterday Opendoor.com finally launched their product in Phoenix. If you’re a regular reader of Architect This City, you might remember that back in July of this year I wrote about how they had just raised $10M of funding to make selling your home as easy as a few clicks.

    Well, since then, I’ve been following them like a hawk. I had all the founders on Twitter notification (so I got notified every time they tweeted) and I was eagerly anticipating their launch.

    Now that they’ve launched, we have a much better idea of how their business model is going to work. I say “better idea” only because there’s still portions of it that are a question mark for me.

    In any event, Opendoor basically provides instant liquidity to homeowners. You go on, tell them about your home, and they then make you an offer to buy, which looks like this and lasts for 3 days. The offer they make you is calculated using comparable sales and adjustments based on your home’s unique characteristics.

    Upon accepting their offer, they then schedule a home inspection (at their cost) to confirm your home’s condition. Once this is done, you just select your move out date and Opendoor handles the rest. The fee for all this is 5.5%, which the company claims is less than the 6% that realtors typically charge (this would be high for Toronto).

    After buying your home, Opendoor plans to turn around and resell it.

    What this reminds me of is a “bought deal.” In the world of investment banking, a bought deal is when the bank itself agrees to buy the entire offering of a particular security, as opposed to going out to the market and trying to raise the money. The advantage to the company (offering the securities) is that there’s no financing risk. They know they’re going to get their money. But it usually means the company gets a lower price.

    So what I wonder, is if this is what’s going to happen here. Since Opendoor is effectively taking on the selling risk, does that mean their offers will be lower? Or are all their costs built into that 5.5% and that’s truly their core business model? I’m sure some of this will surface in the coming weeks.

    I do, however, think they are smart to be focusing on the supply-side of the marketplace and offering virtually perfect liquidity to homeowners. Real estate is a unique asset in that it’s difficult to bring supply to the market. And so if control the supply-side, I think you have a pretty good shot at controlling the market as a whole.

  • Is the world urbanizing or suburbanizing?

    The Economist recently published an essay called, A Planet of Suburbs – The world is becoming ever more suburban, and the better for it. The argument is basically that the “great urbanization” that everyone loves to talk about these days is actually a misnomer. From Chicago to Chennai, it’s not the urban core that’s growing. It’s the suburbs. And so what we’re seeing should actually be called the great suburbanization.

    The basis for this argument is that wealth fuels sprawl. As people become richer, they naturally consume more of everything – including space. It’s a natural market outcome.

    Take for example, the path of many of Toronto’s ethnic groups. In the first half of the 20th century, College Street was the Little Italy. Then it shifted north and St. Clair Avenue West became the more authentic Little Italy. Today, many Italians now live north of the city in Woodbridge. In fact, last weekend I was on St. Clair West and was disappointed to learn that one of my favorite butchers had closed up shop and “moved to Woodbridge.”

    However, there are also many supporters of the exact opposite outcome. From Edward Glaeser to Alan Ehrenhalt, many have argued that we’re in the midst of a “great inversion.” The suburbs are no longer a threat to urban centers. It’s the urban centers who are threatening the suburbs. The suburbs are dead. Long live the city.

    So which is it?

    Well, The Economist does cite two examples where true urbanization is actually taking place. It’s happening in Tokyo and London. In both cases, it’s the city center that is growing the fastest – not the suburbs. The explanation for Tokyo is its aging population. And the explanation for London is its restrictive greenbelt, which effectively stops the possibility of any further sprawl.

    Here in Toronto – where there is also a greenbelt in place – we know that the population of the downtown core is growing at an incredible pace. A recent report by the city – called Comprehensive to the Core – revealed that the downtown core is growing at 4 times the rate of the rest of the city.

    But what about the suburbs?

    If we look at the province of Ontario’s growth projections, it is indeed the suburbs which are expected to grow the fastest up until 2036. Here is a diagram showing percentage growth rates:

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    In absolute numbers, the city of Toronto alone is expected to add about 0.66 million people between 2012 and 2036, and the suburbs are expected to add almost 1.9 million.

    There are a number of potential explanations for this differential, but I think it’s largely because land is cheaper in the suburbs, it’s easier to add new housing supply, population densities are lower, and we’re talking about very different land areas.

    The city of Toronto is 630 square kilometers. If you tack on the suburbs, the Greater Toronto Area is 7,124 square kilometers. That means Toronto makes up less than 9% of the total land area. And yet it is expected to contribute 25% of the region’s population growth. 

    Still, the suburbs are where the bulk of the population growth is expected to happen over the coming decades.

    However, the “great inversion” that authors like Alan Ehrenhalt have been talking about should not really be interpreted as the death of the suburbs. What he’s instead talking about is a socioeconomic or demographic reversal: center cities used to be poor and now they’re becoming rich.

    Here’s how he put it:

    What we are seeing is a reversal in which the words “inner city,” which a generation ago connoted poverty and slums, [are going to mean] the home of wealthier people and people who have a choice about where they live, and the suburbs are going to be the home of immigrants and poorer people. And Census figures show that that’s taking place.

    In this context, we are still living through the great urbanization. We’re seeing a shift in consumer preference and a shift in where wealth is choosing to locate. That’s a profound change.

    And while we’re obviously still suburbanizing, I don’t agree that we’re better for it. In fact, left unchecked, this demographic inversion could actually prove to be quite damaging to our suburbs.

    Image: Flickr

  • Panel: What is Smart Now?

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    This Tuesday evening at 630pm, WORKSHOP – which is a design studio, gallery, and retail shop located in Yorkville, Toronto – will be hosting a panel discussion titled: What is Smart Now?

    On the panel will be a building scientist, a computer scientist, and two architects. The moderator will be Larry Wayne Richards, who is Creative Director of WORKSHOP and the former dean of the Faculty of Architecture, Landscape, and Design at the University of Toronto. He was dean when I was completing my undergraduate degree and is one of my favorite people in the world of Toronto architecture.

    Here’s a bit more on the panel:

    For more than half a century, visionaries and companies such as Monsanto, Hewlett-Packard, Microsoft, and Samsung have promoted the concept of technologically smart homes with highly integrated, interactive systems.  However few of these homes have actually been realized, leaving us to wonder why.

    Meanwhile, architects, builders, and home owners have become aware of the advantages of being smart in terms of energy efficiency and sustainability, from using common sense to selectively employing high-tech.  

    But now, with the digital realm and software advancing rapidly, will sophisticated smart home systems merge with recent advances in high performance materials and energy-efficient construction, making “totally smart” (and affordable) homes commonplace? Will we finally be living in the magical future that was imagined 50 years ago?  And what are the implications for architects and architectural education?

    And here are the panelists:

    • PAUL DOWSETT, Architect and Founding Principal, Sustainable TO
    • SRINIVASAN KESHAV, Professor of Computer Science, University of Waterloo
    • TED KESIK, Professor of Building Science, University of Toronto
    • JANNA LEVITT, Founding Partner, LGA Architects, Toronto
    • LARRY WAYNE RICHARDS (Moderator), Creative Director, WORKSHOP

    Given the current “Internet of Things” trend and the fact that software is creeping into so many non-tech fields, such as housing, I think this is a really timely discussion to be having. I also think it’s critical for these kinds of conversations to be cross-disciplinary. There are infinite opportunities in the housing market for people who are able to think in that way.

    If you’d like to attend, click here to sign up. It’s free and open to the public. WORKSHOP is located in the lower concourse level of 80 Bloor Street West.

    Image: WORKSHOP

  • The ultimate Toronto transit map

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    If you live in Toronto and only give serious thought to one thing today, it should be to this interactive transit map created by Metro.

    The map shows all existing, planned, and proposed transit lines in the city, and then overlays population densities, commuting patterns, household income, and so on. It’s a super valuable map that I think reveals a lot about how we should be focusing our energies to get Toronto moving.

    So what sorts of things does it tell us? I’ll give 2 examples.

    If you look at commuting patterns across the Bloor-Danforth subway line, you’ll see that Runnymede station in the west is where people switch over from taking transit to driving. People west of that station tend to drive. Naturally, it also happens to coincide with where population densities start to fall off.

    By contrast, if you look at the east side of the city along the Danforth and beyond, the entire stretch more or less relies on transit to get around. Part of this likely has to do with income levels, but it’s also because of the availability of the Gardiner Expressway. There’s no equivalent in the east end. Dylan Reid of Spacing Magazine believes this makes a case for some sort of road pricing along the Gardiner, and I would agree.

    As a second example, look at the population densities along the proposed Downtown Relief Line, Finch LRT, and John Tory’s SmartTrack line. Outside of the core, the population densities are relatively low along the proposed SmartTrack line – which is never a good thing for rapid transit.

    There’s also no Sherbourne station on the SmartTrack line, which happens to have the highest population density across the entire Relief Line – 22,131 people per square kilometre! That’s more than any other stop along the Yonge-University subway line except for Wellesley station.

    I’ve written about this a lot before, but I think we need to do a better job of matching up transit investment with expected customer demand. Too often we let politics get in the way of rationale decision making. Maybe it’s time we did something like set minimum population densities. If you want a subway line in your area, you have to first bring the people.

    What else does this map tell you?

  • Net-positive buildings — why a green building isn’t what you think it is

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    “We can’t address climate change without thinking about buildings.” -Bryn Davidson, Lanefab (Vancouver)

    This is a line from a recent TEDx talk by Bryn Davidson, who is one of the founders of Lanefab out of Vancouver. Lanefab is a design and construction firm specializing in sustainable infill / laneway homes. Unlike Toronto, laneway houses are actually allowed in Vancouver.

    If you have any interest in climate change, I would encourage you to watch his talk. It’s less than 20 minutes long and he addresses many of the misconceptions that I think people hold about what it means to build “green”. Click here if you can’t see it below.

    [youtube https://www.youtube.com/watch?v=JEUShQ7r_tE]

    While I think it’s great that the green agenda is much more front and center these days, I agree with Bryn in that we’re not yet on a sustainable path forward. For many people, being green means buying a LEED certified home, having a Tesla in the garage, and having a Nest thermostat on your wall. And certainly those things help.

    But they’re not the whole story. Instead of just focusing on green and LEED buildings, Byrn argues that we need to take it a step further and start focusing on “Net Positive” buildings. In other words, ask yourself this: Will there be fewer green house gas emissions on the planet after your project is built?

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    More specifically, he outlines 3 criteria:

    1. How good is your building?
    2. Where is it located?
    3. What does it replace?

    The idea behind this framework is that the building itself (i.e. How good is your building?) is only one piece of the story. What also matters is its location and what it happens to be replacing. Is the building in a walkable area? Is it on a greenfield or infill site? Is it replacing an old energy inefficient building? Is it intensifying land use patterns?

    All of these things matter when it comes to assessing our greenhouse gas emissions.

    Let’s now apply this framework to three different building typologies: mid and high rise condominiums, and laneway houses. In the context of a Net Positive building, they all do quite well. In Toronto, we could certainly do a lot to improve the way many of our condo buildings are built, but they are usually in the right kinds of areas and they are the right kind of building typology.

    Similarly, laneway houses as a whole are an incredibly sustainable building typology. In fact, I would argue that an energy efficient laneway house is easily one of the most sustainable homes you could build. They’re compact. They’re located on under-utilized and previously developed land. They often replace parking. And they increase population densities in established residential areas, which then makes transit more feasible.

    But again, here in Toronto we’re not allowed to build them.

    So whether you like it or not, if you’re involved in shaping the built environment, you’re also involved in climate change. This is a job for architects and developers, but also policy makers and communities. Laneway housing is a perfect example of that. Lots of people would build them — if only they could.

    Image: Lanefab

  • The Tesla Easter egg

    I was rushing to get to a real estate forum dinner last night and so instead of walking — which is normally what I would have done — I decided to grab an UberX. As some of you might be aware, I like UberX. It’s convenient to use. And the fares are cheaper than regular taxis. So why wouldn’t I use it?

    But last night I got an extra treat. A guy named Mike picked me up in his Tesla Model S:

    //platform.twitter.com/widgets.js

    According to Mike there are two of these “Easter eggs“ in the UberX Toronto fleet, which I was also told is now up to hundreds of cars. So it’s not everyday that you’ll get picked up in a Tesla.

    If you’ve never been in a Tesla, the first thing you’ll likely notice is the absolutely epic screen that sits in the dash. Most people’s laptops don’t have a screen this big. It’s gorgeous.

    But there are a bunch of small details that also standout. For example, the door handles sit flush with the door until they’re needed. Here’s a video of how they work:

    [youtube https://www.youtube.com/watch?v=UxavZ2QxuLY]

    But the real question that is probably on your mind is: Why is some guy with a Tesla driving around Toronto offering rides via UberX? That was certainly one of the first questions I asked him after I got in the car.

    And the answer is that he does it for fun.

    He actually owns a medical clinic in Markham, but comes downtown on the evenings and weekends to drive around and meet new people. In fact, he called it the “best networking tool on the planet.” Because as soon as he picks people up in his Tesla, they immediately take him seriously and want to have a conversation. That has translated into business relationships and even invites to parties. As in, he drives a group to a party and they ask him to come in — which he said he often does.

    If he really took it seriously and did it full-time, he figures he could make around $40,000 – 50,000 a year driving for UberX. And I believe that’s close to what a regular taxi driver would make. But again, that’s not why he’s doing it. Isn’t it interesting how things change?

  • A video and conversation about laneways

    Two weeks ago I gave a brief presentation at The Laneway Project’s inaugural summit here in Toronto. I then wrote about it here on ATC.

    At the time, I wasn’t sure if the event was being filmed or not, but it turns out it was. So here is my presentation from the event. It’s just over 7 minutes. Click here if you can’t see it below.

    [youtube https://www.youtube.com/watch?v=vdMNC1BtUz8]

    If you’d like to see the other 5 presentations and the Q&A session, click here. 

    Following the event, I was also interviewed by a radio show out of Calgary called Space + Place. If you are really into laneways and would like to listen to that as well, go here.

    I’ve said this before, but I’ll say it again: I continue to be amazed by how much interest there is — both here in Toronto and elsewhere — in laneways. They may be overlooked today, but that’s going to change. It’s inevitable.

  • 47.55 square meters in Tokyo

    I’ve always been fascinated by Japanese culture.

    A lot of that has to do with how design and technology seem to permeate the culture. But it also has to do with how dichotomous the culture feels to me. On the one hand they’re at the forefront of design and technology, and on the other hand they are very much steeped in tradition. It has always felt like a unique and special place to me.

    So today on ATC I thought I would share a piece of Japanese architecture that I found on Dezeen. It’s a 47.55 square meter (512 square foot) apartment in Tokyo that was recently renovated by Yuichi Yoshida & Associates. 

    Here are three views of the main living area:

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    Here’s the view from the main entrance:

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    Here’s the walk-in-closet/storage area (notice how the exposed concrete walls have been dabbed with plaster):

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    And here’s the floor plan (I’m guessing sub entrance means secondary entrance):

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    The first thing that struck me was the lack of a traditional bedroom. It’s basically a nook with a bed and sliding doors. But that was obviously done to give more space to the remainder of the apartment and the main living area, which they label as the “reception area.” The idea was that this space could be used for both living and working, and so they wanted a large open space.

    The other thing that stood out for me was the amount of storage and shelving throughout the apartment. There’s a bookshelf as you walk in. There are drawers under the bed. There’s a walk-in-closet with floor to ceiling shelving. And if you look closely at the upper track for the sliding bedroom doors, you’ll see a small ledge that was purposefully created for storage and display.

    It all seems very Japanese to me.

    It’s a small space and yet there’s no absolutely zero clutter. I love how organized everything seems. For many of you, this space may be a bit too sparse (even with that hammock!). But there’s something really nice about the simplicity of it all. It’s peaceful.

    Images: Katsumi Hirabayashi via Dezeen

  • Community building on the east side of downtown

    Yesterday evening I went to the Toronto Christmas Market in the Distillery District. I had actually never been before, but it was something that I had been meaning to check out for a few years now. And it was wonderful. If you’ve never been, I would highly recommend you go. This past weekend was the opening weekend and it runs all throughout Advent until Sunday, December 21st.

    For those of who might not be aware, the Christmas Market festivity is a longstanding tradition that originated primarily in German-speaking Europe. Accounts of a “December market” were found as early as the end of the 13th century. The Toronto Christmas Market is a slightly more recent tradition (it’s only about 5 years old), but it was already selected as one of the world’s best.

    But Christmas carollers and hot toddies aside, the Market is also a fantastic opportunity to see the Distillery District in all its glory. Every time I visit the Distillery, I can’t help but feel how lucky we are to have a district like this in the city. The architecture and scale of the place is incredible and – alongside the Toronto Islands and Kensington Market, sometimes – it’s pretty much the only car free zone we have.

    However as someone who lived near the Distillery District in its early days, I remember how much of an “island” it was when it first opened. It felt disconnected from the rest of the city and the only way to get people there was to hold a special event. The retailers and galleries struggled and many didn’t last.

    With all the condos that have been built, literally on top of the neighborhood, that has changed dramatically. Today the area has become much more balanced as a mixed-use community. But the real tipping point, I think, will come next year when Toronto hosts the Pan Am Games and the West Don Lands neighborhood starts to come online just to the east of Cherry Street.

    Now all of a sudden the Distillery District won’t feel like the edge of downtown anymore, it will feel more like the middle of it. As my friend Alex Bozikovic of the Globe and Mail pointed out to me this weekend, the Pan Am Games are going to put the east side of downtown on people’s radars. And I would completely agree. Once that happens, the Distillery District will finally start to reach its maximum potential.

  • The case for not being mean

    Startup guru Paul Graham writes really interesting essays. Judging by the date stamps on his website, he’s been easily doing it for more than a decade. And he’s gotten really good at it – everyone in the startup community reads them. Whenever he posts one, I know I read it. No question. 

    His most recent essay is called: Mean People Fail. And in it, he argues that the structural changes that have happened in our economy have also meant a reversal in the correlation between “meanness” and success. I know that might sound a bit funny, but hear him out:

    For most of history success meant control of scarce resources. One got that by fighting, whether literally in the case of pastoral nomads driving hunter-gatherers into marginal lands, or metaphorically in the case of Gilded Age financiers contending with one another to assemble railroad monopolies. For most of history, success meant success at zero-sum games. And in most of them meanness was not a handicap but probably an advantage.

    That is changing. Increasingly the games that matter are not zero-sum. Increasingly you win not by fighting to get control of a scarce resource, but by having new ideas and building new things.

    That has always been the case for thinkers, which is why this trend began with them. When you think of successful people from history who weren’t ruthless, you get mathematicians and writers and artists. The exciting thing is that their m.o. seems to be spreading. The games played by intellectuals are leaking into the real world, and this is reversing the historical polarity of the relationship between meanness and success.

    This makes sense to me. But the other reason I find this interesting is because I’ve wondered before if I should be more of an asshole in my professional life. Some people are really good at being assholes. I’m not. It’s not in my nature. When I manage and work with people, I’d rather try and create intrinsic motivation as opposed to using some form of brute force. In my view, the latter burns social capital.

    So if you happen to be of the same mindset, you might like to hear that you’re probably sitting on the right trend line. Don’t be mean.