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.
I’m flying out to Chicago this morning, and so I don’t have a lot of time to write. But I am taking my iPad with me and I plan to continue writing every day that I’m there. As some of you might remember, I’ve never been to Chicago before. This will be my first time. So I’m expecting lots of writing inspiration.
That said, I’m going for a bachelor party and so I may not get the chance to geek out about the city as much as I normally would. There certainly won’t be any any Frank Lloyd Wright pilgrimages taking place. However, I have convinced the group that the architecture boat cruise will be a great way to see the city and a nice way to start off the day following a late night.
If you’re from Chicago (or just know the city well) and have some must-see recommendations, I’d love to hear from you in the comment section below. I’m excited to visit Chicago because it’s another Great Lakes city and I’m told it’s somewhat similar to Toronto. It’ll be interesting to see how they compare and differ.
Traffic is a big deal when it comes to real estate development. Residents are almost always concerned about the additional traffic that a development might bring to their community. And who can really blame them. They’re frustrated by traffic as it is in the city and so they naturally assume that more residents in their community will translate into more cars on the road.
But as natural as this reaction might seem, I don’t believe that opposing intensification is the right long-term solution. In fact, I would argue that the question of traffic is a bit of a red herring. Because as Toronto’s Chief Planner Jennifer Keesmaat explains in this blog post, density can actually go a long way to reducing traffic congestion. And it does that by placing people closer to where they work, and by creating an environment that’s more conducive to other forms of mobility: walking, biking, and public transport.
So instead of becoming fixated on traffic, I think there’s another, perhaps more relevant, question that we should be asking ourselves: Will this development, over the longer term, help to encourage a modal split that leads to more transit usage and less driving?
Because if it doesn’t, well then we’re not doing anything to correct the problem we already have. In fact, if we don’t allow intensification to happen, it means we’re simply pushing demand outwards, horizontally. And the more you push people out of a city, the more likely they are to drive. In which case we’re only delaying the inevitable – which is more traffic.
Earlier this month a team consisting of Benjamin Barber (who is author of If Mayors Ruled the World: Dysfunctional Nations, Rising Cities), Richard Florida (who is Director of the Martin Prosperity Institute here at the University of Toronto), and Don Tapscott (who is a leading authority on innovation) released a research report advocating for a global network of cities that they’re calling a “Global Parliament for Mayors.”
“Nation-states work together through multi-lateral agreements and global institutions in an effort to solve global problems. But states have limitations, and their cooperative efforts in our new era of interdependence and globalization are increasingly insufficient and even ineffective and outmoded,” say the three prominent researchers. A Global Parliament of Mayors represents a new type of governance network – one with enormous potential.
“Our proposed parliament would operate as a global urban network with a vibrant online community that collaborates on key issues 365 days a year,” they say. “Multi-stakeholder governance has come of age and is now fully independent from control by any government, or governmental organizations like the UN.”
And if you dive into their report, you’ll find the following 5 reasons for why they believe a Global Parliament for Mayors (GPM) makes sense:
Global migration to cities. Most people live in cities, so it makes sense to concentrate problem-solving capabilities there.
Urban predisposition for problem-solving. Cities are entrepreneurial, close to the people and richly connected to a wide variety of stakeholders. They have a history of cooperation and pragmatic problem-solving.
A need for experimentation with new governance models. Traditional models of state-based global governance have struggled to advance effective solutions to many global problems, so there is an urgent need to experiment with new models. The GPM is the most promising.
Digital networks. Online collaboration technology makes it possible to operate a largely virtual parliament that would not only be more cost-effective, but more transparent, inclusive and productive.
Digital citizens. There is a large, educated and motivated population of digital citizens that could be tapped to improve urban governance.
In principle, I agree with the direction. And I feel that way because of the two major shifts outlined above: More people are living in cities (a trend that all urbanists talk about ad nauseam) and digital networks are having a disruptive effect on the way we run companies and live our lives.
I’ve talked before about how the internet is causing a decentralization of value creation (see Airbnb, YouTube, and so on) and so I think it only makes sense that our governance structures will inevitably go through a similar transformation.
The governance models that we are living with today were put in place during a time when the world was a different place. At one point, nation-states were the de facto way to effectively organize ourselves on a global stage – probably because there wasn’t any other reasonable alternative.
But today, we are connected and interdependent in entirely new ways. And so the opportunity in front of us is to create a governance structure that leverages the progress and innovation that’s happening in cities, everywhere.
If cities are our most important economic unit, then mayors are arguably some of our most important leaders. So it behooves us to figure out how to give them the frameworks and forums to best do their job.
Last week The National Post published an article talking about Toronto’s Crosstown LRT and how it’s spurring a wave of development all along Eglinton Avenue. Below is a map, taken from that article, showcasing some of the developments that are currently in the pipeline and awaiting the Crosstown’s opening date of 2020.
Not surprisingly, developers like transit investment. But more specifically, they like fixed track transit investment. Rarely do new bus routes elicit the same sort of response that you’re seeing above. And that’s because fixed track investment has permanence. If you’re going to go long on an area, you want certainty.
As the Crosstown tunnel boring machines move across midtown Toronto, I thought it would be interesting to look at a transit concept that I first learned about through Jarrett Walker’s Human Transit blog. It’s called: the radius of demand.
One of things that transportation planners look at when designing and building a new line is the spacing of stops. Typically, as you move from buses all the way up to subways, the spacing between stops and stations increases. Spacing is always a bit of a trade off though, because more stops means easier access for riders, but it also means slower overall service. Somewhat famously, Paris designed its metro system so that you’re rarely more than 500 meters away from a station.
Once you have your station locations, it’s quite common to then draw a radius around each stop to simulate the catchment area. In other words: How much of the city can I service with this station and how far will people be willing to walk in order to get there? However, this distance, which is the radius of the circle, usually depends on the type of transit. Oftentimes people are willing to walk further in order to get to faster transit service.
But what’s most interesting about this radius of demand is that it’s entirely dependent on the fabric of the city. Take for example, the following two maps from Seattle, which I have taken from Walker’s blog. On the left is a suburban setting and on the right is a downtown setting. In both cases, the red circle represents a 1 km radius.
Now, if humans could fly over barriers, such as highways, and every Seattle resident was willing to fly exactly 1 km to a transit station, these two radiuses of demand would be perfectly accurate. But since that’s not the case, we instead need to look at what actually represents a 1 km walk – those are the blue lines in each image.
Because once you do that, you realize that the cul-de-sacs and highways on the left make it impossible for most of that radius of demand to actually walk to the station in under 1 km. So the catchment area actually becomes much smaller. On the other hand, if you look at the image on the right, you’ll see that the tried and true city grid is actually remarkably efficient for walking. Almost all of the circle is serviced.
So as the Eglinton Crosstown LRT makes its way through the center of Toronto, I think it’s important to keep in mind that it’ll be cutting through quite a few different kinds of street grids. Some of them will be highly conducive to transit usage and others not as much. And in many ways, this is one of the greatest challenges of transit investment. The track itself is only one part of the puzzle.
That’s why the City of Toronto is also undertaking a planning exercise called Eglinton Connects. Its intent is to leverage the opportunities, as well as address the challenges, that will result from Metrolinx’s Crosstown LRT. If you’re interested in the future of Eglinton Avenue, you should consider getting involved. Oftentimes it’s only the critics that speak up. But that’s not the best way to build anything.
Today, more than 125,000 health-care professionals use Figure 1 to view or share free medical imagery, including photos of patients with personally identifiable details blurred out or excluded; x-rays; charts; and still images taken from MRI or CAT scans, for example.
The app’s users include board-certified doctors, registered nurses, medical and nursing students, physicians’ assistants, and others who use the app and share images for teaching and studying purposes, or even to request community feedback about a possible diagnosis.
With this round, USV is now up to 3 investments in the Toronto/Waterloo region (I think of us as one center). The other 2 are Kik (out of Waterloo) and Wattpad, which is actually headquartered here in the St. Lawrence Market.
What’s exciting to me about all of this is that it’s further evidence of a growing and thriving Toronto/Waterloo startup ecosystem. And while to some it may not seem like a big deal for yet another mobile app to receive funding, it’s actually great news.
Because as these companies grow and become successful, they’ll not only create new jobs in the region, but also create a tremendous amount of wealth and expertise. And when this wealth and expertise gets reinvested into future startups, you end up with a powerful snowball effect. That’s how startup ecosystems are built.
It’s also great to see companies staying put, because the pull towards more established startup hubs can be significant. When my friend Evgeny raised a Series A round from Andreessen Horowitz last year, he told me that they asked him to move 500px down to California. As is the case with a lot of VCs, they like their portfolio companies to be nearby.
But ultimately 500px decided to stay headquartered here in downtown Toronto. And they did that for a few reasons: There’s lots of great engineering talent here and it usually comes at a discount relative to California (5-15%). He also finds that employees here are more loyal. There’s less turnover. In California, everyone is looking for that next best startup to join. Here 500px gets to be that big fish in a small pond.
Anyways, a big congratulations to the Figure1 team. I hope they continue crushing it and that they stay put in Toronto. If you’re a healthcare professional, you can click here to download the app.
Last weekend a friend of mine sent me an article from The Economist talking about why trams, streetcars, and light rail are a waste of money. The argument is basically that steetcars are expensive, less efficient, and that – despite North America’s renewed interest in them – we should instead be spending our scarce public dollars on more buses.
…but cash spent on streetcars displaces spending on other, more cost-effective forms of public transport like buses, which offer cheaper and more-efficient service but are considerably less sexy. The capital cost per mile of a streetcar is between $30m and $75m, while a rapid bus service costs anywhere between $3m and $30m, according to the American Public Transportation Association.
Now, there’s no question that buse routes are initially cheaper to implement. You don’t have track to build. But I don’t agree that the cost structure is quite that simple if you consider the number of people you need to move in your city. I struggle to see buses as a more efficient service.
The big difference between modern light rail and buses is capacity. Toronto’s new streetcars will move about 3 times as many people as your typical bus. So you’d need to triple the number of buses and triple the number of drivers – adding to your labor costs – if you want to have a chance at moving the same number of people.
Streetcars are also electric, which means they run on a renewable energy source. We’re in the process of making this switch with private transport, so why go backwards when it comes to public transport? You can certainly run electric buses as well, but then you’re building overhead power lines and bringing up your initial costs.
I think the challenge is that when people think of light rail, they think of slow lumbering streetcars. I agree that many of these lines are inefficient and I’ve written about it. But there are a number of ways to implement light rail. And when done well it can efficiently move a lot of people for costs that are far less than a subway.
When I was working on my startup Dirt last year, one of the things we spent a bit of time figuring out was how to classify buildings according to neighborhood. Now, at first blush, this may seem like a fairly easy thing to do. You simply locate the building, figure out which neighborhood it’s in, and then tag it accordingly. But neighborhood boundaries and definitions aren’t as clear cut as you might think.
For example, a lot of you probably know that I live in the St. Lawrence Market neighborhood of Toronto. And indeed, if you look at this Wikipedia definition, I live in that area. But if you look at what they call it, it’s just: “St. Lawrence.” They also specify that it used to be called “St. Lawrence Ward”, but that today most people actually call it “the St. Lawrence Market.” So here you have an example of an evolving and changing name.
But then there’s the question of boundaries. According to Wikipedia’s definition, the north boundary is Front Street. This means that the North Market Building would be technically outside of the area and so would the Market Square condos. But I suspect that almost everyone would consider these two buildings to be part of the neighborhood. So where exactly is the north boundary? Is it King Street? Or maybe by Front Street they mean that all buildings on the north side of the street are included.
If you look at the city’s official neighborhood list (which is built from Statistics Canada Census Tracts) you’ll find a completely different boundary and name. According to this list, I live in the “Waterfront Communities–The Island” neighborhood. Obviously nobody, other than maybe somebody who deals with census data, would have any idea what this area is. But it’s how the city tracks its demographic data.
What this begins to show you is that neighborhood definitions and boundaries aren’t as black and white as they might initially seem. And it’s partially because cities themselves are always in flux. New neighborhoods emerge and old ones reinvent themselves. And as that happens, people start introducing new names and new terminologies.
When I was about 19 years old, people in Toronto used to say they were going out “on Richmond and Adelaide.” Since then, gentrification has pushed many of the bars and clubs out of that area. So people instead go out “on King West” or “on Ossington.” And as people begin to use those terms and identify with an area, new brands are created. Ask anybody who lives downtown and I bet they’ll tell you that King West has its own unique personality and even a type of person who typically lives there. This is an on the ground type of awareness though, which doesn’t get captured in census tracts.
The other reason neighborhood boundaries can be so fuzzy is because we – the real estate community – are constantly trying to manipulate them for our own benefit. I’m indifferent to the fact that this happens, but it is a reality. Think about how much the neighborhood of Yorkville has been stretched from its original roots north of Bloor Street. If a neighborhood has a good brand, agents and developers will naturally try and leverage it. Homeowners do it all the time too. Would you prefer to say that you live in Seaton Village or the Annex?
Ultimately, we (my Dirt cofounder and I) decided that neighborhood definitions and boundaries needed to be fluid. They needed to dynamically adjust with the market and come from as many people as possible on the ground. Because at the end of the day if the official documents say one thing, but the majority of city residents believe another, then that official boundary and definition are probably out of date. The crowd wins here.
We liked this approach because it was organic – just like cities.
As a recent graduate of Rotman’s Morning MBA program (and presumably because somebody over there reads Architect This City), I was asked to write a guest post for their MBA blog. More specifically, I was asked to share my thoughts on the real estate industry and on my time at Rotman. And since I haven’t really done a post like this before, I thought it would be worthwhile to do.
But before I begin, I think it’s important to explain a bit about my background and my motivations for doing an MBA in the first place. Before going to Rotman, my first master’s degree was in architecture and real estate from the University of Pennsylvania. Basically it was a Master of Architecture combined with their MBA real estate concentration. So it included everything from real estate finance to real estate development.
Having already done this 3-year program, there were a couple of things I wanted out of an MBA program. First of all, I wasn’t prepared to go full-time. Five years out of the workforce was simply too high of an opportunity cost for me and so part-time was all I considered. I also only applied to Rotman because I didn’t want to waste any time traveling outside of the city (or to other parts of the city). I also saw Rotman as a rising star and one of, if not the, best option in Canada.
At the same time, I didn’t give much thought to the real estate curriculum being offered even though I fully planned to stay working in the real estate industry. I felt like I already had that sort of formal training and so, unlike some of my classmates who were looking to switch into real estate, I was after something else. I ended up majoring in Innovation & Entrepreneurship.
What I was trying to do was really round out my skillset and fill in some of the missing holes: accounting, marketing, and so on. But even more importantly, I had drunk the kool-aid around Rotman’s focus on integrative thinking (renamed “business problem solving”) and “design thinking”. And since there will always be a part of me that thinks of itself as a designer, it seemed like the perfect program for me.
Because at the end of the day, it’s not that hard to learn how to create a real estate development pro forma or calculate your expected exit cap rate on some piece of real estate. That stuff is all fairly mechanical. It might seem quite mythical when you don’t know how to do it, but once you do, you quickly realize that a financial model is only as good as the assumptions you put in. As we’re told in school, garbage in = garbage out.
The real value gets created in the assumptions. It’s created in the way you think about the market, your product, and your customers. And a lot of the time, the most value is created when you know or believe something that nobody else believes to be true. If you’re a lemming, you’re going to get lemming like returns and outcomes. So in a lot of ways, I went to Rotman to help me think better and think differently.
In some industries, resting on your laurels can kill you in a relatively short period of time. See Blackberry. Real estate, on the other hand, is generally a bit slower moving. But that doesn’t mean that change doesn’t happen and that there isn’t room for loads of innovation.
Just look at the Toronto of today versus the Toronto of 10-15 years ago. We’ve transformed ourselves into a city of high-rises where more and more people now want to live in the core of the city. This has brought commercial landlords back to the city center so that employers have downtown office space to attract the best human capital (see South Core) and it’s brought suburban retailers into the core to sell to these same urbanites. We’re seeing a complete reversal of the trends experienced with the last generation.
Amidst all of this, I’ve been noticing a growing awareness and passion around cities. My blog Architect This City started as a forum for architects, planners, and developers, but it has grown into a community of thousands of people who simply love cities. They’re passionate about everything from architecture to grade-separated bike lanes (as geeky as that probably sounds).
So I think that it’s not only the real estate market that’s changing, but also the professions involved with it. I’ve written a lot about the future of the architecture profession because I think we’re starting to see the emergence of new business models. Architects are becoming developers and developers are starting to become much more heavily involved in the shaping of the communities in which they build. Which is why in many ways, I think of my self as a city builder more than anything else.
Finally, to make matters even more complicated, technology is starting to have a huge impact on the business. Zillow.com just bought Trulia.com for $3.5 billion to form a portal that will now serve around ¼ of the online US residential market. And Opendoor.com is getting ready to launch a product that seems entirely poised to disrupt the way homes are bought and sold in America.
So what I’m getting at is that there’s absolutely no guarantee that the way we used to do something, is the way we’re going to continue doing it. In fact, I operate under the assumption that everything can and will be changed by somebody at some point. And if this is the way you approach things, then it should become abundantly clear to you that being able think critically is going to be one of your most important assets.
When I was just starting at Rotman, I met for lunch with an upper year classmate who told me that one of the best things he’s taken away from the program is the ability to think about the way he thinks. That may sound silly to some, but in our uncertain world, it’s actually a great skill to have.
Earlier this week my good friend Gabriel Fain emailed me a bunch of photos from his recent trip to Melbourne. Gabriel and I went to architecture school together here in Toronto and we often go back and forth on city building issues.
Here are the photos he sent me of Bourke Street in Melbourne:
The comparison he drew in his email was to that of Bloor Street in Toronto, except with a few major differences: Bourke Street is pedestrian only (except for a tram running down the middle of it). It has no curbs. There’s lots of inviting seating. And the connecting cross street laneways are fully activated. He then ended by saying that "Toronto is light years behind Melbourne and Sydney in the terms of the quality of the public space.“
I replied and asked if I could turn his email into an ATC post. He responded by saying that he was hoping I would, and then sent me another photo – this time of one of the laneways:
Melbourne’s laneways and arcades are celebrated around the world. What was once just residual space, became a catalyst for the revitalization of the city’s central business district in the 1990s and a major tourist destination. But all it really took was a change in thinking. It took somebody to believe that the space used for garbage collection, could also be used for a thriving culture of intimate al fresco dining.
In Toronto, I think we’re headed in the right direction in terms of our thinking, but that we’re not yet being bold enough. The recent revitalization of Market Street in my neighborhood (St. Lawrence) is a wonderful example of putting pedestrians first and a wonderful street overall. Like Bourke Street, it also doesn’t have curbs (this is how you know pedestrians matter). But it was also a prime candidate for a pedestrian-only street. Especially given that Market Lane to the north is already one (though in desperate need of renewal).
For a number of reasons though, pedestrian-only streets are difficult to accept here in Toronto. I’ve been shot down many times in real estate meetings for arguing that we should have them in our city. Oftentimes people say it’s because of our harsh climate. But in my view, that’s all the more reason to have them. When the weather is nice, we should be enjoying our public spaces to the fullest. Why only build to the worst case scenario? Plus, they work in Scandinavia.
We’ve also done it before. In the early 1970s (when I wasn’t around), a portion of Yonge Street was piloted as a pedestrian-only mall – a remarkably forward-thinking achievement for that era of city building. So I’m confident that it can be done and that we’ll one day do it again.
I’m convinced that city building – like probably every other industry – is going to get a lot more data driven. Yesterday I wrote about how driverless cars are collecting exact replicas of our cities as a result of the 3D scanning that they do. And today I learned about an interesting new startup called Placemeter.
Basically it works like this: If you have a window (at home, at the office, or wherever) that faces onto a lively street, Placemeter will pay you to setup a smartphone in that window as a “meter.” The going rate is up to $50 per month and they’ll even provide you with the necessary suction cups.
Through video, your phone will then start collecting anonymous data about that street’s activity levels: the number of people, cars, and so on. Below is a video of what that output looks like. Notice that it’s even collecting the number of people that go into each of the stores. Click here if you can’t see the video below.
To make money, Placemeter plans to sell (or is already selling) this data. And their goal is to “make your city better” by specifically improving the way that pedestrian spaces are designed. There are of course lots of other use cases for data like this (such as seeing how busy that bar is across town), but their primary goal appears to be around city building. At least that’s the case right now.
Not surprisingly, there are concerns about privacy. But I’m sure they’ll be able to work around that. All of the data they collect is anonymous and they don’t save any of the footage that they receive from the meters. Their system just extracts the relevant data points and then automatically deletes the video.
What’s also interesting to me about this startup, though, is that it’s yet another example of decentralized value creation. Just like Airbnb empowered anyone with a spare room to run their own bed and breakfast and YouTube empowered anyone with some talent (or a funny cat) to create engaging content, Placemeter is allowing anyone with a window and a view to connect and contribute to a network of urban sensors.
And it works because the marginal cost of adding a new meter to their network is relatively low. Especially if you compare it to what it might cost for a municipality to setup and manage a similar – albeit centralized – system. It’s a totally different cost structure. So when we talk about smart cities and data driven city building, we’re really talking about networks and an environment of decentralized inputs.
It’s a pattern that keeps coming up as a result of the internet. If you start watching for it, I’m sure you’ll see it.
