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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  • BlackBerry started our forest

    A friend of mine posted this article on my Facebook wall yesterday: “A Snowier Silicon Valley in BlackBerry’s Backyard.”

    It essentially talks about the fact that despite the rapid decline of BlackBerry (it just reported $4.4 billion in losses), the Kitchener-Waterloo region is thriving. Many companies—both local and international, such as Google and Motorola, Square, Desire2Learn, Kik and others—have all hung their shingle in the area. 

    Part of this certainly has to do with the University of Waterloo, but much of it also has to do with the legacy of BlackBerry. In fact, you could argue that BlackBerry (formerly Research in Motion) is what started at all.

    In reading the New York Times article I was reminded of a post that Fred Wilson wrote last year called, “The Darwinian Evolution of Startup Hubs.” It’s a great post. In it he talks about how he looks for the company that gave birth to the hub. In Silicon Valley he argues that it was Fairchild Semiconductor and in New York it was Doubleclick.

    Once started, he likens the hub to a growing forest. The big trees (mature companies) start dropping seeds and new trees then start to grow (more startup companies). This is important, because it kick-starts a non-linear cycle of entrepreneurial growth.

    Here’s how he maps out Silicon Valley:

    “In my mental model of Silicon Valley, the first “tree” was Fairchild Semiconductor (founded in 1957) which begat Intel (founded 1968) which begat Apple (1976) and Oracle (1977), which begat Sun (1982), Silicon Graphics (1981), and Cisco (1984) which begat Siebel (1993) and Netscape (1994), which begat Yahoo! (1995) and eBay (1995), which begat Google (1998) and PayPal (1998), which begat YouTube (2005), Facebook (2004), and LinkedIn (2003) which begat Twitter (2006) and Zynga (2007), which begat Square (2010), Dropbox (2008), and many more.”

    Using this logic, Fred Wilson argues that Silicon Valley is about 10 cycles in and New York is at about 2. So what about Kitchener-Waterloo? Well if you buy into the argument that BlackBerry is what started it all, we’re really only into our first cycle. BlackBerry created a lot of wealth and talent, and now it’s being deployed into local startups. Our forest has begun.

    Part of me worries, though, if Kitchener-Waterloo is the right place for a startup hub over the long term. Sure it has the University of Waterloo, but does young talent want to be there? At about 320,000 people, it’s no San Francisco, New York or Toronto. And we’re already seeing a significant pull towards urban centers.

    But let’s look at it from the perspective of Southern Ontario as a whole. We’re at a critical moment in our evolution. The mother tree has caught a disease and it’s starting to take its toll. It may be able to fight it off, but right now it’s not looking promising. Thankfully, there are many young trees sprouting up to replace it. But we’re going to need to take special care of them, because they’re probably our best shot at creating our own thriving forest.

  • Why real estate is an imperfect market

    I’ve said many times before that the real estate market is an imperfect one. Participants lack access to a lot of valuable information and there’s a significant amount of friction between buyers and sellers.

    A perfect example of this can be found in this recent Toronto Star article, which is suggesting (at least in the headline) that only about 23% of Toronto’s condos are owned and rented out by investors. The article is reporting on the Canada Mortgage and Housing Corporation’s annual publication called the Canadian Housing Observer.

    Of course, to come up with this number, CMHC is only reporting on data held by the MLS. It does not include units that may have been rented out via Craigslist, Kijiji, social media, a billboard in the lobby, or some other means. And I would argue that the rental side of the marketplace has a much stronger tendency to go outside of MLS as compared to sales.

    So what what this means is that we have absolutely no idea what the actual percentage of investor owned units in the city really is. Here’s how CMHC put it:

    Mathieu Labarge, CMHC’s deputy chief economist, acknowledged that “to complete the picture there’s a need for data,” and it simply doesn’t exist.

    Nobody seems to know exactly where buyers, or their money, is coming from, why they are buying and how they intend to use the condo.

    In reality, the investor percentage is going to be higher:

    “We think the number is closer to 50 per cent,” says veteran Toronto development consultant Barry Lyon. “The data they (CMHC) are using has some shortcomings. It’s only part of the story.”

    Now, I don’t have the answer, but I think it’s pretty safe to say that consumers and the market as a whole would be better off if it had all the information.

  • Am I supposed to like this city?

    Marketer Seth Godin just wrote a typically short blog post called, “Am I supposed to like this?”

    In it he talks about the fact that we are, for example, more likely to enjoy the food at a fancy restaurant. And we’re also more likely to enjoy a bottle of wine if it’s expensive or if we believe it comes from some desirable wine region and it’s supposed to be good (you can even just switch the bottle).

    He then sums up this idea in one line that I really like: “Judgments happen long before we think they do.”

    Now, I’ve thought about this same idea with respect to cities. Take New York, for example. New York is famous. If I had to pick a capital for the world, it would probably be New York.

    You watch it in movies and shows (even if it’s actually filmed in Toronto, Chicago or some other stand in). We read about it. We hear about it. We generally form judgments without the actual experiences. That builds brand equity. We’re supposed to like New York. Sex and the City told us so. And that makes it all that much better when we eventually get there.

    Of course, it’s a bit of a catch-22. You have to be an awesome city for people to want to make movies and songs about you. But in this era of global connectedness, I think everyone, from citizens to economic development agencies, can fake it until that city makes it by investing in “supposed to.” Am I supposed to like this city?

  • Wrapping my head around Bitcoin

    There’s been a lot of talk about Bitcoin over the past year, particularly as of late when the value of one bitcoin peaked at over USD $1,200.

    Truthfully, it’s only been over the past few months that I’ve really started to wrap my head around how Bitcoin works and what the implications of it might be. But the more I learn about it, the more it strikes me as something enormous in the making.

    If you’re not yet familiar with Bitcoin, you can check out this video (simple version) or this video (complicated geek version).

    Essentially though, it’s a decentralized and open source digital currency that’s managed using networked computers, as opposed to any one government. And functionally, it works as a distributed public ledger that logs every single bitcoin transaction. What this means is that when you buy or sell something using bitcoin, no exchange of bitcoin actually takes place. Instead, the distributed public ledger (called a block chain) gets updated to show who owns which coins both today and previously. 

    This is potentially a big deal for 2 reasons.

    The first is that many people view Bitcoin as the first internet native currency. The decentralized architecture of Bitcoin matches the decentralized architecture of the internet. And so it has the possibility of becoming the transactional protocol for the internet and global commerce.

    The second reason (and this is where your mind will really get blown) is that transactions can be logged in the block chain/ledger with additional information embedded into each bitcoin. What this means is that you can use Bitcoin to create contracts, such as deposits, escrows, loans and so on. And since Bitcoin is designed to function in low trust environments (ie. where nobody knows each other), there’s an opportunity to really optimize the way we buy and sell almost anything.

    In fact, if you dig deeper into what’s being contemplated with Bitcoin, you’ll find things like “smart property.”

    “Smart property is property whose ownership is controlled via the Bitcoin block chain, using contracts. Examples could include physical property such as cars, phones or houses.”

    Of course, it’s still early days for Bitcoin. But if it truly does become the transactional protocol for the internet, then I certainly do think we’ll see dramatic changes in the way we buy things like cars and real estate.

  • The story behind the name “Architect This City”

    I was having drinks with an old friend a couple of weeks ago and I told her about my blog. She immediately asked me what it was called. At the time, it was just called “Cities.” And truthfully, I hadn’t given the title much thought. I just knew that I wanted to take a multi-disciplinary approach to examining cities.

    After that night I started thinking more about the idea of a proper title for my blog and I came to the conclusion that I did need something more creative. I should have a stronger brand and identity. So I experimented with a few names and, as you’ve probably noticed, I settled on “Architect This City.”

    Now that I’ve been using the name for a few weeks, I thought I would share my thinking behind it.

    I wanted the name to convey 3 things. (1) I wanted it to be clear that this blog was about cities. (2) I wanted it to be something personal to me. (3) And I wanted to somehow demonstrate that this blog isn’t a siloed look at any one particular discipline, such as architecture, planning or real estate. It’s more than that.

    Given my background in architecture and the fact that “city” is in the name, I think that objectives 1 and 2 made it through. But what I hope is also clear from the name is that the term “architect” is supposed to refer to something much broader than just building design. It’s about the underlying systems, processes and structures of our cities—which could tie into the real estate market, our governance structures or some new technological innovation. Cities are complex and there are many “architects.”

    Finally, I wanted the name to be a directive—a call to action. I wanted it to be a reminder that cities don’t just build themselves. They require careful thought, planning and deliberation. And that’s fundamentally what this blog is all about: city building.

    What do you think about the new name? I’d love to hear your thoughts in the comment section below.

  • Priced out of the city

    Earlier this month, the Royal Bank of Canada and the Pembina Institute co-published a report on Toronto’s housing market called “Priced Out”. The overarching argument is that homebuyers in the Greater Toronto Area (GTA) are being “priced out” of the areas in which they really want to live, which happen to be walkable and transit-oriented neighborhoods.

    In fact, according to their research, 80% of residents in the GTA would be willing to sacrifice space (size of house and yard) if it meant they could live in a more walkable and urban neighborhood. But at the same time, more than 70% of GTA residents say that they live where they do because of affordability reasons, not because of actual preference. This, of course, isn’t new. It’s the whole “drive to affordability” notion—just keep driving until you can afford the housing. 

    Overall though, the report does reinforce a macro tend that I’ve discussed many times here at Architect This City. People are returning to cities in droves (or would at least like to, if they can afford it).

    If you’re interested, the report also has some good data on Toronto and Canada’s housing markets. 

    Here’s how average home prices in Canada trended between 1980 and 2012. Vancouver became a total outlier starting in the early 90s (thanks Hong Kong).

    image

    And here’s a look at housing completions (so new construction) by product type in the Greater Toronto Area. Note how apartments/condos surpassed single-detached houses in and around 2008. 

    image

  • A question of infrastructure

    One of the main reasons why I hear people oppose certain development projects is because of a lack of infrastructure. Whether it’s roads, transit or something else, the concern is that what we have is inadequate to service what we’re about to build.

    Now, I understand that we can’t completely overburden the city, but I still have fundamental concerns with this line of thought. 

    The population of the Greater Toronto Area is expected to grow by 2.5 million people over the next 20 some years, to almost 9 million people by 2036. What this means is that growth is happening and it doesn’t really care whether or not we have the “right” infrastructure in place. It’s coming and we need to figure out how best to house these people while at the same time building the most livable and prosperous city on the planet.

    And I’m not sure most people appreciate that if we don’t build up (intensification) it means we’re going to be building out (sprawl). Again, the growth isn’t going to stop. And this represents an even greater strain on our region’s infrastructure (both built and natural) because it puts people into less intense land use and into cars.

    So what I’m going to suggest is that instead of asking if our current infrastructure will handle the future, we ask why the future hasn’t been built into our current infrastructure? It’s a question of being proactive, rather than reactive.

    We should be demanding better infrastructure instead of holding back progress because of our inability to properly city build. We should be demanding the best as opposed to knocking everything else down to the lowest common denominator.

    A perfect example of this is transit.

    I strongly believe that transit is one of, if not the, biggest issue facing our region today. Decades of disinvestment are really showing my friends. And if we don’t get our act together, the impact on our quality of life, our environment, and our economic productivity is only going to worsen.

    We need to be asking the right questions: Is the development the problem or is the real problem our infrastructure deficit?

  • I got 88 buildings

    The NH Deutscher Kaiser Hotel building in Munich looks like this:

    It’s a fairly conventional tower on top of a podium.

    However, photographer Victor Enrich decided to reimagine what this tower and podium could look like. In fact, he did it 88 times. Here’s the video. And here’s one example:

    The realism of each is incredible. It’s also a fascinating—albeit outlandish—study of what could be.

  • 100 books for city geeks

    If you’re a city geek looking for a good book to read, head over to Planetizen and check out Brent Toderian’s list of the 100 best books on city-making. Toderian was formerly Chief Planner for the City of Vancouver.

    I have a good number of those books on my own bookshelf, but also many that I should really read. I think I’ll start with #1: Cities for People by Jan Gehl.

    Here’s the forward for that book by British architect, Richard Rogers:

    “Cities are the places where people meet to exchange ideas, trade, or simply relax and enjoy themselves. A city‘s public domain — its streets, squares, and parks — is the stage and the catalyst for these activities. Jan Gehl, the doyen of public-space design, has a deep understanding of how we use the public domain and off ers us the tools we need to improve the design of public spaces and, as a consequence, the quality of our lives in cities.

    The compact city — with development grouped around public transport, walking, and cycling — is the only environmentally sustainable form of city. However, for population densities to increase and for walking and cycling to be widespread, a city must increase the quantity and quality of well-planned beautiful public spaces that are human in scale, sustainable, healthy, safe, and lively.

    Cities — like books — can be read, and Jan Gehl understands their language. The street, the footpath, the square, and the park are the grammar of the city; they provide the structure that enables cities to come to life, and to encourage and accommodate diverse activities, from the quiet and contemplative to the noisy and busy. A humane city — with carefully designed streets, squares, and parks — creates pleasure for visitors and passers-by, as well as for those who live, work, and play there every day.

    Everyone should have the right to easily accessible open spaces, just as they have a right to clean water. Everyone should be able to see a tree from their window, or to sit on a bench close to their home with a play space for children, or to walk to a park within ten minutes. Well-designed neighborhoods inspire the people who live in them, whilst poorly designed cities brutalize their citizens. As Jan says: “We shape cities, and they shape us.”

    No one has examined the morphology and use of public space to the extent that Jan Gehl has. Anyone who reads this book will get a valuable insight into his astonishingly perceptive understanding of the relationship between public spaces and civic society, and how the two are inextricably intertwined.”

  • Tech irony

    I came across an interesting op-ed in the New York Times this morning called “What Tech Hasn’t Learned from Urban Planning.” It basically talks about how, despite the fact that tech companies are increasingly moving from the suburbs to the city, they haven’t yet figured out how to be urban.

    “The tech sector’s embrace of urbanist lingua franca and its enthusiasm to engage with urban problems is awesome, and much welcomed. But these folks need to become better urbanists.”

    The problem—Allison Arieff argues—is that they create sterile and insular environments. Breakfast, lunch and dinner are served to employees so they don’t need to leave the building. And private social spaces are created just for them.

    It strikes me as being terribly ironic that these companies—a great number of which are committed to making the world more open and connected—actually suck at doing that in real life.