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.

Subscribe

  • Why I decided to start blogging

    New York VC Fred Wilson wrote a blog post yesterday called “Writing It Down.” In it he talks about why he blogs everyday. It’s worth reading. If you’re into tech, you should also read his linked post on Twitter.

    After reading it, I thought I should come clean about something: He’s one of the main reasons I decided to start blogging. I saw what he was doing and I felt inspired. The other reason is that I started blogging for Dirt and really enjoyed it. I’m trying to also do it daily, but so far I haven’t made any public promises on that front. I’d rather under promise and over deliver.

    I’ve been an avid reader of Fred’s blog for awhile now. What I find really powerful is that it has become a mechanism for him to get his thoughts out and into the world and to get feedback on them. Sometimes his posts can be a definitive how-to (such as his MBA Monday lessons) and in other cases it’s clear that he himself isn’t sure of the answer, but that he wants to put it out there for discussion. And I think that’s a great way to be. There’s wisdom in crowds.

    At the same time, when I decided to start blogging personally, I told myself that even if nobody reads my stuff that I’d still be getting value out of it. That’s because writing forces you to think about things to a greater extent than if you, well, just sat and thought about them. I like that.

    However, I do hope that my blog will end up getting read by others because I’m interested in happenstance. I’m interested in the chance that like-minded individuals will read one of my posts about cities and reach out to me, or introduce me to somebody I should meet. 

    When you put yourself out there, I think you also open yourself up to opportunities.

  • The Ruins of Detroit [Book]

    In light of my upcoming trip to Detroit, I thought I’d share a (photography) book that was recently recommended to me called The Ruins of Detroit. It’s by photographers Yves Marchand and Romain Meffre. You can check out some of the photos here.

    The imagery is absolutely incredible and I really like their description of the project. Here’s a part of it:

    “Detroit, industrial capital of the XXth Century, played a fundamental role shaping the modern world. The logic that created the city also destroyed it. Nowadays, unlike anywhere else, the city’s ruins are not isolated details in the urban environment. They have become a natural component of the landscape. Detroit presents all archetypal buildings of an American city in a state of mummification. Its splendid decaying monuments are, no less than the Pyramids of Egypt, the Coliseum of Rome, or the Acropolis in Athens, remnants of the passing of a great Empire.”

    I particularly like the last line: “…remnants of the passing of a great Empire.” When I look at their pictures, I like to try and imagine what those spaces would have been like teeming with people. Do you think anyone, at the time, could have possibly imagined that those good times were going to end? 

    Clearly most did not, because look at the money that was spent on what are beautiful buildings. As derelict as those buildings are today, each one of them was presumably built with economics in mind. Developers were making money, tenants were paying rent and people were occupying the spaces. Now look at them.

    There’s something really powerful about witnessing this kind of abandonment, particularly because it feels so recent. It’s one thing to look at relicts like the Coliseum and dismiss it as being eons ago. But this wasn’t that long ago. For me, it’s a stark reminder of how ephemeral things in life can be. Just because you’ve got it today doesn’t mean you’ll have it tomorrow.

  • Why the Pan Am Games are good for Toronto

    The Pan American Games are coming to Toronto in 2 years – 559 days to be exact. While not as high profile as the Olympics, some of you may be surprised to learn that the Pan Am Games will involve three times as many athletes as the Vancouver Olympics did.

    However, the big question with these sorts of events is always whether or not they create a lasting economic boon for the host city. History is littered with examples of economic disasters and lingering Olympic debts. I’d love to see a full analysis of what it costs to bid for a game, how much public money has to go up, how much private investment it spurs, and so on.

    At the same time, I suspect that some of the positive externalities might be hard to measure. How do you attach a value to the brand equity you get from hosting a major international sporting event? It’s hard, but for many people around the world the 2015 Pan Am Games could be the event that embeds Toronto into their psyche. 

    But there is another big benefit to playing host. It creates a real deadline. When cities bid for games they make all sorts of promises about the kinds of things they’re going to build and provide. In the case of Toronto, it accelerated the creation of a new mixed-income neighbourhood called the West Don Lands (which will be used to house the athletes during the games).

    “Originally, build out of the 32 hectare (80 acres) West Don Lands was planned to unfold in three strategic phases and take between 10 and 12 years, subject to market conditions. With the Pan Am Games, more than half of the community will be in place for the Games in 2015.” -Waterfront Toronto

    So in effect, we’ve leveraged the games in order to expedite capital projects that were already in the pipeline. I like this, because without a hard and fast deadline, I can almost assure you that these publicly run projects would have fallen behind schedule. Deadlines and goals are good.

    Here’s an example why:

    When I first started my MBA program at Rotman, we did an interesting organizational behaviour exercise involving origami cranes. The class was split into groups and each group was asked to go away and build paper cranes. If you’ve ever built one of these, you’ll know that they can be tough at first.

    But what each group wasn’t aware of was that they were all given different instructions in terms of the number of cranes they were expected to build. Their goals were different. At the end of the exercise, all of the cranes were counted and each group wrote their “production” levels on the board.

    What was discovered was that each group more or less built the exact number of cranes that they were asked to build. This is interesting, because presumably every group had the raw ability to produce the same number of paper cranes. All that changed was the motivation.

    Returning to the case of the Pan Am Games, the mandate is clear: We need to house 10,000 athletes and officials by the summer of 2015, or else we’ll look utterly incapable in front of the world. We have a deadline. And that’s a good thing.

  • DUKE

    As many of you know, I recently made the move to a new real estate development firm here in the city called TAS. Well, actually, it was a return for me. I interned here one summer while I was in grad school at Penn. I was always a big fan of the company’s philosophy around city building and so it felt then, as it does now, as a really good fit for me.

    As a returning member of the TAS team, I’m excited to announce the launch of our latest condo project called DUKE. It’s located in the Junction (near Dundas & Keele), which is arguably one of the hottest up-and-coming neighbourhoods in Toronto. And, it’s a stone’s throw away from Playa Cabana Cantina, which just so happens to be my favourite Mexican place in the city (although sometimes I think it could be Grand Electric).

    In all seriousness though, and with as much bias aside as possible, I think it’s a fantastic project. I obviously wasn’t around for its formative years, but I’m thrilled to be a part of it now. If you’ve read any of my blog posts over at Dirt (thedirt.co), you’ll know that I’m a huge supporter of more midrise development in Toronto. It’s a European scale of buildings that I think we’re largely missing in our fantastic city.

    So if you’re in the Junction area, I would encourage you to pop into our sales office and say hello to the team. We’re located at 2800 Dundas Street West. The tile as you walk in is awesome (I can say this because I didn’t choose it) and I think you’ll find that the design of the place is very much of the Junction. Much of the materials, fixtures and labour that went into the sales office were sourced locally from the hood.

    If you do go check it out, let me know what you think by commenting below, tweeting me, or tweeting @tasdesignbuild.

  • L.A.T.

    In case you needed one more piece of evidence that household and family dynamics are changing, here’s a relationship arrangement that you may not have heard of but that’s seemingly growing in popularity: living apart together.

    Essentially, it’s when a couple is together, but has decided to live in two separate places, which could mean down the street, in another neighbourhood, or in a completely different borough.

    This may sound odd, but:

    “The arrangement has surprising appeal, perhaps because it protects against the constant churning in people’s domestic lives,” said Mr. Klinenberg, a sociology professor at New York University. “Many people who live alone are in relationships that are quite meaningful. And the arrangement is especially attractive in New York, which has such a thriving public culture and little stigma about how people live their lives.”

    This certainly reinforces the trend towards more and more people living alone – creating an obvious impact on housing typologies. But it’s not something I see as being desirable. Perhaps because I haven’t been divorced 3 times and become sufficiently jaded towards the institution of marriage.

    What do you think of this? Would you do it?

  • Tower renewal

    Before I went to bed last night, I stumbled upon this Globe and Mail article talking about Toronto’s Tower Renewal program. Here’s a snippet:

    “In the postwar period, Canadian cities, particularly Toronto, grew differently from those in the United States, following a European-style model of regional planning. Regional governments insisted on building suburbs that were dense and housed people of all income levels. Apartment towers helped balance out the pricier single-family houses that middle-class people preferred – and a generation of new Canadians, and those migrating from rural Canada, arrived to fill those apartments. It was good planning on a massive scale, in line with the market.”

    If you know Toronto’s urban landscape, you’ll know that this is true. The city is dotted with suburban tower clusters, many of which were built in the 60s and 70s during our last high rise boom. But these towers have now aged and the Corbusier style “tower in the park” planning ideology has proven to be a failure.

    The Tower Renewal program is designed to not only retrofit those buildings, but also reposition how those buildings fit in with the larger urban fabric. In most cases, that’ll mean adding more density to the site and activating the street level through retail and other uses.

    It’s absolutely the right move. I think that suburban intensification is something we’re going to have to do all across the board to correct some of the planning mistakes we’ve made in the past and to make our cities more livable.

    But the real question in my mind is whether we can transform the way people think about high rise living.

    If you take a look at the snippet I included above, what is basically being said is that we built towers for poor people and immigrants coming to Canada. We slapped a “park” on the end of the neighbourhood’s name (Regent Park, Flemingdon Park, Thorncliffe Park, etc.) and thought we had created something really quite nice.

    Some neighbourhoods, such as St. James Town, were initially intended to attract young and hip urbanites. But was it ever really the King West of its day? The middle class preferred single family houses and that’s where they went, leaving the tower communities to those who had no other choice.

    Today, many of these tower communities represent one of Toronto’s 13 “priority neighbourhoods.” These are neighbourhoods considered to be in social and economic need. Given this outcome, there’s no shortage of people comparing our new high rise communities, such as CityPlace, to older ones such as St. James Town. Is history repeating itself?

    But I think things are a bit different this time around. We’re building more condos than rental apartments and we know that housing tenure can matter. There’s been a return to cities. People genuinely like living in walkable communities close to amenities. The region is becoming increasingly harder to navigate by car. And the price of single family homes is no longer within the reach of many middle class families.

    What all this mean is that I think Toronto is in the early stages of transitioning to a city where more and more people actually live and raise families in multi-family dwellings. I disagree with the notion that we’re already there, because even though we have lots of high rises, they’re often viewed as a stepping stone towards a more desirable form of housing.

    The true test will be when this generation of condo dwellers grows up and decides to have a family. Will they stay put or once again search out the seemingly necessary single family home?

  • I don’t get Las Vegas real estate

    If you had to pick an epicentre for the housing bust of 2008, I’d say that Las Vegas would be a pretty safe bet.

    Las Vegas home prices doubled between 2002 and 2006 (the peak), and then fell 62% through to 2012! According to RealtyTrac, Las Vegas saw the highest rate of foreclosure (in 2009) compared to any other major city in the US. 1 out of every 13 properties was in foreclosure. That’s pretty incredible.

    Now, hindsight is always 20/20, but from the beginning I had a hard time understanding Las Vegas from a real estate standpoint. You have a city that’s running out of water and who’s major economic drivers are tourism, gambling and conventions. Not only are these industries highly cyclical, but they don’t create a lot of high paying local jobs.

    So for home prices to double in the span of 4 years, it must mean that there’s a lot of investor activity in the market. But how much is a lot? As one example, the 678 unit Meridian Private Residences, which was a condo conversion done by American Invsco, apparently only sold 14 units to end users. The remaining 98% of the units were bought by investors.

    Those are pretty scary numbers – both for investors and end users. And while times today are certainly nowhere near as frothy, I still don’t get Las Vegas real estate.

  • The Hungarian House on St Clair

    I was driving down St Clair West yesterday and I noticed that Urbancorp had erected a marketing sign on their site at 836 St Clair Ave West (former Hungarian House) and was in the midst of constructing a sales office.

    The project is called The Homes of St. Clair West and it looks like it’ll be a promising set of semi detached houses. However, if you look at the City of Toronto’s Development Application website, the site shows a mixed use project with almost 100,000 square feet of residential space and roughly 12,000 square feet of retail space.

    I’m not sure how to reconcile what’s planned for site, but I have two things to say:

    First, I think it’s a damn shame that the Hungarian House was even torn down in the first place. I’m not exactly sure when it was built, but I thought it was an interesting building with lots of potential to be incorporated into a new mixed use project. We really need to get better at preserving the history that we do have in this city.

    Second, if they’re planning townhouses along St Clair Avenue then I think it’s absolutely the wrong type of development for that street. St Clair deserves midrise. Let’s hope that’s what they have planned.

  • You can go wrong with real estate

    One of the things I often hear people say to me is that “you can never go wrong with real estate.” And indeed, if you’re talking about Toronto real estate over the past decade, then yes, it was fairly difficult to go wrong.

    But that’s not a universal truth – either here or elsewhere. Real estate is very much an imperfect market and it has always been prone to protracted market cycles.

    Furthermore, if you’re in the wrong city or part of town, there could be absolutely no market for your property. Take this example from Business Week:

    Helene Pearson’s belief in homeownership was shattered in Roseland, the mostly black Chicago neighborhood where President Obama got his start as a community organizer. Pearson, who bought her two-bedroom, red-brick bungalow on South Calumet Avenue for $160,000 in 2006 with a high-interest loan, put it on the market a year ago for $55,000—and didn’t attract a single offer. Her bank has agreed to take it back in exchange for canceling her remaining mortgage debt. “I was so excited to buy my first house right down the street from my mother, but they got me good,” says Pearson, a 35-year-old guidance counselor and mother of two girls. “This scarred me so badly that I never want to buy again.”

    Here you have a case where the value of the property (whatever it may be – clearly it’s not even $55,000) is below the replacement cost. That is, the value is well below what it would cost to actually go out and build a similar property. When you have a scenario like this, it intuitively translates into very little new investment.

    And this is the case in many places, which is why when I hear somebody say “that you can never go wrong with real estate”, I secretly cringe inside.

  • TIFF + TORONTO

    During TIFF is an awesome time to be in Toronto. The city is buzzing, the bars are open until 4am (that should be standard), and everybody is talking about films. I used to go to a lot more movies when I was younger, but that’s sort of fallen off in recent years. Thankfully, my good friend Meg was kind enough to invite me out last night. We saw Blood Ties, which I really enjoyed. It’s about a good cop and a bad brother.

    Before the movie started we started talking about the history of TIFF and it’s impact on Toronto’s economy. Curious, I looked it up today and the estimated annual contribution in 2011 was approximately $170M (which appears to be comparable to Cannes). That’s pretty impressive given that, even though there’s technically programming all throughout the year, it’s really only an 11 day festival.

    I was also reminded of Roger Martin’s book the Opposable Mind, where he talks about the founding of the festival and the dichotomy the founders were faced with. He argues that, at the time (1970s), there were 2 predominate film festival models in place: the elitist jury driven Cannes model and the sort of grassroots model. The problem with the former was that it didn’t feel inclusive for festival goers and the problem with the latter was that it didn’t attract the buzz of say a Cannes.

    image

    The solution was to do both – basically make the audience the jury. The solution was a People’s Choice Award. This made festival goers feel like they had a say and were a part of the process, and it served as an effective buzz machine. There were also a bunch of other benefits, including the fact that the industry could now get a clear sense of a movie’s commercial appeal prior to going to market. More insular festivals couldn’t do this as well.

    Here’s how Roger Martin put it:

    “The People’s Choice Award put the Toronto International Film Festival on the map. By 1999, Roger Ebert, America’s most influential film critic, was telling one reporter that “although Cannes is still larger, Toronto is more useful and more important.” By 2005, TIFF had booked the largest volume of sales in film festival history, and film critic Liam Lacey named it “the most important film festival in the world – the largest, the most influential, the most inclusive.””

    This is an incredible achievement and we’re lucky to have it in our city. Now let’s get out and create some more of the world’s best.