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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  • Shopping: offline vs. online

    According to Sequoia Capital, Americans spent $4 trillion on retail shopping last year – 95% of which was still done in traditional brick-and-mortar stores. I’m actually a bit surprised by how high this number is. I would have thought that a larger percentage of people would be shopping online.

    For me personally, I’d say that my split might be close to 50/50. From furniture to clothes, to even a new bicycle, I buy a lot online, come to think of it. Part of the reason is convenience, but the other reason is that I like having easy access to a broader selection.

    About the only thing I really prefer buying in person is groceries. However even there I’ve been exploring ways to regularize shipments of the items I typically buy. I can’t recall where I read it, but I remember seeing something about less than 1% of groceries in America being bought online.

    Intuitively, the percentage of online sales is only going to rise, particularly given the shift to mobile. Consumers can now shop anytime, anywhere. Real estate companies and retailers certainly need to pay attention.

    But just like the internet didn’t make cities irrelevant, I don’t think it’ll make shopping in person completely extinct. As Sequoia Capital points out in its article, mobile phones are creating new opportunities at the intersection of online and real world shopping.

    So while I don’t know what the future online/offline split might be, I suspect that the two worlds will continue to blur together. I might buy a bicycle online, but when it comes time to service it, I’d like to be able to bring it into a store.

  • Subways – except the downtown relief line

    Politics rewards consistency. Even if you’re wrong, it’s better to be consistently wrong than come across as wavering – however noble and rational the intentions may be. And that’s exactly what happened with Rob Ford and his commitment to subways, subways and subways.

    John Lorinc of Spacing wrote an interesting piece yesterday on how, despite all the debating that went on, Ford is delivering what he said he was going to deliver: a subway. It doesn’t matter that all technical and financial considerations were thrown out the window, he got it funded.

    As I said earlier this week, I think the Scarborough line is the wrong subway to be building and that the downtown relief line is infinitely more important for the region. However, Lorinc makes a good case in his article for why this line will not be funded despite the current focus on subways, subways and subways:

    “Fourth, it’s important to recognize that there will be one notably perverse exception to the foregoing, which is the [Insert Euphemism Here] Relief Line. I do admire Josh Matlow’s advocacy on this front. But Ford will never take up the DRL cause because (i) he doesn’t get the purpose of said extension; and (ii) because the project doesn’t butter his bread, electorally speaking. I’m guessing it will be years before someone with the mayor’s block-headed tenacity emerges to champion a line with a politically inconvenient name and an eye-bulging price tag.

    In fact, the sheer heft of the relief line will allow marginally useful yet politically supported subway projects — extensions in the west end to Sherway Gardens or up Yonge to Richmond Hill – to continue to elbow their way to the front of the line, just exactly as the Scarborough subway project did. Indeed, because we no longer care, at any level of government, about subjecting our transit investment choices to a rational policy framework, the most crucial project in the GTA will always lose out in the funding lottery because it has the most diffuse constituency and the most conceptually complicated purpose.”

    The disparaging thing about these two paragraphs is that it’s a sad reality.

  • Nothing stops Detroit

    When I told my friends that I had booked a weekend getaway to Detroit, I got responses like: “By accident?” and “Why on earth would you want to go there?” But that’s exactly what I did last weekend. I went to Detroit.

    I wanted to see first hand what was going on the city. I wanted to see if it really was the lost cause that the media makes it out to be or if it had the potential to come back. I had been following Dan Gilbert’s efforts to seemingly buy up every building in downtown Detroit and I wanted to see if those efforts were working. I’m an optimist, so I wanted to believe that they were.

    I also have friends who live in the city and a friend who’s working on a number of urban renewal initiatives in the midtown area. It was a great opportunity for me to get a local point of view and also learn about what’s coming in the development pipeline. So I met my friend Alex – pronounced Ay-lex in Michigan – and I got the run down on Detroit.

    Detroit is an absolutely fascinating city. As I mentioned before, it’s like visiting the ruins of a former empire, but one that’s recent enough to remind you of how ephemeral success can be. Whether it’s the death of Blackberry or the decline of Detroit, the mighty fall all the time. But it’s precisely this rich history that makes the city so interesting. When you walk inside some of the buildings built during the first half of the 20th century, you can’t help but be reminded of how important of a city Detroit was for America. Detroit was filthy rich.

    But even beyond the showpieces like the Guardian Building and Fisher Building, the Detroit landscape is littered with office and industrial buildings that would make any developer want to line up. One neighbourhood in particular that stood out for me was Rivertown. Running along the water just east of downtown, the area is filled with old brick buildings and the right street scale for a magnificent neighbourhood.

    However, I was told that this neighbourhood doesn’t really have a lot of momentum behind it. Most efforts are focused on the downtown and midtown areas. Still, I couldn’t help but imagine the area as a thriving mixed-use community. In the shorter term, I also thought the area could be really cool as an entertainment and nightlife district similar to Kuntspark in Munich, which was also a former industrial zone.

    Downtown and midtown are where it’s most evident that change is underway though. “Opportunity Detroit” is the slogan of Dan Gilbert’s real estate company, called Bedrock, and you see it plastered up in all of the windows downtown. Offices buildings are now leasing up and new retailers are moving in. I was told that five years ago none of this was happening. Woodward Ave was empty.

    As you move north towards midtown, you then discover a Michigan first: an urban depressed freeway. Detroit was the first city in America to build these and it’s certainly going to work in its favour as its city centre is reborn. I can only imagine how much more divided the city would be today had the freeways that wrap the core been built as elevated overpasses.

    But that’s not the case. Downtown and midtown are decently connected, albeit different in feel. In midtown, the buildings are more midrise in scale, the streets are broader, and the retail appears further along. There’s a Whole Foods that just opened up and fantastic new coffee shop called Great Lakes Coffee. It was busy when I was there on Sunday morning and I was told that it’s really the first place in Detroit where people could go to hang out and work.

    As you leave the core of the city things really fall off though. This is where Detroit becomes a prairie city and you see the one house on a block condition that the media likes to capture. It’s here where it becomes apparent that Detroit is simply too big, geographically, for its current population. You have infrastructure in place for 2 million people and yet a tax base of 700,000 people. No wonder it went bankrupt.

    So like many others have suggested before, I think Detroit needs to figure out a way to shrink in order to eventually grow. Just like a company going through restructuring, Detroit has to rid itself of some its liabilities. It’s going to have to take that write-down.

    At the same time, the population needs to be somehow consolidated and something needs to be done with all its excess land (urban agriculture is one idea). Jane Jacobs taught us that towers in a park don’t create urban vibrancy and the same can be said for houses in fields. Detroit is fragmented and divided. More so than dangerous, most of the city just feels eerily deserted.

    However, despite these challenges, two things really stood out for me during my visit.

    The first is that Detroit still very much has an ethos of production. It likes building and making things, and it’s visible in the emergence of brands like Shinola who are producing bikes, watches and leather goods right in the city.

    The second is that there’s a palatable sense of possibility. Detroit hasn’t lost that entrepreneurial spirit that made it a leader in manufacturing, music and sports. A great example of this is the Green Garage in midtown, which is a former Model T showroom turned sustainable coworking lab for Detroit entrepreneurs.

    But perhaps the best way to sum up this spirit is through a line I saw on a neon sign downtown on Woodward Ave. 

    It read: “Nothing stops Detroit.”

  • Wrong subway

    It was announced this morning that the feds will be contributing $660M towards Toronto’s new Scarborough subway line. While transit investment of any kind is generally a good thing, it’s a shame that we can’t get our priorities straight. Decisions are being made based on politics rather than rational thought.

    Here’s what TTC CEO Andy Byford said:

    “We all know that Toronto has a congestion problem, so it can only be good that we get more funding,” Andy Byford told reporters after the announcement. “I’ve said since the day I got here that the downtown relief line remains a priority for the TTC. I reiterate that point. But I think that, with the time scales available, it’s possible we can do more than one thing at a time.”

    This is Byford being diplomatic.

    The downtown relief line is absolutely the most important (planned) subway line in Toronto. For one, the Yonge & Bloor subway interchange is at capacity. Until these pressures are relieved, any extension of existing lines will only exacerbate the problem.

    At the same time, the density levels are way higher in the core, meaning that ridership levels will be higher and the required government subsidies will be lower. Not surprisingly, subway lines make more fiscal sense when you build them where demand is greatest.

    So the irony is that our Mayor – who ran on a campaign to “stop the gravy train” – is pushing to build a rail line that will ultimately cost taxpayers more money.

    Oh, politics.

  • Globe and Mail moving to the east side of downtown

    This past Wednesday the Globe & Mail newspaper announced that they signed a 15-year lease to be the lead tenant in a new office tower now under construction at 351 King Street East (just west of Parliament Street). This means that the newspaper will be leaving its current digs on the west side of downtown at Front & Spadina.

    I have to admit that I was pretty excited when I read the news. The design looks incredibly promising and, as some of you might know, I’m bullish on the east side of downtown.

    One of my favourite areas of the city is the Distillery District. But today it still feels very much like an island. And it’s because the city hasn’t really caught up to it. It’s a destination.

    However, between the West Don Lands and major office projects such as this one (it’s 500,000 sf), I think the east side of downtown is about to hit its stride.

    It’s continuing to “fill in” and this will make more and more people realize how central it actually is to the core – especially in comparison to west side neighbourhoods like Liberty Village.

    Amongst my excitement, I did however stop to think about the fact that a newspaper company was taking top spot in a new office tower. Will newspapers even be around for another 15 years?

  • 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?