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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  • 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.

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    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.

  • There’s no light rail in Toronto

    Next City published an interesting article this morning on the politics behind Rob Ford’s subway obsession. I encourage you to have a read if you’re interested in politics, transit and/or the increasing polarization of North American cities (core vs. suburbs). It’s called Canada’s Strangest Straphanger.

    There are a number of great take-aways from the article, but I’d like to highlight one that I’m not sure many Torontonians realize: There’s currently no light rail (LRT) in the city. We have streetcars, of course. But no light rail. There’s a difference.

    Here’s an exert from Next City:

    “It is true that most people in Scarborough don’t want a light rail. They want a subway, and the reason they want it is that there is no light rail in Toronto,” says Jay Young, SSHRC postdoctoral fellow in the Department of History at McMaster University in Hamilton, Ontario. “We just have streetcars and subways and they think light rail is a streetcar, when actually it’s very close to a subway in terms of having its own right of way.”

    This may seem like semantics, but it’s not. Again, one difference is that light rail has its own right of way and streetcars compete with vehicular traffic. The other significant difference is station spacing. Streetcars stops are spaced similar to bus stops, which let’s say averages around 250m. LRT stations on the other hand are often in the range of 400-600m. This makes them similar to subways.

    It’s for this reason that even though the St Clair streetcar has its own right of way, I would not personally consider it a true LRT. As someone who lived in midtown for over 3 years, I can tell you that the stations are way too close together and that it’s highly inefficient during peak times – much like the rest of our streetcar network.

    Given the constant debates going on this city about light rail vs. subways, I think it’s important that we’re clear on definitions. Light rail has the potential to be an effective (read: cheaper and faster) way of delivering rapid transit to a greater number of people in the city. Before we dismiss that proposition, let’s please understand what it is.

  • Privacy in the new world

    Remember when you first started using the internet and nobody wanted to reveal their actual identity? Everyone used aliases, because it was weird to share sensitive information – like your full name – on the internet. One of my earliest usernames was bdonn. I used it for everything. I had bdonn@aol.com.

    Well, things have certainly changed.

    Could you have imagined that we’d get to a world where “over sharing” is viewed as a real – albeit first world – problem and phrases like “I share therefore I am” get thrown around. It’s a pretty dramatic departure from how we used to feel about privacy. And for the younger generation, who grew up entirely with social media, I don’t even think privacy is on the radar.

    Some would argue that this is a problem, which is why a group of academics over at Berkeley created a web app called Ready or Not? What it does is allow anyone to enter a Twitter or Instagram username and see a plotted map of where that user has shared from.

    Here’s what it spit out for me based on my recent tweets:

    The hope is that this will promote awareness around the fact that even one short tweet could be potentially revealing your exact geographic location. But I wonder to what extent people are actually unaware that this is happening or is just that they’re comfortable sharing this information? What do you think?

  • Gentrification and corporate shuttle buses

    A couple of months ago I had coffee with an urban planner who had recently relocated from the Bay Area back to Toronto. One of the interesting things that came up during our conversation – that I hadn’t really given a lot of thought to before – was how corporate shuttle buses (from the likes of Apple, Google, Facebook and so on) could be impacting cities.

    On the surface, they seem fairly benign. Most of the big tech companies are located outside of San Francisco, but young smart people today like living in cities. So let’s run shuttles buses that take people back and forth. Employees get to live the life they want and employers get broader access to human capital. It seems like a win-win.

    But in reality, some argue that these shuttles buses reinforce a powerful trend already plaguing the region: The alienation of non-tech people. George Packer of the New Yorker called the buses “a vivid emblem of the tech boom’s stratifying effect in the Bay Area.”

    What I wonder though is to what extent these buses are not just an emblem, but an actual driver of stratification and other negative outcomes. The first concern that comes to my mind is the possibility for this to lead to infrastructure disinvestment. Already there seems to be a philosophical divide around transit (see BART strike).

    Wired just published an interesting set of maps that try and map “Silicon Valley’s gentrification problem through corporate shuttle routes.” They’re worth checking out. It’s also interesting to see how they collected the data; it was a fairly messy process.

  • Building height isn’t everything

    We need to stop fixating so much on building height. I think some people believe that there’s a perfect correlation between building height and offensiveness. But in fact, I’ve been offended many a times by fairly squat buildings.

    Now, don’t get me wrong, I understand that height is an important part of urban design. But I’m starting to feel like we’re over emphasizing the importance of height and under estimating the myriad of other factors that constitute great architecture and city building.

    Massing is one. And the ground floor is another. Buildings that give nothing back to the street can be a real drain on a city, which is why if you’re trying to build a livable and exciting place where people want to be, you need to get the ground floor right.

    It’s important because as a pedestrian, it almost doesn’t matter what the building looks like 500 feet up in the air (unless of course you’re completely bathed in shadow). What matters is what you see right in front of you. The stuff happening on the street.

    What I worry about is not all the tall buildings we’re building in Toronto, it’s what we’re doing, or not doing, for our main streets. In some cases, a new development can be a welcome addition to a neighbourhood because it fills in what was previously a void (either physical or psychological).

    But in other cases it can be harmful, particularly if we’re destroying small scale retail and replacing it with something that sucks, or worse – nothing at all. So I would encourage you all – real estate folk and citizens – to think more about the ground floor the next time you evaluate a project. It’s an important one.

  • Is outer city the new inner city?

    What does the term “inner city” mean to you?

    It’s a loaded term. But probably more so for North Americans than Europeans. For a long time, calling a neighbourhood inner city, was simply a nice way of saying poor. They were the neighbourhoods that people of means left behind when they fled to the suburbs with their cars.

    But in today’s world it’s a stale term. So I think it’s about time that we officially retire it from our lexicon. All across North America inner city neighbourhoods – with their historic housing stocks and walkable main streets – have become some of the most desirable places to live. 

    Author Alan Ehrenhalt calls this The Great Inversion (title of his book):

    “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.”

    For many of us this, this isn’t news. The trends are clear. Young Americans are driving less and there’s been a growing preference for more compact and walkable communities.

    But does this mean that outer city will become the new inner city?

  • A map of every building in the Netherlands according to age

    There are apparently 9,866,539 buildings in all of the Netherlands. And Waag.org has just plotted them all on a map and colour coded them based on the year of their construction (via Information Aesthetics).

    Here’s what Amsterdam looks like:

    As to be expected, you can see how the city grew out from its historic core. What would it make the map even better though, is if you could turn off “layers” and see each time period in isolation.

    If you’re interested in this sort of thing, here’s a similar map of Portland.

  • How I walked today

    A couple of months ago I picked up a FitBit Flex. For those of you unfamiliar with the wrist device, it’s similar to the Nike FuelBand.

    I bought one for really two reasons.

    The first is that I think it’s pretty clear at this point – with Google Glass and rumours of an Apple iWatch – that wearable computing will eventually be a massive market opportunity. Who knows, it could do to mobile what mobile did to PCs.

    The second reason is that I love data. I love measuring and tracking things. And it’s probably the main reason I use apps like Foursquare fairly regularly.

    To this end, here’s how I walked today:

    It’s pretty typical for a day of commuting: To the office in the morning; out and about at lunch; and then back at the end of the day.

    In terms of the value I get out of this, it’s more for novelty than anything else at this point. The FitBit app has a lot of features to track caloric intake and other things, but I only use it to track things it can do passively.

    That said, I like being able to quickly see how close I am to my daily step goal of 15,000. On most days I don’t hit it.

  • Labour Day thoughts…

    Today is Labour Day (or Labor Day for my American friends).

    Many of us simply think of it as the official end of summer, but it’s also the day we’re supposed to celebrate the labour union movement and the achievements of workers. Given this, and the fact that yesterday’s post was about Detroit, it seems like an appropriate time to talk about jobs.

    In many ways, the woes of Detroit are simply an extreme example of what’s happening in many advanced economies. The loss of manufacturing based jobs is creating a void that is not being filled – or is being filled differently – by new industries.

    The first piece to this is what I mentioned yesterday: education.

    Manufacturing jobs allowed unskilled workers to make good middle class salaries. But other than a few remaining instances – such as in Fort McMurray, where high school graduates can make six figures working in the Canadian oil sands and the average price of a home is pushing $800,000 – I think it’s pretty clear that the opportunities for unskilled workers is on the decline.

    Therefore (and this is old news), we clearly need to figure out ways to retrain existing workers and ensure that the next generation is equipped with the skills and knowledge to compete in this new world. The problem though – and this is the second piece – is that I’m not sure the new economy will require the same raw number of people.

    What I mean by this is that scaling up production of an automative plant is quite different than scaling up an internet platform like Twitter or Tumblr. You just don’t need as many people, which is why the returns to being smart have grown massively for those few. And this is part of the reason we’re seeing rising income inequality across the board.

    Now, I don’t know what the answer is, but I think we’ve already shown that the transition to a new economy isn’t going to be a smooth one. To that end, I’ll leave you with one last thought which came from a former professor of mine at Rotman, Walid Hejazi.

    His argument is that it’s actually unethical for governments to subsidize unproductive sectors of the economy, such as a manufacturing, in order to sustain jobs. The reason being that you then have high school students telling themselves that they don’t need to go to University because they can simply go work at the local plant and make decent money. But what they don’t realize is that there’s a very real expiry date to those opportunities and, when it comes, it’ll be much harder for them to be retrained.

    What are your thoughts?

    Here’s what venture capitalist Fred Wilson had to say today.