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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  • 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.

  • 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?