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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  • Seoul’s infamous modernist megastructure

    Seun Sangga is Seoul’s first mixed-use complex.

    Constructed between 1967 and 1972, the elaborate structure sits atop a strip of land measuring 50 m x 1.2 km, which had been flatted during the Second World War as a way to contain the spread of fire in the event of an air raid and to act as an evacuation corridor.

    It’s a modernist development that is very much of this period. It’s massive, complicated in section and, in many ways, completely disconnected from its surrounding urban context. Flanking the various buildings are elevated and covered walkways.

    So it is perhaps not surprising that this development has followed a similar fate to many others of this era. While it was initially viewed as being quite modern and desirable — it was one of the first buildings in Seoul to have elevators — Seun Sangga was quick to start showing signs of decline.

    In fact, by as early as the 1970s, the complex became known for its porn shops and a bunch of other informal economy-type activities.

    It’s an interesting, though familiar, story.

    If you’d like to learn more, I recommend you check out this episode of the Urbanist and this article from The Architectural Review. The photos in the article are good accompaniment to the audio-only Urbanist episode, so make sure you flip through them.

  • Do great cities need tall buildings to help them thrive?

    In other words, are tall buildings a prerequisite to competing in today’s global economy? It’s an interesting question. And Jason Barr — professor of economics at Rutgers University-Newark — does think they are an important ingredient. So much so that he wrote a book on the topic called, Cities in the Sky: The Quest to Build the World’s Tallest Skyscrapers. While Jason does acknowledge that not every city needs them, he does suggest that not having them could hinder a global city:

    If you look at Paris’ global ranking in terms of its importance in the world economy, as measured by the size and number of international firms, it’s falling. Paris in 2000 was ranked fourth, and by 2020, it was down to eight, losing out to skyscraper cities such as Singapore and Dubai.

    In the last decade, Paris has shrunk by 122,000 residents. As reported by Forbes, “Many of those leaving are choosing either the suburbs or countryside around Paris, or they are relocating to France’s smaller cities such as Bordeaux, Lyon, and Toulouse.” By limiting its building stock, Paris is driving up housing prices, pushing out residents, and causing suburban sprawl.

    While I agree that tall buildings are important “geography-shrinking machines”, what we’re really talking about is using land more intensely. We’re talking about urban density. But you don’t necessarily need tall buildings to have high population densities. Consider Barcelona, which is one of the densest cities in Europe, and consider this comparison between Paris (few tall buildings) and Vancouver (more tall buildings).

    So is the argument simply that density is good for cities, and that tall buildings are one way to achieve that? Or is it that, now that cities like Paris are built out (albeit at very high densities), the only option for growth is to go up? I guess I’ll have to read his book.

  • Waymo’s robotaxis now make 50,000 paid trips every week

    A few days ago, Waymo announced (on X) that its robotaxis are now doing more than 50,000 paid trips every week across Phoenix, San Francisco, and Los Angeles.

    This means that the company is getting an average of 300 bookings every hour or five bookings every minute. And if you add in Austin, where it’s currently offering a limited number of rides, the company has completed a total of over one million rider-only trips.

    In the announcement, Waymo also went on to say that “fully autonomous ride-hailing is a reality and a preferred mobility option for people navigating their cities every day.” All of this is something.

    But perhaps the most important takeaway, right now, is that the company continues to claim — by way of a study from Swiss Re — that its robotaxis are already significantly safer than human-driven vehicles.

    I don’t personally know if this is true, but it’s not hard to believe. I mean, human drivers suck. And assuming it is true, we should all want more robotaxis on the road, because statistically, we would be significantly safer.

    The problem, though, is that autonomous vehicles suffer from a perception bias. We’re all looking for them to fail. If a robotaxi gets into an accident, it’s news. But if a human driver gets into an accident, it’s standard operating procedure. It’ll be interesting to see how and when this flips.

  • Cost-plus price floor

    Oftentimes, it feels like there is a perception that developers price new housing with the fattest of margins. Meaning, if only developers were less greedy, housing could be more affordable. But as we have spoken about many times before, real estate development is a competitive industry; therefore, projects happen on the margin.

    Ordinarily, the prices you see are the result of a cost-plus pricing strategy. Developers figure out what it will cost to build and develop, they add on a margin that they think their investors will accept, and then they determine what sticker prices they need to make the project financially feasible.

    I’ve been writing about this approach for many years, but today it’s even more obvious. According to Urbanation’s Q1-2024 condominium report, new unsold condominium inventory in the GTA is currently sitting at approximately 23,815 units. This is up 30% YoY and is equal to about 23 months of supply. Two years ago in Q1-2022, this number had reached an 18-quarter low of 8,726 units.

    Developers are highly motivated to sell and move their projects forward. Time is a killer, especially today. So the logical explanation for this rising inventory is simply that they can’t sell it. Their cost-plus pricing doesn’t overlap with what most buyers in the market are willing to pay. Like I said, development happens on the margin.

    In theory, there is always a price where buyers would be willing to transact. If I listed a beautiful condominium for $100k today, many people would want to buy it. Supply would quickly run out. The problem is that no developer can build for this. There is always a very real price floor and, right now, that floor doesn’t seem to be low enough for many buyers.

  • Housing affordability in Canada

    By some measures, housing affordability is, in aggregate, the worst it has been in Canada going back to the 1980s. Below is a chart from RBC showing homeownership costs as a percentage of median household income.

    The previous spike came around the early 90s, but following that, we saw 3 decades of relative affordability. In fact, for a large portion of this timeline, condo apartments look to be hovering around 1/3 of median household income. This is a common rule of thumb for measuring affordability.

    Now obviously things changed pretty dramatically during the pandemic. But that time has ended and a reset is underway. New housing supply has slowed dramatically. Developers are sitting on record levels of inventory. And sellers of all shapes and sizes are clinging, as best they can, to yesterday’s prices.

    With so much uncertainty, it’s challenging, if not impossible, to know exactly how all of this will play out in the coming years. But I suspect that, as time goes on, the above chart is going to start to mirror what we saw in the early and mid-90’s. In other words, affordability is going to improve.

  • Facing west

    I lived in my last condo for over 10 years. And since it faced east, I never got to see any sunsets while at home. Now that our new place faces south and west, I am amazed at how often there’s a beautiful sunset here in Toronto.

    This was last night’s from my home office:

    Naturally, this picture doesn’t come close to doing it justice.

  • Toronto’s Major Streets Study approved at Planning and Housing Committee

    Back in March, we spoke about how Toronto wants to allow small-scale apartments on all of its major streets. Well today, this study — known as the Major Streets Study — passed at Planning and Housing Committee.

    It still has to pass at Council. And the Committee did ask for city staff to look at certain amendments, such as reducing setbacks and increasing the maximum dwelling count from 30 to 60 suites. However, all signs point to this new policy being fully approved sometime in the coming months.

    There’s still work to be done. For example, I don’t know why there even needs to be a maximum number of homes. Maybe one of you can explain it to me. We are already dictating the overall built form, so why not let people just build as many homes as possible.

    It feels like we’re saying: “We desperately want more homes on our major streets, but you know, we don’t want the economies of scale to be too great. We’d rather see more, smaller projects. This way each home is more expensive to build!”

    In any event, this is still meaningful progress. It is what so many urbanists have been clamoring for over the years; more homes in our low-rise neighborhoods. So I think it’s important that we recognize today as such. Nice work.

  • Unlearning our biases

    I had coffee this morning with an engineer who is going back to business school in order to segue into real estate development. This is a fairly typical journey. Lots of people come into development from a related discipline. In my case, it was architecture (even though I never practiced architecture). It was also the case when I went to Rotman that something like a third of the class had a background in some sort of science or engineering field.

    However, one thing I did mention this morning was that he will likely find that he will need to unlearn certain things as he moves forward. Every discipline tends to indoctrinate us with a certain way of thinking about the world. Lawyers tend to be a certain way. Engineers tend to be a certain way. And architects tend to be a certain way.

    In my case, I found that architecture school taught me to be, among other things, an intense perfectionist. The modus operandi in design studios is that your project is never ever complete. The more you work on it, the better it will become. And as a result, you should feel a deep onus to work on it as much as humanly possible. But in business, this isn’t practical. In the vast majority of cases, speed over perfection will serve you better.

    I believe wholeheartedly in multi-disciplinary backgrounds, and maybe this is one of the reasons why. It shows you what you should unlearn. What would you say your biases are?

  • US mandates new higher-speed automatic braking for passenger vehicles

    The US Department of Transportation has just finalized a new vehicle safety standard that will require all light-duty vehicles to be equipped with a more advanced form of automatic emergency braking (AEB) by 2029. (Light-duty vehicle = pretty much all passenger vehicles, including SUVs and trucks.)

    Now, most light-duty vehicles on the road today already have some form of emergency braking. What’s noteworthy about this ruling is that it requires a more robust version. Some might say one that works. Specifically, it will need to work at much higher speeds and at night.

    Most of the AEB systems in operation today don’t really work at night — basically at all — and many have shown to be ineffective when it comes to stopping for humans.

    This new standard will require vehicles to automatically brake at up to 90 mph when a possible collision with a car is detected and up to 45 mph when a possible collision with a pedestrian is detected.

    This seems like a very good thing, especially given the persistent problem we are having with cars killing too many people. But how do we do it?

    From what I have read, this new standard will be pretty challenging to meet without the use of long-range LiDAR, especially since night vision is a requirement. I find this interesting because, even though autonomy is taking a lot longer to arrive than most people anticipated, there’s still meaningful progress being made.

    Here’s to hoping it saves a lot of lives.

  • Architecture as a product

    Construction is generally considered to be the world’s largest industry, and yet, it is well known that its productivity levels suck. Over the last half century, the industry has experienced something in between meager and negative productivity growth.

    It is for this reason that, for as long as I can remember, people have been trying to figure out how to turn development and construction into something more repeatable and less custom — something like a product.

    Now, there can be a bit of a stigma associated with this moniker. Architects don’t often like to think of their work as being a product and references to modularity can sometimes evoke feelings of cheapness (think manufactured homes).

    But I think all of this is quickly changing. And at the end of the day, we are going to need to start building like this if we have any hope of making housing more affordable within our cities.

    Here’s an example.

    Back in 2021, I wrote about a new modular housing company called Juno. They had just broken ground on their first project in Austin (a five-story 24-unit building), and they were in the media talking about how they had more or less reduced the building down to 33 standardized parts.

    The multi-family space has since softened in Austin, and I don’t have any inside knowledge of how this project went, but the building is now complete and being leased up. And regardless, I think it’s an important case study to look to. This is where our industry is heading.