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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  • 3% approach

    The late fashion designer, Virgil Abloh, had a design rule for himself called the “3% approach.” Above is a slide from a presentation that he gave at Harvard back in 2013 where he listed it as item 3 of his “personal design language.” The idea behind this 3% rule is simple: you really only need to change something by 3% in order to create something new.

    Case in point:

    Given this, it should come as no surprise that Abloh had cited artist Marcel Duchamp as being a source of inspiration. (We’ve spoken about this before.) Duchamp is most famous for his “readymade” sculptures where he took existing objects — like urinals — and transformed them into art by signing them and curating them appropriately. This was obviously controversial, but it made Duchamp one of the most important artists of the 20th century.

    Now, 3% seems like an oddly precise number. I don’t know how, for instance, you quantify the amount of change on the above shoe. Is it surface area? In any event, that’s beside the point. What’s most fascinating for me about this approach is that it suggests that small changes are enough to, not just create novelty, but actually establish authorship. Meaning, the shoe on the right is no longer a Converse shoe. It is now an “OFF-WHITE” shoe. They authored it.

    Like the work of Duchamp, this was and is controversial. Lots of companies have sued Off-White for trademark infringement. We know, for example, where the above black stripes came from and we know that Off-White’s multi-directional arrow logo is borrowed from Glasgow Airport’s logo c.1960. But that’s clearly the point of readymade reworks. And it’s clearly enough for people to want to pay a lot more for the shoe on the right.

    Fascinating.

    Do you think that this 3% approach applies (or could apply) to other things outside of fashion, like architecture and buildings? I think so.

  • Car washes are hot right now

    We talk a lot about walkable urban communities on this blog, and I’ll be the first to admit that this is my own bias. It’s my preference. But at the same time, we can’t ignore that, as of 2022, there were nearly 280 million registered personal and commercial vehicles in the United States. And that only about 8.3% of households do not have a vehicle. Most households drive in this part of the world.

    The result is that lots of people want to regularly wash their car(s). According to Bloomberg, there are some 60,000 car washes across the US, and the overall sector has been growing at roughly 5% per year (I’m not sure over what time period). More thrilling, though, are the stats that the car wash market is expected to double by 2030 and that there were more car washes built in the last decade compared to all prior years combined.

    The obvious reason for this is that there are a lot of drivers. But why right now? Apparently, there are other more specific reasons for the recent boom in car washes:

    Now, washes can take just 90 seconds, labor costs have been automated down, and recurring revenue from memberships has eliminated weather risks. Plus, the tax reforms enacted in 2017 by former president Donald Trump allowed car wash owners to claim 100% depreciation on new equipment — a generous subsidy to further investment. While that incentive was written to shrink over time, the tax proposal currently in Congress would restore the 100% depreciation allowance.

    This has the PE and real estate industries interested:

    “If private equity thinks it’s sexy, they’re gonna throw money at it, right?” said Emil Khodorkovsky, founder and CEO of Forbix, a real estate firm that just acquired a car wash in Santa Monica, California. “It’s a basic business. It isn’t complicated finance. Certain actors are getting squeezed but this one still has a much higher-yielding return than an apartment building or a retail center.”

    It’s hard to think of a retail use that is more antithetical to walkable urban communities. Even most drive-through places have the ability to service things that aren’t cars. It is also possible to go through a drive-through on a bicycle or other micro-mobility device. I have done this before and it was fun. But going through a car wash on a bicycle is probably a lot less fun.

    Intuitively, as long as there are lots of cars, there will be lots of people who want car washes. At the same time, there may even be a more urban use case, here. If you happen to have a garage and a driveway, there is always the possibility that you could wash your own car. But if you live in a walkable urban center and you park your car in a stacker accessed via an elevator, it’s probably a lot harder for you to do that.

    In this case, there’s a subscription for that.

  • Project Profile: Iconik Apartments, Prague

    Today, let’s take a look at the Iconik Apartments in Prague.

    Completed in 2023 and designed by edit!, this mid-rise project is split into two distinct volumes — a 9-story one and an 8-story one. This was done to respond to both the surrounding context and the way that the parcels were divided on the site prior to redevelopment. In total, the building is 5,433 m2 and has 48 apartments.

    There are 3 levels of below-grade parking, which are accessed via a single parking elevator (pictured above). Based on the one example parking plan provided (which has 13 spaces), I’m guessing the project has somewhere around ~39 total parking spaces (13 x 3). This is a higher parking ratio (39/48 = 0.81) than I would have expected for what looks to be a central and urban location.

    The color of the traffic coating in the garage is nice, though.

    The lobby is simple. It contains one elevator and one staircase running up the building. I like how prominent and accessible they made the latter. It encourages you to take the stairs if you live on one of the lower floors.

    Above is what one of these lower floors might look like. There are two dual-aspect apartments on either end of the plate, meaning they have windows facing both the street and the rear courtyard. There are also a handful of studio apartments facing this same courtyard.

    Finally, above is what the outdoor spaces look like for the penthouses at the top. The clear heights appear a little low, but presumably they were working to an overall building height.

    I like studying this scale of project because it is a housing type that we should be building more of in our cities. So it is helpful to see how others are doing it. In the case, there are a number of obvious takeaways: no onerous loading/servicing requirements on the ground floor, a single parking elevator in lieu of a space-consumptive ramp (though less parking would would be even more ideal), and a single means of egress throughout the building.

    If you’re looking to build at this scale, these are good places to start.

    Drawings/Photos: edit! and BoysPlayNice

  • The Walk-Up

    Today on the blog, I thought we’d feature a new fourplex being developed here in Toronto at 2343 Gerrard Street East called The Walk-Up. Designed by Studio JCI and presented by Paul Johnston of Unique Urban Homes, this is the first in a series of “missing middle” projects now being developed by Urbinco.

    Housed on your typical single-family lot, The Walk-Up is somewhere between 3-4 stories and has four homes: a garden suite, a ground suite, a center suite, and a sky suite. And each is family-oriented both in terms of design and size. They all have over 1,000 square feet of interior space, have two bedrooms, and have access to outdoor space.

    In other words, it is exactly the kind of housing solution that Toronto needs a lot more of! Thankfully, this form of housing has been permitted (as-of-right) in Toronto since May 2023. Unfortunately, there are still many municipalities and politicians who don’t seem to get it. But that’s okay. This is usually how things go. Toronto leads, and then others follow.

    For more information on The Walk-Up, click here.

  • Windowless bedrooms are the result of specific forces

    Pat Hanson of gh3* is absolutely right with her comment, here, about why we are seeing more windowless bedrooms being built in Toronto:

    In much the same way, some of Toronto’s development policies encourage windowless bedrooms. “I don’t think it’s driven by cost,” says architect Pat Hanson, a founding principal of gh3* and a member of Waterfront Toronto’s Design Review Panel. “It’s driven a lot by building forms. Where you find a lot of these inboard bedrooms is in the mid-rise type.” The requirements to step back mid-rises on an angular plane, she adds, forces the developers to populate their projects with very deep units.

    This condition is being driven by building forms and by overall housing affordability. Here is a post that I wrote on this exact topic back in 2017. The numbers are dated. I cited $857 per square foot as the average price of a downtown Toronto condo. But the forces at work remain the same.

    And they are not entirely unique to apartments and condominiums. One of the reasons why many condominiums are becoming long and skinny — and getting designed with windowless bedrooms — is the same reason that many cities, like Toronto, have long and skinny single-family lots.

    You can certainly find wider lots, but it’ll cost you.

  • The Aluminaire House finds a permanent home in Palm Springs

    In a few days, a new exhibit, called the Aluminaire House™ Exhibit, will open in a parking lot of the Palm Springs Art Museum. It will form a new part of their permanent collection. Now, museum goers won’t be able to go inside of the house due to accessibility limitations, but they’ll be able to look at it from the outside. And this alone is a big deal because this house is a big deal.

    Initially constructed in 1931, the house was designed by A. Lawrence Kocher (then the managing editor of Architectural Record) and Albert Frey. Albert was a Swiss-born architect who had just immigrated to New York from Europe, after having worked for the famous Le Corbusier in Paris. And so he was a practitioner of the International Style and this house was a clear representation of that.

    Erected in only 10 days, Aluminaire House is thought to be the first all-metal house ever constructed in the United States. Well, metal and glass. And at the time, the overarching objective was to build something cheap, modular, and durable. Something that many are still trying to accomplish to this day.

    Not surprisingly, the house was polarizing. Supposedly, architect Philip Johnson picketed in front of it. But this house would go on to become an icon, and it was eventually featured in MoMA’s 1932 exhibition, “The International Style — Architecture Since 1922” — an exhibition that has been largely credited with introducing European-style modernism to the US.

    Albert also ended up moving to Palm Springs later in life, and became known for pioneering something known as “desert modernism.” So it’s only fitting that this house ultimately end up here. Even if all-metal maybe isn’t the best choice of material for a hot desert. If you find yourself in Palm Springs, you should definitely go check it out, or picket in front of it.

    Images: Surface Magazine & Palm Springs Art Museum

  • FYI, new home coming soon

    This is not a post about laneway housing. Okay, it sort of is. But there’s a broader point to discuss. Recently, a local Toronto newspaper ran this article talking about how a bunch of people are upset that their neighbor is building an as-of-right garden suite. Here’s an excerpt:

    “The members of the community know that they can’t stop the building of this ‘garden suite’. However, they want to change the bylaw to ensure that future ‘garden suites’ can’t be built without community consultation and an environmental assessment,” said a news release from a number of residents in the area that was sent to Toronto media outlets including Beach Metro Community News last week.

    This raises some interesting questions.

    For one, what would be the purpose of this community consultation? Is it just a “Hey, I’m going to be building a garden suite” and then homeowners go do it exactly how they want anyway? Or, would it be an extensive community engagement process where homeowners would be expected to gather feedback, submit a report to the city, and consider design changes?

    And, would this apply to all low-rise housing? In other words, would all homeowners need to consultant their neighbors and do an environmental assessment before pulling a building permit? What if someone just wants to build a small extension or a shed? Or, are we only talking about laneway and garden suites?

    I’m not really sure what the exact intentions are here — besides delaying new housing — but I can tell you that it’s a terrible idea.

    Laneway and garden suites should never require community consultation and/or an environmental assessment. I mean, this is the whole point of allowing them as-of-right. It’s so you don’t have to do these things and you can go straight to a building permit. This is way too small of a housing type to burden with obstacles.

    In fact, the same is true of larger housing types. In my opinion, conventional mid-rise buildings should not have to go through a full rezoning and they should not have to consult with the community. We already know what these buildings look like. We know that they make for great homes. And yet they’re our most expensive housing type to build.

    Removing barriers (and reducing project durations) is a sure-fire way to make them cheaper. Especially in a higher interest rate environment.

  • You have to try

    Now that some of the dust has settled around Apple Vision Pro, it is clear that nobody really knows if it is going to work. (Though, it’s too expensive and it’s too heavy are missing the bigger picture.) It sounds like it delivered what it said it was going to deliver as a product, and the potential is there for a “spatial computing” future. But who knows for sure. Here’s an excerpt from an essay that Benedict Evans recently published called, “A month of the Vision Pro“:

    Second, taking one step further back again, even if my doubts are all wrong, we won’t know any of this for years, and right now this is all still in the experimental category. Apple sells more watches in a typical quarter than Meta has active Quest users. Even the iPhone took years to start selling. It’s possible than in five years this will have started to work, and it’s possible than in five years we’ll have concluded that this [AR/Apple Vision Pro] is a niche, and we’ll have to wait for glasses, contact lenses or neural implants.

    But ultimately, this is okay. You have to try, because:

    Thank you to Lucas Manuel for sending me the above quote.

  • Laneway as front door

    Recently, I wrote about 4 predictions that I have for Toronto’s laneways. And one of them is what I refer to as a “market inversion.” What I mean by this is that I think we’ll start to see the laneway side of lots become more desirable than their traditional street frontages.

    Maybe it won’t be a universal thing, but I definitely think we’ll stop thinking about laneways as being the “rear” or “backside” of lots and just think of them as quieter and more intimate streets. Because here’s the thing, as more and more laneway houses get built, we are, in a lot of cases, removing parking at the same time. And so generally speaking, as time goes on, our laneways are going to become even more pedestrian-oriented by default.

    Now here’s a built example.

    Designed by Williamson Williamson, I think this house, called the Garden Laneway House, is immediately notable for two reasons. One, the overall design is beautiful, especially the exterior brickwork. I mean, wow:

    And two, it is a 4-bedroom house for a family of five. In fact, what the family did is turn the front house into a duplex, creating three homes on a lot where previously there was only one. And from the looks of it, it was their preference to live in the laneway house and use the laneway as their front door.

    This is exactly the sort of thing that I was getting at with my predictions post.

    Photos/Plans: Scott Norsworthy & Williamson Williamson

  • What the NAR’s $418 million settlement could mean for the real estate industry

    The $418 million commissions lawsuit that was settled last week with the National Association of Realtors (NAR) is certainly a big deal. The NAR is trying to sound positive, but all signs point to this outcome being meaningful for the industry. TD Cowen Insights is forecasting that commissions paid in the US each year could fall by some $25 to $50 billion (from a total of ~$100 billion). And this is the headline you’ll see everywhere right now. But how might this actually happen?

    As we’ve talked about before, the status quo commissions set up is a good one for agents:

    • Sellers are typically the party who pays 100% of the commissions
    • But sellers don’t pay until the agent sells and they have fresh cash
    • Money being deducted from proceeds (a “take rate”) is a lot less noticeable and has a lot less friction than cash you just have to pay out of pocket
    • Buyers kind of don’t pay — or at least that’s how they’re supposed to feel

    This is “good” because it perpetuates the existing model. If buyers feel like they’re mostly not paying, they’re just going to go to the marketplace with the most supply of homes. And that marketplace is the Multiple Listing Service (MLS). However, this marketplace also does things like tell buyer agents how much commission they will make as part of each deal. And the belief is that practices like this are anticompetitive.

    So as part of the above settlement, the following new rules are expected to go into place by July 2024 in the US:

    • Seller agents will no longer be able to set compensation for buyer agents
    • All fields on MLS displaying broker compensation will need to be removed
    • Furthermore, agents will no longer even need to subscribe to an MLS in order to accept compensation
    • Buyers working with an agent will need to enter into their own buyer broker agreement and negotiate compensation separately
    • However, there’s nothing stopping buyers and sellers from negotiating whatever commission structure they want; the idea is simply that it will be more transparent and negotiated by each participant

    Why this is meaningful is that it decouples buyer agents and seller agents in a way that they aren’t today. Instead of everything originating from the sell side, each side of the transaction is now going to — theoretically at least — negotiate what they believe is fair compensation for their representation. At the same time, there’s no obligation to even subscribe to an MLS.

    This leads us to, at least, two important things to think about:

    1. What is fair compensation? Well, it should depend. If I’m a first-time buyer, I may want someone to walk me through the entire process. But if I’ve done it many times before, maybe I need very little. Or, if I’m an investor looking to renovate homes, maybe I want representation that is also an expert on construction. The point is that, in a truly open market, one should be able to find an agent and pay them based on the value that they’re creating. And this is presumably why everyone is expecting commissions to fall precipitously.
    2. If there’s no obligation to even subscribe to an MLS, does this then open the door for new and more open listing platforms? Right now, I don’t know how this will play out. I’d like to better understand more of the details around this settlement item and what it could mean for the landscape. But I do know that the way to spur the most amount of innovation would be to have the marketplace run on something like a blockchain, and then allow anyone to create their own listing platform on top of it. One day.

    This will be fascinating to watch play out. And I’m sure it’s only a matter of time before it spurs similar changes here in Canada. Expect further coverage of this topic on the blog.

    Photo by Tom Rumble on Unsplash