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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Tag: athiscity

  • The demand for character office space

    Last Friday the Toronto Star published an article talking about the growing demand for character office buildings in submarkets outside of Toronto’s core. Specifically, it was talking about the Downtown West and Liberty Village submarkets (citing a report from CBRE).

    I’m sure this isn’t news to most of you. Cool loft spaces have been popular for years. But it’s interesting to look at how rents and vacancy rates have changed for these submarkets and product types over time.

    Since 2002, average (net) asking rents for brick-and-beam buildings in the west end have gone from $16.12 to $22.23 per square foot. Almost a 38% increase. By comparison, office space in the core has gone from $28.40 to $32.38 per square foot. A 14% increase.

    And if you look at vacancy rates since 2007, you’ll see that the character office market has really tightened up over the past 4 years or so. There’s growing demand for a limited amount of supply.

    With the growth that the downtown core is seeing and with the rise of Toronto as a creative startup hub, I’m sure we’ll continue to see strong demand for this type of space. But there’s only so much of it to go around. So I think we’ll also end up seeing greater interest in the east side of downtown and also more interesting new builds.

    Images/Charts: CBRE

  • Should you own or rent your home?

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    I was at a good friend’s wedding last night (congratulations again to Adrien + Rachel!), and one of the topics that came up at our table was whether it is better to own or rent your home. Now, in North America, conventional wisdom would suggest – almost mandate – that you have to own your place. If you’re still a renter, well then you’re “throwing away your money” my friend.

    But are you really? 

    A big part of the value of owning your home is that it’s forced savings. Every month when you make those principal and interest payments, you’re paying down your mortgage and socking away money for the future. And this can be a great thing for a lot of people, particularly if you’re not disciplined enough to save otherwise.

    But when you own a home, you’re also spending time and money on maintaining that home, and you’re also tying up capital that could be used elsewhere. So consider this: what if, instead of putting your savings towards a downpayment, you simply continued to rent and created an investment portfolio that you then contributed to on a regular basis just as you would a home?

    Depending on your assumptions, renting could turn out to put you further ahead financially. Here’s an example of that scenario from the Globe and Mail.

    Similarly, I remember being told in business school that companies that own their own real estate tend to under perform those that do not. And the rationale is that owning lots of real estate ties up capital that could otherwise be reinvested in the core business. In other words, if your core business is making widgets, then invest your money in making better widgets, not in real estate.

    But this is not to say that everybody should rent. Obviously I’m a big believer in real estate. And for a lot of people, owning may make sense. This post was really just to say that the owning vs. renting decision may not be as black and white as you might think.

    Image: Flickr

  • Seattle’s first protected bike lane makes a quick adjustment

    Seattle recently installed its first protected downtown bike lane on Second Avenue. Here’s a short video of it in action (pay attention to the signalling setup and the pedestrians that walk into the bike lanes). Click here if you can’t see the video below.

    [youtube https://www.youtube.com/watch?v=x2iQCCHlR0s?rel=0]

    Shortly after it opened, they quickly discovered that the left green arrow and solid green circle (shown above) were confusing drivers. The intent was for the left green arrow to signal that you could turn and for the solid circle to signal that you could drive straight ahead.

    But even with the accompanying sign, drivers kept getting confused and thought a green circle meant you could go wherever you want.

    So the Seattle Department of Transportation quickly adjusted and changed the green circle to a north arrow. And it seems to have fixed the problem. I think it goes to show how important the details can be with these things. 

  • Fun Friday: Skateboarding city tours (Brisbane & Porto Alegre)

    Some of you told me that yesterday’s post on careers was actually quite sad. That it came across as if I were advocating for people, not to do what they love, but to instead do what makes them the most money. But that was not my intention. 

    There were a lot of reasons why I got into real estate development, and perhaps I oversimplified yesterday. But a lot of it actually came down to the fact that I’m passionate about building great cities (hence this blog).

    And I thought it was ultimately unfair that some investment-banker-turned-developer, who doesn’t really care about cities, might end up having more say over the built environment than me, the architect. 

    So I decided to sacrifice designing individual buildings in the hope that I’d one day be able to give back to cities on a much larger scale. And I still hope to be able to do that.

    In any case, to end the week on a more fun note, I thought I would do a post called Fun Friday and link to 2 city tours: one of Brisbane, Australia, and one of Porto Alegre, Brazil. 

    But these aren’t just any city tours. They are by local skateboarders showing you their city. I posted one for Toronto about 8 months ago, so some of you might be familiar with the series.

    I love how differently skateboarders look at the urban environment. I hope you can appreciate it as well. 

    Brisbane, Australia:

    [youtube https://www.youtube.com/watch?v=KEFQLjnhKT4?rel=0]

    Porto Alegre, Brazil:

    [youtube https://www.youtube.com/watch?v=taF71igPZY0?rel=0]

  • Why I didn’t go work for my favorite architect

    As a result of writing Architect This City, I’m fortunate enough to receive a lot of emails from random people. But I’m always open to meeting new people, and so I enjoy this very much.

    One of the most common questions I get is from architects, and students of architecture, who want to know about transitioning over to real estate development. (Posts related to this topic also happen to be some of my most popular.)

    So today I thought I would share a story with all of you about the one decision that ultimately lead me into real estate development.

    When I started graduate architecture school, I already had inklings that I was going to get into development. That’s one of the main reasons why I went to Penn. I knew that I could concentrate in real estate and I knew that I could take courses over at the business school. And that’s exactly what I wanted to do.

    But during my first year, I still wasn’t exactly sure how I was going to reconcile this dual interest. In fact, I remember feeling really conflicted. I loved architecture and design, but I also really enjoyed business and entrepreneurship. I was also interested in making money, and architecture isn’t often the best place to do that.

    So for my first summer internship, I decided to apply to both architecture firms and to real estate developers. I was fortunate enough to be offered jobs in both. And on the architecture side, I actually got my top choice, which was the Bjarke Ingels Group in Copenhagen. To this day, Bjarke remains one of my favorite practicing architects.

    But when I looked at the numbers, I quickly realized that real estate developers were prepared to pay me about 3x more than any architect would and that, if I were going to take an architecture job, I was going to end up going more in debt just to live throughout the summer.

    While internships are often career loss leaders, I took this as a sign of things to come. This was a 10 or 20 year decision in my mind. And even though I loved architecture, I figured I would quickly fall out of love with it if I couldn’t pay my bills or live the lifestyle that I wanted.

    So I accepted a real estate job and I moved to Dublin, Ireland for the summer to work for a small consultancy called Urban Capital (no relationship to the Toronto firm of the same name). And I haven’t looked back since.

    This may not have been the right decision for some of you, but it was for me. So if you’re at a crossroads, my advice is always to think about where you’d ideally like to be in 10 or 20 years. Because once you establish that, it’ll become much easier to make that decision today.

  • Trying out the Oculus Rift virtual reality headset

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    This week on Architect This City is turning out to have a big focus on technology. And it’s not going to stop today, because this evening I had the chance to try the Oculus Rift virtual reality headset for the first time (many thanks to Dave Payne of Invent Dev for the demo). As a reminder, Oculus is the company that Facebook recently acquired for $2 billion.

    Now virtual reality certainly isn’t a new idea and lots of people have been promising – for a long time – that it was going to revolutionize the world. Which may be why I had somewhat low expectations going into this. But I have to say that I was blown away. Despite being a bit choppy (to get good visuals it ran at around 15 frames per second), I was shocked at how immersive the experience was.

    Here’s a picture of Rick exploring the (virtual) space behind him:

    image

    It was actually really strange watching somebody move around as they explored another world. The demo that Dave showed us was of an apartment suite. You could walk around the living room. Turn around and see the front door. Walk up to the window and admire the view outside. It was incredible, but somewhat scary at the same time.

    Obviously there are ton of potential use cases for this. I’m imagining a buyer touring a condo suite and picking their finishes before it’s even built. I’m imagining an architect designing a building in 1:1 scale by waving their hands around in a virtual world. I’m imagining “traveling” to a beach to treat seasonal affective disorder. And the list goes on.

    This isn’t going to happen overnight. I actually got a bit nauseous because of how choppy the video got at times. But I can certainly see the potential. Virtual reality is coming. It’s clearly the future of gaming. And I’m sure it’ll get applied to many other areas of the economy. I guess that’s why Facebook bought these guys for $2 billion.

    If you have an interest or need in the 3D visualization space, I would encourage you to reach out to Dave at Invent Dev. He’s super passionate about the work that he’s doing and is looking to collaborate with more people in the design and real estate spaces. Thanks again Dave.

  • How smartwatches will augment location

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    So the rumors were right. Apple released a watch today. There will be 3 different “collections”, but lots of flexibility in terms of how each can be customized. There’s a big emphasis on health and fitness monitoring. Prices start at $350. And you’ll need an iPhone. Though you won’t be able to get one on your wrist until next year.

    Who knows whether or not it’ll catch on in the same way that iPod and iPhone did, but I think it has a damn good shot (more on this below). They’ve clearly put a lot of thought into both usability and the whole fashion side of the equation, which obviously needed to be done. Given that most people today use their phone for the time, the watch market strikes me as being heavily about style.

    In case you were wondering, here’s the watch market size as of 2013 (courtesy of Benedict Evans):

    image

    A lot of you might be skeptical about the need for a computer on your wrist (remember those watch calculators from the 80s?). But I think this time is different. Consider the number of people that now walk around with their phone in their hand and/or immediately pull it out whenever they have a free moment. We’ve become reliant (okay, addicted), to notifications and information.

    But in many of those cases, the smartphone isn’t the most efficient medium to be delivering those messages. Just like it’s not ideal to have to reach into your pocket to figure out what time it is, I think the watch could emerge as a new and better medium for a bunch of other pieces of information. And the big one could be location-aware or contextually-aware notifications.

    Here’s a tweet from Dennis Crowley – founder of Foursquare (Swarm) – talking about that exact thing:

    So what does this even mean?

    It means walking into a restaurant and having a tip pop up on your watch telling you what the best dish is (as shown in the tweet above). It’s driving down the street and having your watch notify you that there’s an open house 3 blocks away (and then giving you directions). It’s walking into a condo building and having your watch tell you that one of your friends is having a party on the 23rd floor. And so on.

    All of these notifications are currently already possible on your phone, but it’s not the ideal place for many of them. Which is why we’re all walking through life looking down at our phones. So while a computer strapped to your wrist may feel like we’re going further down that rabbit hole, it may actually free up more of our hands and our attention.

    And I’m sure there are many other possibilities that nobody has even thought of yet. Location just feels like a big one to me.

    //platform.twitter.com/widgets.js

  • Taxis just got 40% cheaper in Toronto

    UberX officially launched in Toronto today. Which means that Toronto’s taxi and limousine industry is about to get a lot more grouchy. For those of you who may not be familiar, uberX is Uber’s low-cost car service. Just like the regular version, you hail a car using your mobile phone. But this option will cost you 40% less than a regular taxi!

    Here are sample rates from the Financial District to Yonge & Eglinton (midtown):

    And from the Financial District to Pearson International Airport:

    image

    This is pretty exciting. Because as much as I think it’s great to use Hailo or Uber to hail and then pay for a car, the big problem in my mind has always been that cabs in Toronto are just far too expensive. The meter starts at $4.25 and shoots up faster than you can take a selfie in the backseat.

    But obviously there’s an entrenched industry here that is not going to be happy about a startup eating into their fares. So I wouldn’t be surprised if we see a lot more backlash here in Toronto – as has been the case in many other cities. However I don’t think that’s a viable long term solution for the incumbents.

    Uber is thought to be worth $18.2 billion right now. It’s probably not going to go away.

    So instead of protesting and trying to ban it, we should be figuring out how to adjust to this changing reality. For the incumbents, this might mean lowering fares or figuring out a better way to differentiate themselves. A 40% discount is a pretty compelling value proposition. For me personally, I don’t know why I would ever pay more for a regular taxi, unless there was no other option.

    On a side note, it’s worth pointing out that an uberX trip from downtown to Pearson is estimated to cost around $33 – roughly the same as what some people think the Union Pearson Express train will cost. That’s further evidence that charging a lot and targeting business travelers may not be the best strategy.

  • Exploring the Mimico waterfront

    This morning I explored Humber Bay Park, which is a waterfront park in the west end of Toronto. It’s in a neighborhood called Mimico that used to be a separate town, with its own mayor, until 1967. I honestly can’t remember the last time I was there, so it was fun to explore what felt like a new part of the city.

    Given its proximity to downtown and the fact that it’s very well connected to the water, the area is currently facing tremendous development pressures. In fact, as I was standing in line waiting to order an Americano, the conversation happening directly in front of me was all about how developers are fighting to buy up every piece of land they can find. Normally I would chime in, but today I decided to stay silent.

    Today the area is an interesting mix of old low-rise and mid-rise rental apartment buildings (many of which fell into decline a long time ago), and new high-rise condominiums that are all fighting for unobstructed views of the lake and downtown.

    There wasn’t a ton of street or public life going on, but it was certainly a beautiful place to spend a Sunday morning. As much as I’m looking forward to getting back into snowboarding, I’m not quite ready for summer to be over. So I’m happy that we’ve been having some great weather in the city.

  • TIFF: Getting ready for guests on King Street

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    Right now the Toronto International Film Festival is going on in the city. It’s actually one of my favorite times in Toronto. There’s so much going on and the city generally does things that it doesn’t normally allow, but that it should do all throughout the year, such as extending last call at bars and closing down streets to cars.

    This year, King Street between University Avenue and Peter Street has been made pedestrian-only. It encompasses an area known as the Entertainment District and includes the Bell Lightbox, which is the TIFF HQ. The street was closed last Thursday and will reopen this Monday. So it’s a 4 day thing, that TIFF is calling “Festival Street.”

    Some people – like me – are really excited about this. Here’s s picture I tweeted out on Thursday night. Given the engagement (retweets/favorites), I think there are others who feel the same way I do:

    //platform.twitter.com/widgets.js

    But there are others who are furious that their commute was disrupted last week and that we’re inconveniencing locals for the sake of hosting one of the top film festivals in the world. (King Street typically moves about 60,000 people per day on the streetcar and 20,000 vehicles.)

    But when I walked the entire 650 meter stretch on Thursday night, it was completely full of people. There were people playing large-scale chess. There were people eating at picnic benches. And there were lots of people just enjoying a wonderful summer stroll in the city.

    And all I could think about is that this is an unmet need in the city. King Street is a wonderful place to be right now and we don’t have an equivalent during the other 361 days of the year here in Toronto. So rather than be upset that we’ve closed down 6 blocks of downtown, I’m only upset that we don’t do more of this and make it permanent during the rest of the year. 

    I’m not necessarily saying that King Street is the best place to do this. Yonge Street initially strikes me as being a better place to start. But I am saying that if we have to reconfigure things to make our city more awesome for when guests come over, that maybe we should think about how to make it more awesome all the time.