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: canada

  • Toronto-Montréal should be a 2 hour high-speed train ride

    The Quebec City-Windsor corridor is the most densely populated region in Canada. The last time I checked Wikipedia, it was reported to house about 18 million people, or about half of Canada’s entire population.

    So it is not surprising that there have been numerous high-speed rail studies for this corridor over the decades, as well as studies for other important links in Alberta (Edmonton-Calgary) and other parts of the country.

    And yet, Canada remains the only G7 country without any high-speed rail. Though to be fair, the US doesn’t have all that much either; certainly with respect to the size of its population.

    However, there is some good news. In March of this year, the Government of Canada announced a Request for Expression of Interest related to high frequency rail service between Quebec City and Toronto. More information, over here.

    But from what I have read, it’ll be a faster upgraded service (~200 km/h), but not true high-speed rail (~250-300 km/h). I took the TGV from Marseille to Paris last summer, and this is how fast we were going:

    If we’re going to do this, let’s be the absolute best in the world and not settle for mediocrity.

  • Super-entrepreneurs by region

    A super-entrepreneur, according to the common definition, is a rich person who has amassed a net worth of at least US$1 billion dollars by either starting a company or taking a small company and growing it into a big one. A super-entrepreneur is, by definition, not someone who inherited their wealth. Though I’m not sure what the cut off is. If you inherited $1 million and then started a massive company, does that still make you a super-entrepreneur? What about if you inherited $100 million?

    In any event, here is a chart from New Geography showing super-entrepreneurs by region:

    The USA is in the lead in this chart at about 3.1 super-entrepreneurs per one million inhabitants. But the highest rate in the world, at least according to this data set, actually belongs to Singapore at 4.7 per million. Europe, as a whole, doesn’t look all that great here. But again, if you get more specific, some European countries are actually doing quite well. Sweden, for instance, is sitting at around 2 per million, which is higher than Canada’s figure.

    Why this data is potentially interesting is that it tells you a bit about these countries. It tells you whether they have strong property rights, whether it’s easy to conduct business, and whether it’s supportive of new ideas, among, of course, many other things. There also appears to be a clear link between the presence of super-entrepreneurs and unemployment. Turns out that the more people you have starting wildly successful businesses, the lower unemployment tends to be.

    For the full New Geography article, click here. In addition to what I just wrote about, it talks about Europe’s “entrepreneurial paradox” and issues of gender equality.

  • 1912 Michelin Guide to France

    This is a copy of the 1912 edition of the Michelin Guide to France. Most of you have probably heard of Michelin star restaurants, but some of you may not be familiar with how it all started.

    First published in 1904, the Michelin Guide is, as you might suspect, a product of French tire company Michelin. And since the beginning, this free guide has had a pretty clear objective: Its goal was to get you to drive more.

    At the turn of the 20th century, there were only a few thousand cars on the road in France. This guide tried to change that by giving you places to go, as well as telling you where to stop along the way should you need to change a tire or two.

    However, its famous starred ranking system for restaurants was not introduced until 1931, and the criteria for said ranking was not revealed until a few years later:

    • One Star: “A very good restaurant in its category” (Une très bonne table dans sa catégorie)
    • Two Stars: “Excellent cooking, worth a detour” (Table excellente, mérite un détour)
    • Three Stars: “Exceptional cuisine, worth a special journey” (Une des meilleures tables, vaut le voyage)

    Curiously enough, Canada has no Michelin star restaurants. I’m not exactly sure why, but I have heard that it’s because we’re not giving money to the right people. Maybe that’s wrong. I don’t know.

    I do, however, find it interesting that this celebrated restaurant ranking system started as a marketing tool for motorists. Oftentimes you never know where a new idea might lead you.

    P.S. I’m also not sure how the above 1912 copy is the 13th edition when the first Michelin Guide was supposedly published in 1904.

  • Forget infill development, why not just build entirely new cities?

    We talk a lot on this blog about how best to intensify and add housing to our existing cities. But here’s alternative approach: Why not just built entirely new cities? This way you don’t have to worry about fixing any of the things that are currently broken in our existing cities or worry about messy things like community engagement.

    Now, I disagree with many, or perhaps most, of the points that Nathan J. Robinson puts forward in the above Current Affairs article, but I think this is an interesting question to unpack. Robinson’s argument is that the main obstacle for building new cities in the US is ideological rather than technological. You need a bit more central government planning if you’re going to pull off a completely new urban center. And that’s not how things are generally done in the US.

    However, I think the real problem is that cities have powerful network effects that encourage centralization (even if some people are working from home). It’s easy to look at a large country like Canada and say to yourself, “but look at all that empty land. How could we possibly have a housing shortage?” The reality is that most of our land is empty and cheap because it has little value. The jobs are in our cities and that’s why Canada is a largely urban country.

    Indeed, this is how most cities have emerged historically. They start with some sort of economic purpose, be it an important trade route, access to resources, or some other driver of prosperity. It is for this reason that urbanists like Alain Bertaud will tell you that, typically, urban infrastructure follows the market, and not the other way around. Because who wants to live in a city with nice infrastructure but no jobs? More importantly, how long can a city without a strong economic purpose even last?

    Take for example Delhi. By 2030, Delhi is expected to be the largest city in the world. This has made it exceedingly difficult for the city to build enough new housing. So government there has been focusing on building new cities on the outskirts surrounding Delhi. These cities are referred to as “counter magnets”, and their purpose is to intercept and literally attract new migrants before they reach Delhi, thereby relieving some of the urban pressures on the capital.

    The fact that these cities are referred to as “counter magnets” speaks to exactly my point about centralization. It is recognition that Delhi is by far the biggest urban magnet. Because of this, these satellite cities haven’t been as successful as everyone had initially hoped. Migrants seem to still want Delhi. You can build new housing, but without jobs and economic opportunity, people will continue to flock to the biggest urban magnets.

    So sooner or later, you’ll need to fix what isn’t working.

    Photo by Ravi Sharma on Unsplash

  • Quietly booming tech town

    We have all seen these headlines before, so it’s not so under the radar for us. But the New York Times just published this article about Toronto calling it a “quietly booming tech town.” Depending on how you want to measure things, Toronto is now the third largest tech hub in North America after Silicon Valley and New York City (or at least that’s what the NY Times is telling me). The article touches on some of the ingredients for this success, but let me be a bit more explicit in this post because I think it is particularly relevant right now.

    Canada is a “Western” country. What does that mean? It means that we’re a democracy, we have the rule of law, we respect individuals (including private property), and we allow for pluralism of opinion, along with many other freedoms. These are all wonderful and magical things that are sometimes taken for granted. But I couldn’t imagine living in a place that doesn’t allow for such freedoms, nor would I want to.

    On top of this foundation, we have two other important ingredients: extraordinary universities, like the ones mentioned in the article (University of Toronto and University of Waterloo), and some of the most liberal immigration policies in the world. Our borders are open for the smartest and most ambitious. With just these handful of things — freedom, rules, education, and talent — we can screw up a lot of other stuff and still accomplish some pretty great things. I may be oversimplifying, but probably not by much.

    Humans are wonderfully talented. Let people be and they’ll show you. Because history has shown us time and time again that the above recipe works remarkably well. (Related post: Do the best cities have a lot of immigrants?)

  • Do the best cities have a lot of immigrants?

    I tweeted this out last night while watching old reruns of Anthony Bourdain’s Parts Unknown series. This was a great show. If I were to give everything up and become a YouTuber, this is the kind of travel and food channel I would want to make, except that I would naturally have to add in some equal parts around architecture, planning, and real estate.

    The responses to my tweet were of course mixed. Some people agreed and some people didn’t. And a few people provided examples of great cities that aren’t particularly known for their openness to new entrants — places like Tokyo. This kind of response is not at all surprising given how divisive this topic has always been throughout history.

    But here’s what I was thinking:

    1/ There are some obvious current case studies. Consider places like Toronto and Miami, where foreign born residents now make up the majority of the population. These are two fast growing and dynamic cities that wouldn’t be anywhere near as interesting without their immigrant populations. Certainly the food wouldn’t be as good.

    2/ Many of the most beautiful cultures in the world are the result of different cultures coming together. Brazil is one example that comes to mind. Throughout history they have been one of the largest recipients of immigrants in the western hemisphere. Sadly, Brazil was also the last country in the western world to abolish slavery.

    3/ Rome and Tokyo were cited (in the comments) as two great cities that frankly aren’t all that diverse. According to Wikipedia, less than 10% of Rome’s population is non-Italian. But Rome, while nice, is provincial these days. And Tokyo, while awesome, has a bit of a demographic problem.

    4/ Even if you think a place doesn’t have a lot of immigrants and maybe isn’t all that diverse, it is still probably the result of diverse cultures coming together at multiple points throughout history. Maybe because of immigration. Or maybe because of something bad like war. Think of the Moors from northern Africa who crossed the Strait of Gibraltar and conquered the Iberian Peninsula.

    5/ An openness to new people could signal and probably does signal an openness to other things. And since we are living in a world that thrives on innovation and new ideas, being open strikes me as being a fairly good and useful characteristic to have.

    6/ Lastly, I come from a family of immigrants. I self-identify as being entirely Canadian. But I had to come from somewhere (multiple places, in fact). And so it strikes me as being odd and entirely selfish to want to block the flow of people now that I’m here and established.

    What are your thoughts?

  • Love letter to Québec

    I watched this for the first time last night. It is the late and great Anthony Bourdain hanging out in Montréal and Québec City with two of Canada’s most respected chefs and restaurateurs: Dave McMillan and Fred Morin of the famed restaurant Joe Beef. Initially aired in 2013, it’s hard not to miss Bourdain when you watch it. And it’s also hard not to love Québec. This is an episode about humility, authenticity, good living, and, of course, some of the best food and drink in the world. Bourdain has a great line right before they visit Wilensky’s (in Le Plateau area of Montréal) where he says, “no matter how you feel about Québec as either separate or as an essential part of Canada, any reasonable person loves this place.” I couldn’t agree more.

    If you can’t see the embedded video above, click here.

  • Zillow exits algorithmic home-flipping business

    Things are happening in the algorithmic home-flipping business right now.

    A few weeks ago I wrote about Zillow pausing this part of its business. It was then later revealed that the company was set to take a loss on many/most of the homes that it had purchased through this “iBuying” division. In October, it listed some 250 homes in Phoenix and on average they were priced about 6.2% below what they had bought them for.

    So it is perhaps no surprise that today the company announced that it will be the exiting the business of buying high and selling low. Turns out this isn’t good for business.

    But does this mean that the model doesn’t work or that Zillow simply didn’t have its algorithms tuned correctly? Following the news, competitor Opendoor took to Twitter to reassure everyone that the digitization of real estate is still well underway:

    Opendoor also announced today that it will be expanding technical hiring into Canada — starting first with Toronto. The plan is to hire upwards of 100 people over the next several years. Presumably this is about access to talent, but presumably it also means that Opendoor is looking toward one day expanding into Canada.

    Stay tuned.

    Disclosure: I continue to be long $OPEN.

  • A new agricultural frontier in Canada and Russia

    Last year over the holidays, I attended a virtual wine tasting event that was put on by one of our partners. It was with a vineyard / winemaker in Spain and so it was evening for us and some ungodly hour for him.

    At the end of the tasting — which was exceptional, by the way — I asked him what he thought about the Niagara region. Some of you may know that I love to support local Ontario wines. His response was hilarious and something along the lines of: “When we think of Niagara wines, we think of a part of the world that shouldn’t produce wine but somehow does.”

    Ouch.

    This was maybe the case before. But I think the region, vines, and industry have all matured. We also have some exceptional winemakers, some of which have come from the Old World because our startup-y wine region affords them far more creative freedom.

    But you might also argue that things are changing because our climate is changing. The Financial Times recently published an interesting “big read” about how agricultural production and crop types are shifting around the world in the face of climate temperatures.

    It turns out that wine grapes are a pretty good leading indicator. A canary in the coal mine if you will. Because climate matters a great deal if you’re trying to make exceptional wines. And if you’ve been harvesting a particular thing at a certain time for the last 5 decades and you’re now doing it several weeks earlier, it might be a sign that something is changing.

    It also turns out that two countries, in particular, stand to disproportionately benefit from this shifting agricultural landscape: Canada and Russia. As temperatures change, a new agricultural frontier is going to be created. And it is expected that more than 50% of this land will be in these two countries. See image at the top of this post.

    Of course, there’s a flipside to this change. Countries on the other end of the spectrum with marginal growing climates and/or low production yields, could be severely impacted by higher temperatures. So perhaps it is a good idea to stay on top of what’s happening in the world of wine. Might I recommend something from Niagara?

    Image: FT

  • Economic update with Benjamin Tal — get ready for the second half of this year

    Benjamin Tal — CIBC’s Deputy Chief Economist — is seemingly everywhere. And earlier today, he was delivering an annual economic update at an online event hosted by Brattys LLP (our condo lawyers) in partnership with CIBC. Below are a handful of slides that I found interesting and that I tweeted out during the event.

    All of our personal risk curves changed during this pandemic. When the first wave hit, we all had no idea how bad this was going to be and what to expect. And so we all stayed home and washed our hands and our groceries. That changed with each subsequent wave. And now we’re all ready and anxious to be done with this.

    Tal referred to this as one of the most unequal recessions we’ve ever seen. If you had a high paying job, you probably kept it. And after you stopped spending money on eating out, entertainment, travel, and watching the Leafs lose in person, you likely had a meaningfully higher savings rate. That has created some $100 billion of “excess cash” sitting on the sidelines.

    This cash wants to be spent and I think we’re going to see it flying out the door in the second half of this year. Much of it will also flow into services, which should help to prop up the hardest hit segments of the economy. So while there has been some real pain, many are expecting the economy to snap back pretty quickly. Get ready for some euphoria in the second half of this year.

    This last slide is particularly relevant to the kind of things we often talk about on this blog. It is essentially showing the increased demand for housing outside of the city during this pandemic (as of Q4 2020).

    A flatter line (Vancouver, Calgary) indicates that year-over-year price growth was less affected by “distance from the city center.” On the other hand, a steeper line (Toronto, Ottawa) indicates that price growth was stronger the more you moved outward from the core. In the case of Toronto, it was nearly 20% YoY when you got about 60-70 kilometers out of the city.

    But it’s important to keep in mind that the core of Toronto still grew at about 5% year-over-year. About the same as in Vancouver. And in the case of Ottawa, the number looks to be about 17.5% in the city center. These are meaningful numbers and not the kind of symptoms you would expect to see from downtowns in the middle of a death spiral.

    I would argue, as I have many times before, that this last chart is the result of short-term phenomena. I bet we’ll see a number of these pitches reverse by the time Q4 2021 arrives.