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.

Tag: cars

  • The third Los Angeles

    I just stumbled upon an interview with Christopher Hawthorne (architecture critic for the Los Angeles Times) talking about a “third Los Angeles.” 

    His argument is that the first Los Angeles ran from about 1880 to World War II, and was characterized by a form of urbanism that most of, today, do not associate with LA. It was a city of streetcars, innovative multi-family housing, and local landscapes.

    The second Los Angeles was the second half of the 20th century. And it is the LA that probably comes to mind for most people when they think of LA. It is the city of freeways, single-family homes, and sprawl.

    The third Los Angeles is the city’s most recent iteration and started sometime around 2000. Like many things in life, it is in some ways a return to the past: namely the first LA. It is about urban intensification, transit, and more drought resistant landscapes. It is a city that senses its geographic limits.

    I like how he talks about some of the challenges associated with intensification and this third LA:

    “People in very good conscience who live in Santa Monica or San Francisco think of a moratorium on development as a progressive thing to support rather than reactionary or conservative or just in their own political self-interest. I don’t have a problem with somebody who bought a house at a certain point saying, “I bought into a certain place, you know, I want it to stay this way, and I’m going to use whatever resources I can to keep it that way.” They have every right to say that, even if I disagree. I have a problem with people saying that’s consistent with a progressive agenda about cities or a forward-looking attitude about the environment or about resources. It’s not.”

  • Tesla is winning the arms race

    “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” – Jim Barksdale, former Netscape CEO

    Fred Wilson wrote a post yesterday about Tesla’s data advantage in this self-driving car arms race that we are currently living through. (I found the above quote in the comment section of the post.)

    In their Q3 2016 update, Tesla claims to have logged more than 1.3 billion miles on its vehicles equipped with Autopilot hardware. This is important because the more data it collects – across diverse road and weather conditions – the better the vehicles get at driving without human intervention. As Fred Wilson put it: “more data is better than more software engineers.” So that places Tesla ahead of Google, Uber, GM, et al.

    I spent a lot of time driving over the past week, certainly more than usual, and I couldn’t help but think about how much better it would have been to instead sit in the backseat and read a book (or mindlessly scroll through Instagram).

    I always try and use cruise control on long drives, but unless the road is fairly empty, I find it doesn’t work very well. Everyone is driving at different speeds and so I usually end up having to reset it / adjust it every so often.

    The big question in my mind is still: How does the world look when driving longer distances doesn’t suck so much? What changes when you can get into your / a car (important distinction) at bedtime, fall asleep, and then wake up in a new place?

    A lot, I think.

  • Full self-driving hardware

    Tesla has just announced “full self-driving hardware” on all of its cars, including the upcoming Model 3, in anticipation of a big software update to be released sometime around December 2016 (hopefully). 

    This will enable fully autonomous driving “in almost all circumstances” – they mention rain, fog, and dust, but no snow – at a level of safety that Tesla believes is already 2x better than the average human driver.

    This is being accomplished through a souped up onboard computer and by increasing the number of surround cameras from 4 to 8. Here’s a diagram (via Tesla) of how those cameras work and how they will capture a 360 degree view:

    image

    A couple of immediate thoughts / takeaways:

    The Smart Summon feature is obviously very cool. Summon on your smartphone and your car will come find you. Elon Musk has said that it will eventually find you even if you happen to be on the other side of the country. 

    But this assumes that there are solid metal snake chargers (or something else) to automatically charge your vehicle somewhere on route. It also suggests that the vehicles won’t be equipped to cross international borders by themselves.

    Elon Musk has said that (unfortunately) retrofitting older Tesla vehicles to full self-driving hardware will be very difficult and costly – the cost delta is greater than buying a new car. This reinforces my belief that leasing, rather than owning, is probably a wise strategy right now given how much change is happening in the auto space.

    Lastly, here’s some fine print from the Tesla Auto Pilot website:

    “Please note also that using a self-driving Tesla for car sharing and ride hailing for friends and family is fine, but doing so for revenue purposes will only be permissible on the Tesla Network, details of which will be released next year.”

    Uber vs. Tesla. Round 1. Fight.

    If you’d like to see a full self-driving Tesla in action, check out the video on their website.

  • The self-driving car arms race

    Earlier this month, I came across the following chart from USA today. 

    image

    It was based on market caps as at July 29 and so the order wouldn’t look quite the same today. Still, here are the largest companies by market cap and the top 5 are US consumer-facing technology firms.

    Remember when it was a big deal that Apple had surpassed Exxon Mobil as the world’s most valuable company?

    We are living in a tech-driven world.

    Then yesterday, I was reading this New York Times article talking about Uber’s acquisition of Otto (a startup focused on self-driving truck technology) and its plans to allow riders in Pittsburgh to summon self-driving vehicles later this month.

    The vehicle will be a tricked out Volvo:

    image

    These two snippets from the NY Times stood out for me:

    Suddenly, it seems, both Silicon Valley and Detroit are doubling down on their bets for autonomous vehicles. And in what could emerge as a self-driving-car arms race, the players are investing in, or partnering with, or buying outright the specialty companies most focused on the requisite hardware, software and artificial intelligence capabilities.

    “There’s an urgency to our mission about being part of the future,” Travis Kalanick, Uber’s chief executive, said on Thursday in an interview. “This is not a side project. This is existential for us.

    The way it will work in Pittsburgh this summer is that the self-driving Volvos will still arrive with a driver, in addition to a sidekick in the passenger seat taking notes about how the vehicle is performing. But the goal is to start weaning us off of human drivers. These pilot rides will be free to start.

    This is quite possibly the start of a general change in terms of the way cities operate (quote from Bloomberg):

    In the long run, Kalanick says, prices will fall so low that the per-mile cost of travel, even for long trips in rural areas, will be cheaper in a driverless Uber than in a private car. “That could be seen as a threat,” says Volvo Cars CEO Hakan Samuelsson. “We see it as an opportunity.”

    Uber is currently logging about 100 million miles per day. Hopefully it is clear at this point that this is not as simple as ride sharing vs. traditional taxis. Cities who are thinking about it in this way are thinking short-term and missing the bigger picture.

    Companies such as Uber, Tesla, and Google are aiming for a fundamental rethink of urban mobility. There is an arms race going on that I believe will completely eradicate the need for human drivers.

  • Slot-based intersections

    If you don’t follow the work of MIT’s Senseable City Lab, I highly recommend that you start. 

    Earlier this year, researchers from the Massachusetts Institute of Technology, the Swiss Institute of Technology, and the Italian National Research Council developed something that they call “slot-based intersections.” In a world where cars have sensors and drive themselves, it is intended as a more efficient alternative to traditional intersections. Goodbye traffic lights.

    Much like air-traffic control, the way the system works is by assigning individualized time slots to each car for when they may enter an intersection. For example, in the diagram below (Sequence 01) the car approaching from the bottom left (#10) has a “stop distance slot” in front of it reserved for 3 of the cars that are currently in the intersection. The two that are traveling perpendicular to it and the car currently turning left into the same lane as #10 (on the other side of the intersection). The car in the midst of turning right (#5) is exempt because there’s no possibility of collision. 

    image

    In Sequence 02 (below) you can see that car #10 is now turning left, which means it has its own time slot in the intersection. Other approaching cars now have a “stop distance slot” dependent on car #10.

    image

    In all cases, cars making a right turn are able to move freely, provided they will not interfere with any other cars.

    image

    The researchers estimate that real-time slot allocation might double the number of vehicles that a traditional traffic-light intersection can handle today and, in some cases, it might completely eliminate stop and go traffic.

    Often when I write about self-driving vehicles I hear people tell me that cars are still cars. It doesn’t matter whether they are self-driving or not. The same inefficiencies apply. They are not the solution to urban gridlock. Elon Musk was also criticized (following his Master Plan) for not properly understanding urban geography.

    But self-driving cars will create new efficiencies. I am not saying that they are a silver bullet, but I am saying that they will help a great deal. I don’t think that anyone truly understands the extent of these efficiencies, but there are a myriad of possibilities. This Senseable City Lab project is a perfect example.

    What I am grappling with right now is the relationship between self-driving vehicles and traditional forms of public transit. Until we get a handle on the efficiencies and overall impact, it’s hard to ascertain how these different forms of mobility will work together. My gut tells me that the lines are bound to get blurry and that self-driving “cars” will feel less and less like the cars we know today.

    Below is a video that was published along with the research. If you can’t see it, click here.

    [youtube https://www.youtube.com/watch?v=4CZc3erc_l4?rel=0&w=560&h=315]

  • Low cost energy efficient homes perched atop of surface parking

    A regular of this blog recently suggested (in the comments) that I take a look at the London-based design firm ZED Factory. ZED stands for Zero Energy Development.

    The first project that caught my attention was ZED Pod. ZED Pod is a small, low cost energy efficient modular home that is designed to sit atop of surface parking lots. In other words, it’s a way to repurpose under-utilized surface parking without compromising existing parking ratios. All you really need are the air rights. And since the “land” is cheaper, the homes can be cheaper. They can also be easily relocated if the parking lot were to get developed in the future (though they are designed as permanent structures).

    image

    In some ways, there is something perverse about the way that driving and parking have such a profound impact on the urban landscape. Even when it’s buried underground and hidden from sight, the structural column grid needed to layout efficient parking will often carry up through the building impacting suite layouts. We’ll even restrict housing supply when parking requirements can’t be met. Should it be parking or people who come first?

    But cars aren’t going away. And ZED Pod is a clever way of dealing with an existing urban condition – however suboptimal it may be. I found the concept interesting and I thought you all might as well.

    Image: ZED Factory

  • How will self-driving vehicles change our cities and our habits?

    Last night
    I had a dream that I was driving around in a snowstorm and, for whatever
    reason, my tires had almost no tread on them. So I was all over the road.
    Strange. I have no idea what this means, if anything at all.

    But it did
    remind me that I can absolutely imagine a time when the thought of driving your
    own car (outside of it being maybe a hobby) will seem positively archaic. I
    mean, think about how messy our current system is. Roads are a chaotic and
    oftentimes dangerous place.

    The more
    interesting question for me though is: how will self-driving vehicles change
    our cities, our habits, and so on? In Elon Musk’s recently published Master
    Plan (Part Deux)
    he outlines 4 main goals for Tesla:

    1. Create stunning solar roofs with
      seamlessly integrated battery storage
    2. Expand the electric vehicle product
      line to address all major segments
    3. Develop a self-driving capability
      that is 10X safer than manual via massive fleet learning
    4. Enable your car to make money for
      you when you aren’t using it

    Let’s think
    about what these could mean.

    One
    translates into decentralized energy generation and storage. Now all of a
    sudden the cars on our roads will be roaming around our cities collecting and
    storing energy, eventually returning home at the end of the day to power our homes.
    I can already imagine fleets of sun worshipping cars chasing the light as it
    moves across our cities.

    Two is recognition
    that self-driving vehicles are going to have a meaningful impact on traditional
    public transit. (Elon reveals that Tesla is working on high passenger-density
    urban transport.)

    Three
    addresses the chaotic current state and the massive potential of networked
    cars.

    Four is particularly
    interesting to me. I wonder to what extent this income will simply subsidize
    car ownership or if it could actually transform cars into an investment (rather
    than purely an expense). Will people end up buying self-driving vehicles in the
    same way that people buy real estate for yield?

    Furthermore,
    how does this notion of a shared vehicle pool now completely change the way we
    think about parking requirements. For instance, today we think about parking in
    terms of individual usage. This tenant requires/wants X amount of parking. All
    2-bedroom apartments require Y amount of parking.

    But if we’re
    now all sharing our vehicles, parking requirements would then be based on some
    broader and collective demand curve. Parking would become less individualistic
    and instead become more of a yard where self-driving vehicles come to store
    themselves when not in use.

    Once again,
    we reach a point where utilization rates go up for each vehicle and overall
    parking demand goes down. Good thing we’re getting rid of parking minimums.

    What else could
    you see happening?

  • The master plan

    I’m going through and dissecting Elon Musk’s second “Master Plan” this morning. 

    I love how he drops earth-shattering news in such a casual and honest way. Two days ago he tweeted that he was planning to pull an all-nighter to complete the “master product plan.” And then yesterday, he outlined his vision in a simple – and at times personal – blog post for how Tesla is going to change the world. It all feels very genuine.

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    There are so many interesting snippets from the master plan, that I’m simply going to quote them all here. There’s lots to think about and discuss.

    A reminder of the broader vision:

    The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippy thing – it matters for everyone.

    By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse. Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better.

    The solar roof and other electric vehicles that Tesla has in the pipeline:

    Create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app.

    In addition to consumer vehicles, there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport. Both are in the early stages of development at Tesla and should be ready for unveiling next year.

    Thoughts on self-driving vehicles:

    Even once the software is highly refined and far better than the average human driver, there will still be a significant time gap, varying widely by jurisdiction, before true self-driving is approved by regulators. We expect that worldwide regulatory approval will require something on the order of 6 billion miles (10 billion km). Current fleet learning is happening at just over 3 million miles (5 million km) per day.

    The most important reason is that, when used correctly, it is already significantly safer than a person driving by themselves and it would therefore be morally reprehensible to delay release simply for fear of bad press or some mercantile calculation of legal liability.

    Once we get to the point where Autopilot is approximately 10 times safer than the US vehicle average, the beta label will be removed.

    Why an even lower cost vehicle (compared to the Model 3) may never be necessary:

    You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.

    And finally, Uber has a new competitor (that, to me, is a good thing):

    In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are.

    I’ll provide my thoughts on all of the above in a subsequent post. I’m out of writing time for today.

  • Towards car-free living

    Right now, there’s an apartment building in San Francisco that is trying to encourage car-free living by offering residents a $100 per month credit that can be used for Uber and/or for public transit. Prospective residents can even get a $20 credit to go check out the community. (The program is a partnership with Uber.)

    The reason this leasing strategy caught my attention is because we’re at a point where city builders are now trying to recalibrate themselves to this new emerging world. 

    When I was at the Land & Development conference earlier this month, one developer brought up this exact point. He more or less asked: If you’re starting development on a new building today and you’re expecting approvals in 2 or so years and completion in another 3 or 4 years, what do you think the state of cars/driving will be at that point? Should you really be building all that underground parking?

    These are great question. And they highlight one of the challenges of development. It takes a long time to bring new supply to the market and a lot can change during that time period. My sense is that we are pretty clearly seeing downward pressure on driving and car ownership.

    That said, this isn’t the case in every city or in all parts of a particular city. I just got back from a trip to a Detroit where it’s pretty hard to imagine the city being oriented around anything but the car. But in cities like San Francisco and Toronto, car-free living is already a reality for many people and so we need to respond to that.

    How do you see yourself driving, or not driving, in the next 5 to 10 years?

  • What it takes to unlock infeasible development land (and some thoughts on parking)

    image

    One of the questions that came up after my recent post about land pricing was: what is it going to take to develop underutilized land on the outskirts of city centers?

    So today I thought I would talk about a new development project that was also discussed at the Land & Development conference I recently attended. I think will begin to answer this question.

    The project today is known as the Rockport Weston Community Hub & Rental Building. And it’s going to include a community cultural hub, 26 live/work artist spaces, and 300 rental apartments. 

    It’s located in the Weston neighborhood of Toronto, which is designated as a “Neighborhood Improvement Area.” These are lower-income areas that the city considers to be “at-risk.”

    Given this, rents are naturally lower here than in other parts of the city, which means that it’s basically infeasible to develop here. There has been no large scale development in this community since the 1970s!

    To put some numbers to this, the developer said they were projecting rents somewhere around “two and a quarter.” So let’s assume for a second that the average apartment rents will be $2.25 per square foot. 

    At this rate, it means that a 600 square foot one-bedroom apartment will have a face rent of $1,350 per month. This may seem fairly high, but it almost certainly wouldn’t be enough to get a project like this off the ground under normal market conditions. At least, that’s the case here in Toronto with current cost structures.

    So what had to happen was a fairly complicated public-private partnership, which you can read all about here. But at a high level, there seems to have been 3 main economic factors that allowed this project to move forward:

    1) The developer was able to acquire the land for cents on the dollar. As I said in this post, land is expensive. So this helps a lot.

    2) The developer was able to make use of extra parking in an adjacent building. Assuming that underground parking could cost around $50,000 per stall, this is a huge cost savings.

    3) Lastly, the project is benefiting from the public invest made in the airport rail link that now quickly connects this site to both Pearson International and downtown Toronto.

    The moral of the story is that infeasible sites require some sort of subsidy or top up to make them work. Or, there needs to be an exceptional circumstance. Because if the rents aren’t there, nobody is going to build. It’s as simple as that.

    That said, here’s one idea…

    This discussion reminds me of a post I wrote a while back called, The hypocrisy of parking minimums. Frankly, I don’t understand why a city like Toronto still has parking minimums. If anything, we should have parking maximums.

    Underground parking is a huge cost that has to get carried by purchasers and renters in a new building. For example, let’s assume that 300 apartment suites would require 180 parking stalls (ratio = 0.6). Assuming $50,000 per stall, that’s a $9 million cost.

    So the second takeaway is that it’s probably time we took a good hard look at how we think about and plan for parking in our cities. Especially since the entire mobility space is being quickly disrupted.

    Image: Rockport