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: chicago

  • 4 decades of inequality

    We all know the story: Much of the world is becoming increasingly less equal thanks to the new knowledge economy. Using data from the Federal Reserve Bank of New York, the NY Times (Emily Badger and Kevin Quealy) recently published this interesting piece on “4 decades of inequality” in American cities. This is what the findings look like:

    In 1980, the United States was relatively flat in terms of wage inequality (except for maybe Fairfield). In fact, inequality in a place like Binghamton, New York was about the same as in New York City. But thanks to decline in the former and growth in the latter, New York City is now a much more unequal place.

    Economic growth is usually considered a good thing, but inequality is not. Emily and Kevin rightly call attention to the fact that — according to the above charts — these two things seem to come together as one package. See New York, Chicago, San Francisco, San Jose, Washington, D.C., and so on.

    The other takeaway from these charts is the way in which inequality seems to correlate with metro area population. We know that as the population of a city increases it tends to also become more productive. And so what we are seeing here are those urban agglomeration benefits accruing to some, but not all.

    There’s a lot that can be inferred from these charts.

  • Gentrification in New York, San Francisco, and Chicago is not as it would seem

    Matthew L. Schuerman has a new book out called, Newcomers: Gentrification and Its Discontents. I haven’t read it. But in it, he argues that “gentrification is all around us.” Hence the title. Will Stancil has an interesting rebuttal to this position as part of his book review in the Washington Monthly. Here’s an excerpt:

    Schuerman settles on what he admits is a simple definition of gentrification: the process by which a neighborhood goes from having below-average to above-average incomes for its region. But he never really applies it. While he frequently asserts or implies that gentrification is exploding across cities, he doesn’t say how many neighborhoods actually meet his definition.

    As a demographic researcher, I decided to check. Using U.S. Census data, I looked at the share of people in New York, San Francisco, and Chicago living in places that met Schuerman’s definition of having gentrified between 2000 and 2016. In New York, it’s 3.1 percent of residents. In San Francisco, the number is 4.4 percent. In Chicago, it’s 4.8 percent. Needless to say, this does not represent a vast swath. Although the numbers might increase if the time frame were extended, change at a generational pace is far less disruptive than change that takes place over a few years. Using Newcomers’ own definition, the story of urban America is not a tidal wave of gentrification but creeping racial and economic transition.

    In fact, this aligns with the growing academic consensus that gentrification is much rarer than is commonly believed. This year alone, there have been no fewer than three national studies into the prevalence and location of gentrifying neighborhoods. (Disclosure: I authored one of these studies, for the University of Minnesota.) Despite using very different methods, all three studies roughly appear to agree that about 10 percent of neighborhoods in metro areas were gentrifying. Research has also tended to show that no matter how you measure gentrification in the urban core, it’s almost always more common to find neighborhoods afflicted by intensifying poverty. Out of the fifty biggest American regions, forty-four have core cities where the population in poverty has grown faster than the overall population since 2000. The only exceptions are New York City, Los Angeles, D.C., New Orleans, Atlanta, and Providence.

    This issue of concentrated poverty has come up before on the blog through posts like this one about Detroit. The data is pretty clear: The number of high poverty Census tracts in the US is increasing faster than the number of gentrifying Census tracts (i.e. Census tracts that are becoming wealthier).

    So could it be that the problem isn’t actually gentrification? It is that, paradoxically, gentrification isn’t happening enough and more broadly, and that it is leading to rising inequality across our cities. That strikes me as being the greater issue.

    Photo by Hardik Pandya on Unsplash

  • The world’s cities by 2030

    This UN report (2018) on urbanization trends is a fascinating way to understand how our world is growing and changing. So today’s post is about some of my takeaways. If you have others, feel free to add them to the comment section below.

    But first, some definitions.

    The UN report considers 3 ways to measure the size of a city, all of which we have used before on this blog. The first is the “city proper.” That is the current administrative boundary of a city. The second is the “urban agglomeration” area, which is a city’s contiguous built-up area. And the third is the “metropolitan area,” which is the approximate area of economic and social interconnectedness.

    Above is what these 3 boundaries might look like for Toronto (which is the example they use in their report). About the only one that isn’t debatable is the “city proper” boundary; but it really doesn’t capture the full extent of a city. Wherever possible, the UN report relies on the city’s urban agglomeration area. They also define a “megacity” as a city of over 10 million people.

    The largest city in the world is currently Tokyo. However, from 2018 to 2030 it is expected to decline by almost 900,000 people. Whereas, the city in 2nd position — Delhi — is expected to add more than 10 million inhabitants during this same time period. By 2030, these are expected to be the largest cities in the world:

    Most current megacities are located in what the UN refers to as the “Global South.” And 9 out of the 10 cities projected to become megacities by 2030 are located in developing countries. The one exception is London. Though all regions in the world are becoming more urban, the real population growth is happening in Asia and Africa.

    Most cities — 59% of cities with 500,000 or more people — are at risk of at least one natural disaster. And 3 megacities — namely Manila, Osaka, and Tokyo — are high risk for 3 or more types of natural disaster.

    Going through the report’s data charts, it’s also interesting to note that Toronto is not projected to become a megacity by 2030. However, the Toronto area already represents over 20% of Canada’s entire urban population.

    In the United States, Chicago’s urban agglomeration is projected to continuing growing and does come close to megacity status by 2030. The Miami region is similarly expected to grow and is actually right on top of Toronto in terms of population. But the fastest growing regions are, of course, expected to be the city’s that can more easily sprawl (Las Vegas, Phoenix, and so on).

    Bogotá, Colombia is already a megacity and is expected to add almost 2 million people by 2030. It currently represents about 26.5% of the country’s entire urban population. São Paulo remains one of the top 10 largest cities in the world and is similarly projected to add over 2 million people in the same time period, but to a much larger base.

    In Europe, it’s London, Paris, and Moscow, with the latter two already in possession of megacity status.

    Now quantity isn’t everything. Despite not ranking in the top 10 in terms of population, both New York and London are widely considered to be the world’s preeminent global cities. At the same time, we do know that the size of a city does create certain socioeconomic benefits. Urban agglomerations create agglomeration economies.

    If you’d like to download a copy of the World’s Cities in 2018 (United Nations), click here.

    Charts/Maps: United Nations

  • Slate announces minority investment from Goldman Sachs

    On Monday, Slate Asset Management announced a minority investment from Goldman Sachs Asset Management’s Petershill Program. This is great news, so here’s a copy of the full press release that went out.

    Toronto, August 19, 2019 – Slate Asset Management L.P. (Slate), a leading alternative asset management platform with a focus on real estate and real assets, today announced a passive, non-voting minority equity investment from Goldman Sachs Asset Management’s Petershill program, creating a strategic relationship with one of the world’s leading investment managers and positioning Slate for future success. The transaction will have no impact on the control or decision making of Slate. The day-to-day operations and management of Slate will remain unchanged.

    The investment provides capital that Slate will use to enhance its platform and increase its GP investments in current and future businesses and investment vehicles, further strengthening the firm’s alignment with its clients and investing partners.

    The investment accelerates Slate’s goal to build the leading independent alternative investment platform in real estate and real assets. As part of the transaction, Slate Founders Blair and Brady Welch have made a long-term commitment to the business.

    To date Slate has completed over $11 billion of transactions across Canada, the U.S. and Europe, through multiple vehicles spanning co-investments with global institutional partners, private equity funds and publicly-traded Real Estate Investment Trusts.

    “This investment in our platform is an endorsement of our people, our strategy and our future,” said Brady Welch, co-founder of Slate. “For our investors and our team, this is excellent news; our strategy and model remain the same, and we can now benefit from our new relationship with Goldman.”

    Blair Welch, co-founder of Slate, added that: “Since we started Slate nearly 15 years ago, we have showed that we can build tremendous value by providing our investors with a unique perspective, focusing on the fundamentals of the assets we acquire and delivering hands-on management that is innovative and creative. With our new relationship with Goldman Sachs, Brady and I are enthusiastic about what all of us at Slate can accomplish together over the next decade and beyond.”

    “Slate Asset Management is an incredibly innovative, dynamic real-estate focused alternative asset management platform,” said Robert Hamilton Kelly, Managing Director, Goldman Sachs Asset Management Petershill program. “We are big believers in the strategy, the team and the model. We are excited to partner with Slate as they work to capture the opportunities before them.”

    About Slate Asset Management

    Slate Asset Management L.P. is a leading real-estate focused alternative investment platform with over $6 billion in assets under management. Slate is a value-oriented manager and a significant sponsor of all of its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm’s careful and selective investment approach creates long-term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a demonstrated ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more.

    About Goldman Sachs Asset Management’s (GSAM) Petershill Program

    The Petershill program is managed by GSAM’s Alternative Investments & Manager Selection (AIMS) Group, which provides investors with investment and advisory solutions across leading private equity funds, hedge fund managers, real estate managers, public equity strategies and fixed income strategies. With investments in over 20 asset management firms, the Petershill program provides strategic capital to mid-sized asset management firms and has raised over $5 billion of commitments since inception. GSAM is one of the world’s leading investment managers with more than $1 trillion in assets under supervision globally as of June 30, 2019.

    For more information:

    Slate Asset Management
    Katie Fasken
    416-583-1785

    Goldman Sachs
    Patrick Scanlan
    212-902-5400

  • The densest urban cells in America

    Garrett Dash Nelson recently published a study looking at urban density on a cell-by-cell basis for a number of US cities. Each “cell” is a 30 arc-second grid cell, but you can think of them as being approximately one square kilometer. The goal of the project was to better define urban density and do it in a more granular way. City averages don’t tell you a whole lot about how neighborhoods vary, and they can be skewed by the denominator you use. i.e. Where are you drawing the urban boundary?

    You can play around with his interactive study, here. Each city can be explored according to its 200 most dense cells. One interesting takeaway — though it is probably not all that surprising to this audience — is that New York City is really a unique place when it comes to American cities. If you look at the above chart (sourced from CityLab), you’ll see that most other US cities don’t come close to it in terms of urban density. New York’s 200th densest cell is still denser than the most dense cells of Boston, the Twin Cities, and of Dallas.

    The y-axis is the total population in each grid cell.

  • The sensing power of taxis

    The latest project out of MIT’s Senseable City Lab examines the “sensing power of taxis” in various cities around the world. Looking at traffic data, they determined how many circulating taxis you would need to equip with sensors if you wanted to capture comprehensive street data across a particular city. This might be useful if you wanted to measure things like air quality, weather, traffic patterns, road quality, and so on.

    What they found is that the sensing power of taxis starts out unexpectedly high. It would only take 10 taxis to cover 1/3 of Manhattan’s streets in a single day. However, because taxis tend to have convergent routes, they also discovered rapid diminishing returns. It would take 30 taxis (or 0.3% of all taxi trips) to cover half of Manhattan in a day, and over 1,000 taxis to cover 85% of it. A similar phenomenon was observed in the other cities that they studied: Singapore, Chicago, San Francisco, Vienna, and Shanghai.

    However, if you look at the percentage of trips needed to scan half of the streets in a city, Manhattan has the lowest rate at 0.3%. Vienna is the highest at 9%. But I’m not sure if this is a function of the utilization rate of their taxis or if it has something to do with urban form. Singapore has a similarly low rate (0.44%), but its street grid looks nothing like that of New York’s.

    Here’s a short video explaining the project:

  • Scooter trips surpassed bike share last year

    According to the National Association of City Transportation Officials (NACTO), scooter trips in the US surpassed station-based bike share trips for the first time in 2018. Here is a chart taken from Streetsblog:

    Dockless electric scooters have created a public nuisance in many of our cities, but what is clear is that the demand is there. Which perhaps isn’t all that surprising given that they require less effort than traditional cycling.

    The other interesting takeaway from NACTO’s analysis, which is likely also not that surprising, is that bike share trips are heavily concentrated in a select few cities.

    In 2018, there were about 36.5 million bike share trips across the US. And about 84% of them took place in just 6 cities: New York, Boston, Chicago, DC, Honolulu, and San Francisco.

    Almost half of the 36.5 million trips were on NYC’s Citi Bike network.

  • Should we be banning cashless businesses?

    Three years ago I wrote about how I was one step closer to not only going cashless — I had pretty much already done that — but also going walletless. (That’s one of the things about writing a daily blog — there’s a public record.) I still carry a wallet in most cases, but I couldn’t tell you the last time I paid for something using cash here in Toronto. It was probably at a Vietnamese restaurant.

    I did, however, notice on my trip last month that Germany and Austria are still quite reliant on cash. Many places only accepted cash and many places wouldn’t accept credit cards under a certain minimum spend. Fewer opportunities to just tap as well. I had forgotten how annoying it was to carry around lots of coins. You really need a change purse.

    Still, a paradigm shift has taken place. And because of this shift, there’s a growing movement in cities toward banning cash-free businesses. Philadelphia, Chicago, San Francisco, New York City, and Washington, DC are all working on policy. The concern is that not accepting cash discriminates against lower-income patrons.

    According to the Federal Deposit Insurance Corporation (FIDC), approximately 8.4 million US households (6.5% of all households) were “unbanked” in 2017. This means that no one in the household had either a checking or savings account.

    An additional 24.2 million US households (additional 18.7% of all households) are estimated to be “underbanked”, meaning they have at least one account at an insured institution, but they also rely on outside financial products — such as payday loans.

    When surveyed, somewhere around half tend to cite “not having enough money” as one of the reasons for being “unbanked.” But the good news is that the percentage of people without a bank account seems to be declining (see above chart).

    This is important because we all know where things are headed. And banning cashless businesses isn’t going to stop that march. There are deeper issues that need to be addressed. Here is an excerpt from a recent CityLab article on the topic:

    “I certainly don’t think [this bill] is the right long-term solution,” said Rogoff. “The future does not lie in this direction. The future lies in giving people free debit cards and financial inclusion.” He cited the case of India. The country launched a program to decrease the number of unbanked and saw the percentage decrease from 47 percent of adults in 2014 to 20 percent unbanked in 2017 according to the World Bank Global Findex Report. “If India can manage to give people free debit cards, so can the U.S.” Rogoff said.

    Kenneth Rogoff is a professor of public policy at Harvard University, the former chief economist of the IMF, and author of The Curse of Cash. If you’re interested in this topic, his book may be a good one to check out.

  • 2019 Pritzker Architecture Prize Laureate: Arata Isozaki

    This week it was announced that Japanese architect Arata Isozaki has received the 2019 Pritzker Architecture Prize. The prize is generally viewed as architecture’s highest honor. (You also get $100,000.)

    He’s the 46th laureate and 8th Japanese architect to receive the honor. (As a side note, the only Canadian on the list is Canadian-born American architect Frank Gehry.)

    Here’s an excerpt from the announcement:

    Not only did he extend efforts to physically reconstruct his native hometown [after World War II] with buildings including Ōita Medical Hall (1959-60) and Annex (1970-1972 Ōita, Japan), and the Ōita Prefectural Library (1962-1966 Ōita, Japan, renamed Ōita Art Plaza in 1996), but also redefined mutual exchange between eastern and western societies, allowing Japanese vision to inform European and American design, particularly in the 1980s.

    His first international commission outside of Japan was the Museum of Contemporary Art in Los Angeles, which was completed in 1986. He was also one of the first Japanese architects to start working in the West at this time.

    For the full media release, click here.

  • Construction update — MIRA, San Francisco

    The MIRA Tower in San Francisco is one of my favorite buildings by Studio Gang and probably my favorite tall building under construction right now. Here’s a video and a few photos from the San Francisco Chronicle’s urban design critic, John King:

    When we first met Studio Gang, this project hadn’t yet started construction. They broke ground in April 2017. But it was one of the designs that got us particularly excited about what a Studio Gang building could mean for midtown Toronto.

    Now that the MIRA Tower is well underway, I have to say that it looks even better than it did pinned to the walls of their Chicago studio. I can’t wait to see it in person once it’s complete.