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: cities

  • When everyone thinks you’re wrong

    Sunset by Paolo Mastrogiacomo on 500px.com

    https://500px.com/embed.js

    I was recently talking to my good friend Jeremiah Shamess about the current state of development land sales in Toronto (he does this for a living) and he said something to me that I found really interesting.

    He said that because the market is so competitive, you can really only win development sites in one of two ways. Either you’re willing to spend the most money or you see something and have a vision that nobody else sees.

    And it was this second piece that really stood out to me because it reminds me of one of my favorite investing frameworks.

    Warren Buffet is famous for saying that you should be fearful when others are greedy and you should be greedy when others are fearful. And what I’m about to talk about is really that same core philosophy.

    Here’s how venture capitalist Fred Wilson put it (reiterating something that Bill Gurley said):

    I saw Bill Gurley say that you can only make money by being right about something that most people think is wrong. His logic was that you can’t make money by being wrong. And you can’t make money by being right about something everyone else knows. So you have to be right about something that most people think is wrong. I really like that framework.

    But this doesn’t just apply to technology companies or stocks. It applies to city building, most industries, and probably most things in life if you think about it.

    If all you’re doing are things that everyone else is doing, then how can you expect to outperform? You’re going to revert to the mean.

    Take, for example, billionaire Dan Gilbert and Detroit. Not everyone believes that Detroit will come back. In fact, I suspect there are probably more people who think it won’t come back, than people who think it will. Otherwise, it would already be back.

    But Gilbert is unquestionably long on Detroit (via Forbes):

    As you’ve likely heard, over the past four years Gilbert has become one of Detroit’s single-largest commercial landowners, renovating the city with the energy and impact of a modern-day Robert Moses, albeit bankrolled with his own money. He’s purchased and updated more than 60 properties downtown, at a total cost of $1.3 billion. He moved his own employees into many of them–12,000 in all, including 6,500 new hires–and cajoled other companies such as Chrysler, Microsoft and Twitter to follow.

    If/when Gilbert proves to be right about Detroit, then he will have been right about something that most people thought was wrong. And because of that, he will no doubt make a lot of money.

  • Made in Toronto: 500px

    Photograph Sunset in Toronto by Daniel Fernandes on 500px

    Sunset in Toronto by Daniel Fernandes on 500px

    https://500px.com/embed.js

    If you’re a regular reader of Architect This City, you’ll know that I generally like to include at least one photo with every post. Sometimes I run out of time and I don’t always do that, but that is at least the intent.

    You might have also noticed that my go-to for stock photography is 500px. That is the case for a few reasons. 

    I find the photos to be of higher quality than any other service. I can easily “embed” them into my posts while giving appropriate credit to the author and linking back to 500px. The company was founded by a good friend of mine and snowboarding compadre. And the company is made in Toronto.

    That’s why it’s exciting to report that yesterday the company announced an additional $13M in funding (Series B). To date the company has raised $23M of outside funding, from some big names like Andreessen Horowitz. This is great for the everyone in the company, and I believe it’s great for this city.

    Why is that?

    Well, here’s a video from the New York Times’ Cities For Tomorrow conference, where Andrew Ross Sorkin and Fred Wilson talk about creating startup hubs. It’s about 20 minutes long and well worth a watch.

  • Enabling innovation by lowering the barriers to entry

    Yesterday afternoon Sam Altman of Y Combinator published a blog post talking about a new YC Fellowship program for even earlier stage companies. 

    For those of you who aren’t familiar with Y Combinator, they are a super successful funding platform for early stage startups. They are located in Mountain View, California.

    What’s unique about their approach is that they invest a relatively small amount of money ($120,000 for 7% of your company) in a relatively large number of companies. Their most recent cohort was around 85 companies and they do that twice a year.

    The rationale behind this approach is that it can be incredibly hard to predict which people and ideas will produce the next great company. Oftentimes the best ideas appear really shitty at first. (Here’s a post by one of the cofounders of Airbnb talking about the company’s early rejections.)

    So instead of putting all of their eggs in one basket, YC invests smaller amounts in more companies.

    But beyond this being beneficial to them, it’s also a model that I think helps to reduce the barriers to people starting a company. It gives more people the chance to prove that their company has the potential to be something great. 

    And that’s precisely what makes this new YC Fellow program/experiment so interesting to me.

    Instead of $120,000, YC fellows will receive $12,000 and they won’t have to move to the Bay Area (although it’ll be encouraged). They’ll still get mentorship and advice like the regular YC program, but it’ll be a kind of light version. 

    Though this is almost certainly just the beginning. Here’s how Sam ended his announcement post:

    “Someday if it works, we’d love to fund 1,000 companies per year like this.”

    Now all of a sudden that’s some scale.

    What’s exciting about this is that I believe our cities have the potential to be far more innovative than they are today. Every city is trying to be the next Silicon Valley, but every city is not the next Silicon Valley.

    I saw a great tweet the other day that went something like this (I wish I could remember who the author was):

    “Entrepreneurs aren’t risk takers. They’re just rich kids with big safety nets.”

    It’s a bit of a tongue-in-cheek generalization. But to unlock the full potential of our cities, we should be figuring out how to get everyone participating and building their ideas, not just those with a head start. 

    I think there are a lot of people around the world who could be doing great things, but they just haven’t been able to take that first step for one reason or another.

    Hopefully organizations like Y Combinator will be able to help them take it.

  • Project Profile: Cabin at 45 Dovercourt

    image

    Last month,
    Curated Properties submitted a
    rezoning and site plan application for a 6-storey, 25-unit building at 45
    Dovercourt Road in Toronto. The project is known to the market as Cabin and you
    can register for it now.

    The project
    immediately caught my attention (because of its design, because of its
    branding, and because I like the work of Curated), so I decided to dig in
    further and get a copy of their architectural drawings. Development
    applications and their supporting documents are all public. Anyone can request
    a copy. But the city isn’t great at making this known.

    Since I’m excited
    to see more of these small scale urban infill projects in the city, today I
    thought I would highlight some of its key features and some of the things that
    are being proposed in order to make a project like this work.

    The Homes

    First of
    all, 100% of the suites are 2-storey. 76% of the suites are also 2 bedroom or
    larger.

    The result
    is that the project is essentially a series of townhomes stacked on top of each
    other. I suspect that this will appeal to more end-users as opposed to
    investors. Hopefully, it will also attract more families to the area.

    Here’s the
    third floor plan:

    image

    You
    probably can’t see it, but all of the suites are marked as “Level 1”, obviously
    indicating that there’s more than one level.

    Also worth
    mentioning is the notch or cut out on the north side of the building. This is
    what makes the 2 suites in the middle of the floor plate possible. In order for
    them to have windows, they need to be setback from the (north) property line.
    It also means those suites get terraces.

    The Parking

    Turning to
    the ground floor plan, it’s interesting to see that they are proposing 8 triple
    car stackers that will be accessible off the rear laneway (right side on the plan below). That equates to 24 parking spaces in the building (8 bays x 3
    cars per stacker).

    image

    On small
    urban sites like this one, it can be very difficult to accommodate parking. So
    it’s inevitable that we will see more parking stackers in the city and a continual
    reduction in parking minimums.

    The Construction

    Finally, I
    have been told that this project is expected to be framed in wood, as opposed
    to reinforced concrete, which is more typical of condominiums in Toronto.

    As of the
    beginning of this year (2015), the
    Ontario Building Code was modified to allow wood-frame buildings up to 6
    storeys    . Before this change, the highest you could go was 4 storeys.

    This change
    was done with the intent of reducing construction costs so that it becomes more
    feasible to develop smaller infill sites such as this one. So expect to see
    more of this.

    I know that
    a lot of people would like to remain in the city even when they start having
    children. But it’s becoming increasingly difficult to find affordable low-rise
    homes. And not everyone wants to live in a high-rise tower. 

    That’s why I think
    we will see more, not less, low-rise and mid-rise infill projects like Cabin.
    If you’re interested in this topic, also check out a post I wrote called 3
    stages of intensification    .

    The rendering at the top of this post is from Curated Properties and the
    drawings are by RAW Design.

  • The taxi cartel

    Photograph Taxi by Roland R. on 500px

    Taxi by Roland R. on 500px

    https://500px.com/embed.js

    Early this morning Peter Cheney of the Globe and Mail published an article called: How Uber is ending the dirty dealings behind Toronto’s cab business.

    And I highly recommend you read it. He’s been investigating this industry for decades.

    Though the article is specific to Toronto, I know that there are middle people and archaic policies governing the taxi industries in many other cities around the world.

    Here it revolves around taxi licenses issued by the city (known as “plates”), which are expensive and almost impossible to get. Last year the average price of a plate was $118,235 (2014).

    The way it works is that people – typically non-drivers – buy/inherit/get these plates and then charge rent on them to drivers who want to use them. The result is a taxi cartel:

    In fact, Toronto’s taxi plate system is anything but free enterprise. Instead, it is based on the artificial restriction of a natural market, and the granting of licences to a fixed number of participants. Even those who paid top dollar for a plate used to enjoy an annual return of more than 12 per cent. And for those who inherited plates, the return was manna from heaven.

    So it shouldn’t come as a surprise that the taxi industry is grouchy about companies like Uber. But the cost structure of the incumbents is going to need to change if they want to stay in business.

    Jeff Bezos of Amazon is famous for saying, “Your margin is my opportunity.” And that’s exactly what is happening here. A bloated legacy cost structure is being quickly supplanted by better/cheaper.

  • Rethinking the tall building

    Back in February of this year (2015), Philip Oldfield, who is an Assistant Professor of Architecture at the University of Nottingham, gave the following talk at the Illinois Institute of Technology. Click here if you can’t see it below.

    [youtube https://www.youtube.com/watch?v=lOfkx39soIs?rel=0]

    If you’re interested in cities and how tall buildings might make them more sustainable, you’ll enjoy it. It’s filled with a number of interesting stats and takeaways, and it’s about an hour long.

  • The tragedy of the commons

    Photograph the traffic jam by Phoebe Eve on 500px

    the traffic jam by Phoebe Eve on 500px

    https://500px.com/embed.js

    In 1968, Garrett Hardin wrote an article where he coined the term: the tragedy of the commons. Hardin was an American ecologist who was obsessed and concerned with the prospect of human overpopulation.

    In his article, the term tragedy of the commons was used to describe a situation where individuals – all acting independently and in their own self-interest – actually end up behaving in a way that is detrimental to the larger group and that negatively impacts some sort of common resource.

    Just in case, here’s another definition via Investopedia:

    An economic problem in which every individual tries to reap the greatest benefit from a given resource. As the demand for the resource overwhelms the supply, every individual who consumes an additional unit directly harms others who can no longer enjoy the benefits. Generally, the resource of interest is easily available to all individuals.

    So what would be an example of a tragedy of the commons?

    You may not have thought of it in these terms, but I bet you that everybody reading this blog has experienced one.

    I will give you two examples.

    1. The first is that of electricity consumption. 

    In most condominiums, there are two types of ways that electricity gets billed and paid. Either the whole building gets one bill (master metering) or each individual resident gets a bill (submetering). 

    In the case of master mastering, each resident’s consumption isn’t tracked and so nobody knows who is consuming what. But in the case of submetering, each individual resident only pays for the electricity that they use.

    Not surprisingly, the data shows that submetering can cut electricity consumption by 10 to 30%. That’s because it creates a 1:1 relationship between usage and cost. There’s now a strong incentive to conserve.

    With master metering, there isn’t a 1:1 relationship between usage and cost. The additional burden/cost of consumption actually gets shared by everyone else in the building. And since each individual is looking to maximize their own benefit, they lose the incentive to conserve. As a whole, this makes the entire group worse off.

    2. The second example is that of congestion on public, un-tolled roads.

    In most cities, public roads are a resource that is “easily available to all individuals” (to use Investopedia’s terminology). They are basically free. The marginal cost of driving another kilometer to work on a road is basically nothing (other than a bit of gas and some time).

    What this does is create a situation where individuals – in their pursuit of maximum individual benefit – start to overload the road. Everybody just wants to get where they need to go and there’s no incentive to conserve the resource (i.e. the road). Once again, the result is that the entire group becomes worse off.

    That’s why building more road rarely/never works. You’re simply increasing a resource that is easily available to all individuals. What we should instead be doing is looking at submetering our roads (i.e. pricing our roads). It’s been proven time and time again to reduce road congestion basically overnight.

    I had never heard of the term tragedy of the commons before today, but I like it a lot. So the next time you’re stuck somewhere in traffic, you can now scream to yourself: What a tragedy of the commons!

  • Sicilian town is giving away free houses

    Photograph Gangi, Palermo - Sicily by Claudio Siragusa on 500px

    Gangi, Palermo – Sicily by Claudio Siragusa on 500px

    https://500px.com/embed.js

    Buy real estate. It always goes up. That’s the mantra, right?

    Few things in life are that black and white.

    A small town in Sicily called Gangi is in the midst of a novel urban renewal experiment. They are giving away houses for free to people who will agree to renovate them within a 4 year time period.

    Here’s the “free houses” notice from the Comune Di Gangi explaining how it works and who to contact. You have to be an Italian or EU citizen to participate.

    Free can be a powerful business model, as we see all the time with tech companies. And sometimes cities and towns aren’t all that different.

    So if you’re looking for a vacation home or want to move to Sicily, now might be a great time.

  • Saturday morning bike ride to the Bluffs

    This morning I got up at 7:30am and met a good friend of mine at the St. Lawrence Market for breakfast.

    Market Street is closed to cars today so it’s pedestrian-only. It should be this way all the time. They had a pig roasting on a spit when I walked by and a big stage set up. 

    Below is a photo of what it looks like. Keep in mind that this photo was taken just after 8:00am, which is why it’s not all that busy, yet.

    image

    When Market Street was redone a few years ago, the original vision for the street was for it to be pedestrian-only. But somebody told me that the city didn’t want that. Too bad. It strikes me as a perfect candidate for that.

    After breakfast, we then biked out to the Scarborough Bluffs in the east end of the city. If you click here, you can see the path we took via Strava. It’s only about 15km from downtown. The ride through the Beaches was by far the best stretch. The water was on my right hand side. The pavement was smooth and continuous. And I had George FitzGerald on my headphones for pacing.

    When we got there, this was the view we were presented with:

    image

    It honestly doesn’t feel like Toronto. The water is turquoise and there’s a beautiful beach at the bottom of the cliffs. It felt like paradise.

    If you’ve never been to the Scarborough Bluffs, do yourself a favor and get out there on a beautiful summer day. It’s the dog days of summer and Toronto is a magical place right now.

  • 10 reasons to visit Toronto right now

    Photograph Toronto Slide by Kyle Anstey on 500px

    Toronto Slide by Kyle Anstey on 500px

    https://500px.com/embed.js

    Next weekend a good friend of mine from architecture school will be visiting Toronto from Philadelphia. And I’m really excited to show him the city. (Next month it’s my turn to go to Philadelphia.)

    He’s a fellow city geek. He hasn’t been to Toronto in a number of years. And I haven’t seen him since our trip to Detroit 2 years ago.

    For those of us living and working in Toronto, there’s a lot to celebrate. Sure the Gardiner Expressway East decision didn’t go as I – as well as many other urbanists, including our Chief City Planner – had hoped. But there’s no shortage of other things to brag about.

    So here are 10 reasons to visit Toronto right now:

    1. We’ve created an entirely new business district south of Union Station called South Core. Now the region’s primary mobility hub is in the middle of the country’s most important business district, as opposed to on the edge of it. It’s a better use of infrastructure.

    2. We now have a dedicated train (the Union Pearson Express) that takes you from the country’s busiest airport directly to downtown in 25 minutes. You’ll find local retailers at the stations and a brand created by the brain behind Monocle Magazine. You can even use a smart card to ride it and our local transit system.

    3. We didn’t shut down Uber. Instead our mayor wants to create new policy that will allow these services to coexist with conventional taxi services. We don’t yet know how this will turn out, but I believe it’s a step in the right direction. It’s Toronto taking a leadership approach to innovation as opposed to trying to stomp it out.

    4. We are about to host the largest sporting event in Canadian history. The 17th Pan American Games will have double the number of athletes competing as the 2010 Winter Olympics in Vancouver.

    5. We created an entire neighborhood from scratch in order to house all of these athletes (Canary District). And I think it’s destined to become one of Toronto’s great neighborhoods. I’m saving my first visit for next weekend, so expect a follow-up post on this.

    6. We are dramatically rethinking this city’s public realm. From the plaza out front of Union Station to the new Queens Quay Boulevard along the waterfront, we are prioritizing people and creating more complete streets. It has given Toronto an entirely new urban feel.

    7. We are slowly starting to embrace our forgotten laneways and alleys through the help of organizations like The Laneway Project. And this is going to eventually lead to a further rethink of our pubic spaces and urban fabric.

    8. We continue to be one of the fastest growing cities in the world (certainly in the developed world). As a result, we are building some really exciting buildings by some of the top architects in the world. This includes everyone from Norman Foster to Frank Gehry.

    9. According to a recent report coming out of the Martin Prosperity Institute, Canada is one of the most creative and globally competitive countries in the world, as well as the most open to “ethnic and religious minorities and gay and lesbian people.”

    10. The ATC community is in the process of identifying a new, quintessentially Toronto food dish. But since we have every type of imaginable cuisine here, we’re struggling to pick just one. When you visit, you can help us identify the best and most Toronto dish.

    So there’s a lot to be excited about. I for one can’t wait for us to host the Pan Am Games, starting tomorrow. It’s a chance to show off this great city. 

    So if you’re also in town next weekend and want to geek out about cities, drop me a line.