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: construction

  • Building height fallacy

    Studio Gang has a project currently under construction in New York City called 40 Tenth Avenue. It is also known as the “solar carve tower.” Here are a couple of progress photos taken by Timothy Schenck. The glass is beautiful. (If you can’t see the embedded tweet below, click here.)

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    This is one of my favorite buildings by Studio Gang and one that we all studied when we were kicking off One Delisle. 

    The geometry of the building is a result of carve outs that maximize the amount of sunlight that is able to reach the adjacent High Line (public space). It is form driven by functional logic. Here is a diagram from Studio Gang showing the carve outs that result from the sun’s rays.

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    The other thing I like about this project is that it is a clear proof of something that I’m going to call the “building height fallacy.” There can be a tendency to overfocus on building height, which I have argued against before on this blog. 

    In this case, a shorter and squatter building without these solar carve outs, would have actually been worse for the High Line and the surrounding environment in terms of access to light and air.

    The building is responding to site-specific criteria – which is what great architecture should do.

  • Below the surface

    Later this month the new 9.7 km North-South metro line in Amsterdam will start service. Like most large scale infrastructure projects, its opening has been delayed many times. 8 times according to this source. But this post is not about that. It’s about a byproduct of the line’s construction. 

    The excavations required for the line meant that two sections of the Amstel River – namely the Damrak and Rokin sites – had to be drained. This took place from 2003 to 2012 and gave archaeologists unprecedented access to the bottom of a river in the middle of a historic city center.

    Amsterdam started as a small trading port along the banks of the Amstel River some 800 years ago. So not surprisingly, they found a few things. Over 17,000 objects were found and all of them have been catalogued online according to time period, use, material, and location found.

    For the full catalogue of objects, click here. Screenshot of the catalogue shown above. And to learn more about the entire project, start here. There’s a lot of good stuff in there for city nerds.

  • Construction costs are no joke right now

    I don’t know what it’s like in your market, but everyone is talking about it in the industry here in Toronto. Combine these rapidly rising hard costs with higher development charges and inclusionary zoning and you get significant upward pressure on condo prices and apartment rents. 

    This is also one of the reasons – perhaps it is the main reason – why you’re seeing some projects get cancelled. These are projects that maybe sold in one market (lower revenues) and are now trying to build in another (higher costs). The math no longer works. Sorry.

    I mention this today not to complain, although I’m always up for a good industry commiseration over beers, but because I often hear people lament that Toronto needs better design. Why aren’t developers using triple-glazed windows? Why aren’t developers thermally breaking the balconies?

    I will always advocate for better design. That is core to my belief system. But everything costs money. There are very real limits in this equation. And markets have a funny way of telling you exactly what those are.

    Photo by Filip Mroz on Unsplash

  • Toronto: 2000 vs. 2025

    Last week, Joe Berridge, Partner at Urban Strategies, gave a presentation at the Institute on Municipal Finance & Governance titled, Toronto: The Accidental Metropolis. I’ve seen Joe give similar presentations to this one before, and I always thoroughly enjoy his focus on Toronto’s position as a global city.

    Here is a slide from the presentation that projects out Toronto’s population to 2071 and compares it to the largest cities in the US.

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    But the two slides that have been really making the rounds online are the following ones. The first is a rendering of what downtown Toronto looked like in 2000. 

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    I remember this time clearly. Queen West seemed to end at Spadina. King West and Ossington weren’t things. And “Richmond and Adelaide” felt like the greatest club district in the world. (If you’re not from Toronto, these references will likely mean nothing to you. Sorry.)

    The second slide is a rendering of what Toronto will look like in 2025. The transformation is just incredible.

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    I’ve seen some people comment that the Toronto of 2000 was relatively affordable; the Toronto of 2018 is unaffordable; and the Toronto of 2025 will be even more unaffordable with all of this new development.

    But I don’t understand that logic. Considering the growth rate shown in the first slide, imagine how unaffordable this city would be if we weren’t building new places for people to live and new places for people to work.

    For the full slide deck, go here. And for recent aerial photos of Toronto’s downtown core, check out my Instagram page.

  • We’re new here. Find your home.

    A simple registration page is now live for our upcoming Junction House (condo) project. We also got this neat sign made:

    Of course, eventually there will be a full website, but this is for people who want to get on the early registrant list and tell us what they are looking for in a new home. Early registration. Early access to suites.

    We’re thrilled with the way the overall brand & identity is coming together for Junction House and we think it reflects the architecture and our project ambitions. 

    Hopefully you all like it as well.

    Photos by Vanderbrand

  • Spaces between buildings

    Doug Saunders recently published a great piece in the Globe and Mail about the “the dead spaces between buildings” and the architectural revolution that is taking place from Mexico City to Toronto to solve this underappreciated problem.

    The example in Mexico City is that of the San Pablo Xalpa public housing complex where architect Rozana Montiel transformed the underutilized spaces between the apartment buildings into vibrant “common-unity” spaces. 

    This meant removing 95% of the fences and gates that had previously been erected as safeguard against the unsavory people and acts that were taking place in these open spaces.

    The underlying goal was to try and address the socioeconomic decline that had taken root in Mexico’s public housing complexes. And there was a sense that part of the problem was simply their physical design.

    Of course, this is partially about trying to correct the failures of post-war planning. But I think this conversation around the “spaces between buildings” shouldn’t just be a corrective one. It can be broader than that.

  • Likely to liquefy in an earthquake

    Today’s post is going to be a short add-on to yesterday’s post about the sinking Millennium Tower in San Francisco. Today, the New York Times published the below map showing the areas of the city likely to “liquefy in an earthquake.” It goes on to note that “at least 100 buildings taller than 240 feet were built in areas that have a “very high” chance of liquefaction.”

    The article might leave you with the feeling that current building codes are inadequate for the pending “Big One” in San Francisco. So I thought I would reblog this post from last fall which talks, in more detail, about how one of the best structural engineering firms in the world designed the tallest building in San Francisco.

    Image: New York Times

  • Half of Toronto condos completed last year became new rental housing

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    Shaun Hildebrand (Urbanation) and Benjamin Tal (CIBC) published a report today called, “A Window Into the World of Condo Investors.” In it they revealed that last year (2017 data) no less than 48% of the Greater Toronto Area’s newly completed condo units were closed on by “rental investors.” In other words, almost half of the units became new rental supply.

    This stat was not surprisingly turned into clickbait-y type headlines like, “Half of Toronto condos bought last year were by investors”; whereas an alternate headline might read: “Half of Toronto condos completed last year became new rental housing.” Not as jarring, I know.

    In any event, there are a bunch of other interesting stats in the reports. Here are a few of them:

    – 80% of all new home sales in the GTA last year were condo.

    – Average resale condo prices (per square foot) increased by 26% last year and rents grew by 9%.

    – Over 20% of condo investors purchased their property with no mortgage.

    – Average down payment made by investors was 20%; non-investors were closer to 15%, likely because of mortgage insurance and other factors.

    – Out of the condo investors who took possession in 2017 with a mortgage, no less than 44% are in a negative cash flow position – meaning their rental income isn’t covering their carrying costs. 

    – The returns, which the report calls exceptional, have been coming in the form of price appreciation.

    – As a stress test for the market – what if all these negative cash flow investors suddenly sold their condos? – the report also estimates that if you took all of the rental investors who closed in 2017 with a mortgage and who are in a negative cash flow position greater than $500 per month, it would represent only 3.4% of the total annual supply of condos (both new and resale product).

    If you would like to check out the full report, you can do that over here.

    Photo by Scott Webb on Unsplash

  • RioCan REIT announces new residential group

    On Monday, RioCan REIT announced its new residential brand: RioCan Living. This is the group that will now be responsible for redeveloping the 43 properties within their portfolio that they have identified as having intensification potential. Here’s how they are describing the new brand: “RioCan Living delivers best in class purpose-built rental units and condos along Canada’s most prominent public transit lines.”

    It has been interesting watching RioCan over the last 6 months. In the fall they announced that they would be selling off somewhere around $1.5 billion of their portfolio to rebalance toward Canada’s six largest markets, and in particular the Toronto market. And with this recent unveiling it is clear that they are doubling down on transit-oriented mixed-use communities as a way to future-proof their retail portfolio against disruption.

    Major markets. High-density. Transit-oriented. This shouldn’t surprise any of you. Here is a link to their latest investor presentation in case you’re curious.

  • How to make money with low-risk licensing deals

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    This morning the Toronto Star published a detailed autopsy of the failed Trump International Hotel and Tower Toronto. It outlines the players, the investors, and what supposedly went wrong. Of course, the headline is all about how Trump managed to make money from the deal – through his well-publicized licensing business – even though the project went bankrupt.

    At the beginning of this year, the Washington Post reported that Trump’s name had been licensed and linked to over 50 properties and that these contracts have earned him at least USD$59 million in revenue. Outside of the US and Canada, the Trump Organization has (or had) deals in Brazil, Turkey, Azerbaijan, India, Indonesia, the UAE, and so on.

    There would have been more money to be made in the actual development of these properties, but the beauty of these licensing deals – for Trump – is that they are “low-effort, low-risk, high-reward.” In fact, this past summer it was reported that the breakup fee at Trump Toronto – the fee to exit all contracts with the Trump Organization – was at least $6 million (guessing that’s in USD).

    This story is not unique to Toronto. And so I have got to believe that there’s major brand dilution happening here. Does the Trump name really bring credibility to projects in some markets? How sustainable is this licensing business? 

    The only other thing that I would add to the Toronto Star article is that the hybrid condo-hotel model has proven to be difficult in this city. It’s perfectly fine to have residential condos and a hotel in one tower. There are lots of successful examples of those. But when the condo units can be put into a hotel pool (and there’s an IRR expectation on the part of individual owners), many seem to have been disappointed.

    Part of the challenge with this model here in Toronto is that the condo-hotel units typically end up with a commercial property tax rate, which, in this city, is much higher than the residential rate. This can suppress values.

    Photo by NeONBRAND on Unsplash