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: developer

  • How the Time Warner Center came to be

    New York Magazine is running a weekly series right now that tells the stories behind key moments in the city’s cultural history. This week’s is about how the Time Warner Center came to be.

    Like most real estate projects, it took an enormous amount of time for it be realized. Multiple developers had attempted to buy the site, which previously housed the New York Coliseum.

    In 1987, the agency put out a call for proposals, its parameters calculated to yield the highest price and the biggest building. Among the 13 developers who responded was Donald Trump, who proposed the world’s tallest tower, 137 stories high.

    It’s a good example of just how difficult it can be to get a large project off the ground. The Time Warner Center opened in 2003. Thank you Paul for sending this along. Click here for the full story. 

  • Screw Toronto

    Hamilton, Ontario is on the rise. It’s no secret. 

    In fact, Toronto Life just ran a piece called The New Hamiltonians, where it profiled ex-Torontonians who have made the move west for more affordable housing and a higher quality of life.

    What stands out for me about the article is how there’s already growing resentment toward both developers and the local business owners who are helping to revitalize the city. Here is an excerpt:

    As builders encroach on Hamilton’s old neighbourhoods, a simmering resentment is building toward the upstart businesses that make rundown areas attractive to developers in the first place. Dave Kuruc, who owns Mixed Media, says that last year, the front door of his and neighbouring shops got slapped with a sticker that read “FUCK YOUR BOUTIQUE. DEFEND HAMILTON.” Last June, a bus tour for ­developers—branded “Try Hamilton!”—was interrupted by masked activists spraying sour milk out of water pistols and wielding signs that read “Developers + Investors = Predators.”

    So it’s not just developers. It’s also those damn boutiques. But the City of Hamilton eliminated development charges and put in place many other incentives for a reason. It wants to see more new construction. 

    Some people clearly aren’t happy about that.

  • Big bad developer

    I just stumbled upon an older (2014) article by Oliver Wainwright in the Guardian called, The truth about property developers: how they are exploiting authorities and ruining our cities. In case the title didn’t give it away, it’s a scathing article about the current state of real estate development and city building.

    Here’s an excerpt:

    “Across the country – and especially in superheated London, where stratospheric land values beget accordingly bloated developments – authorities are allowing planning policies to be continually flouted, affordable housing quotas to be waived, height limits breached, the interests of residents endlessly trampled. Places are becoming ever meaner and more divided, as public assets are relentlessly sold off, entire council estates flattened to make room for silos of luxury safe-deposit boxes in the sky. We are replacing homes with investment units, to be sold overseas and never inhabited, substituting community for vacancy. The more we build, the more our cities are emptied, producing dead swathes of zombie town where the lights might never even be switched on.”

    Now, I’m not that familiar with the London market, so I can’t really comment on the dead swathes of zombie town. But I did enjoy the insights into the UK entitlement process.

    At the same time, my overarching thought as I read through the article was that I don’t believe that making money and doing what’s right need to be mutually exclusively. You can do both in development and in business. Making money as a developer does not mean you have to build shitty buildings.

    Part of the development game is managing an endless number of competing tensions. And profitability and responsible city building is just one of them. Of course, you have to want to do the right thing in the first place.

  • Harry Macklowe, 80

    For those of you interested in real estate development (and architecture), the New York Times recently published an article about New York developer Harry Macklowe

    At 80 years old, he has been in the business for almost 60 years and he has what some might describe as the typical developer story. He has seen ups. And he has seen downs. As a result of the 2008 economic crisis, he was forced to give up seven landmark properties in New York.

    The article doesn’t paint a particularly nice picture about developers. It talks about how he demolished several single room occupancy hotels in midtown Manhattan (hours before a new moratorium was set to go into effect) and how he recently filed a lawsuit against his son, William Macklowe. After their relationship went south, William went off and started his own real estate company and presumably that is causing some problems.

    There’a also mention of a book called The Liar’s Ball, which I am pretty sure would be a good read:

    Real estate “is not an industry full of camaraderie and good will,” said Vicky Ward, the author of “The Liar’s Ball” (Wiley, 2014), a book about Mr. Macklowe and the G.M. building. Developers “are set up to dislike each other, yet occasionally they do come together to partner.”

    If the real estate business has anything, it has characters. Click here for “Harry Macklowe on New York Real Estate.”

  • Episode 15: The Master Builder

    My friend Ben Stevens runs a blog called Skyline where he interviews people involved in the built environment (architecture, real estate, planning, and so on). You might remember that I did an episode with him about a year ago where we talked about the overlap between architecture and development.

    His most recent episode is with San Diego-based architect-developer Jonathan Segal. I’ve mentioned Segal before on this blog and that’s because he is well known and admired in certain circles for (re)creating a process that places the architect in the position of “master builder.”

    He is singularly driven by one goal: to have ultimate control over the architecture that he creates. Making money is secondary. It is a byproduct of goal number one.

    To achieve this, he has worked to cut out every conceivable middle person. Design is in-house. Construction management is in-house. Property/asset management is in-house. He even avoids bringing on investors for his projects, out of fear that they will start to dictate what he can and can’t do.

    If this approach resonates with you, I definitely recommend you watch the interview. Click here if you can’t see it below.

    [youtube https://www.youtube.com/watch?v=r7UT–CAS1g?rel=0&w=560&h=315]

  • The long and narrow of property affordability

    image

    Lots sizes and dimensions vary from city to city, as well as from neighborhood to neighborhood. They come in many different shapes and sizes from long and narrow (common in Toronto) to rectangular or even wide and shallow. Charlie Gardner wrote a terrific post on this last year where he used Bing Maps to illustrate some of these differences. Tokyo, for instance, is shown as having more rectangular lots (32′ x 38′), whereas Buffalo is shown as having more long and narrow lots (30′ x 175′). Charlie then asks: why the prevalence of inefficient long and narrow lots? These dimensions obviously produce long and skinny houses.

    As he rightly points out in his post, there are economic reasons for this. Assuming you’re starting with deep blocks and lots, then there’s going to be a natural tendency toward subdividing and going long and skinny. That’s because the key dimension is frontage onto the street. The more frontages you create, the more front doors can be built, the more lots with access to the Mississippi can be created, etc. And that’s how you end up with 10-12′ wide row homes, which also helps to address overall housing affordability. This is not a new phenomenon.

    To further demonstrate this point, let’s look at how this phenomenon has translated into the condo market – specifically the mid-rise condo market here in Toronto. In this case street frontage morphs into window frontage (access to light). That’s now the guiding dimension. In a 1 bedroom apartment, that dimension might be something around 6-7m. That allows you to have both a bedroom and a living room with a window. So it makes for a great 1 bedroom or 1 bedroom + den apartment. (I’m ignoring corner suites for this thought exercise.)

    However, a tension often arises when you begin to look at larger suites, such as 2 bedrooms and 3 bedrooms. The obvious response would be to simply give over more window frontage. So instead of 6-7m, the suite may get 10m. This would allow you to create a split 2 bedroom apartment (both rooms get windows) with a living room in the middle. This would be considered a highly desirable floor plan.

    But up until now we’ve been ignoring the depth of the apartment. And as is the case with lot dimensions, this can have an impact on the amount of street/window frontage that gets designed. We’ve talked a lot about mid-rise buildings before on this blog and one of the challenges here in Toronto is that the 45 degree angular plane guideline produces deep floors on the bottom of the building and narrow floors on the top. Given this, it would not be unheard of to end up with 12m apartment depths on some of the lower floors.

    The counter argument would be that nobody is forcing these larger floor plates. Simply carve the building back. But the economic reality is that the margins are so thin on mid-rise buildings, that it would be inconceivable to give up this floor area. You have to max out the envelope.

    Why does this matter? Well let’s assume that the average downtown Toronto condo will cost you $857 per square foot. Using back of the envelope math, that means that the above 6m x 12m apartment (1 bedroom) could cost around $663,000 (774 square feet x $857 psf). And that the above 10m x 12m apartment (2 bedroom) could cost around $1,106,000 (1,291 square feet x $857). 

    These are obviously big numbers. Question becomes: Who will be able to afford these?

    So naturally the design exercise becomes about reducing the size of the apartments and often this means reducing the amount of window frontage. Of course when you do this, it means that one or more of the bedrooms will need to be pulled back from the front windows, which is how you end up with inset / recessed bedrooms (indirect light) and long and narrow apartments. These are often pejoratively referred to as “bowling alley suites”, but they are driven by a push for greater affordability.

    Again, this is not a new phenomenon. It is simply a trade-off that gets made. It’s the long and narrow of property affordability.

  • The institutionalization of development

    Jones Lang LaSalle recently asked: Is there still room for the buccaneer property developer?

    But in the contemporary world of real-estate – corporatized, institutionalized and massively capitalized – is there any longer room for the swashbuckling “merchant developers” or are they doomed to go the way of the wildly-gesticulating floor traders in colourful blazers that once symbolized financial markets?

    “There is always room for the entrepreneur,” says Richard Bloxam, JLL’s head of capital markets, Europe, the Middle East and Africa. “It is, however, fair to say that real estate has been on a journey away from total reliance on the entrepreneurial model.”

    I’ve written about the institutionalization of the business before. And it’s something I’ve been asking developers that I interview for my BARED blog series. Are the days of the eccentric and larger than life developer behind us?

    The consensus appears to be no. 

    All that has changed is the capital source / stack. The skills that make for a successful developer haven’t changed. You still need to be creative and look for opportunities that others don’t see. You still have to navigate through all of the various constraints – of which there is probably more of today. You still need to be entrepreneurial in spirit.

    What I wonder though is if this change hasn’t undemocratized the business to a certain extent. It seems to me that it’s harder, today, to fly by the seat of your pants with just an idea (and no capital). The barriers to entry feel more significant. But as Richard says, “there is always room for the entrepreneur.” And I believe that.

    I would be curious to hear your thoughts. 

    Also, the next BARED post will be up shortly. Stay tuned.

  • Introducing: BARED blog series

    I was out with for a bike ride the other night with a good friend of mine and we were talking about all of the creative and social media-based projects that we would like to do. Everything from a daily vlog to a regular podcast. Sadly there are only so many things one can focus on.

    If you’ve been reading this blog since the beginning of this year, you’ll know that I’ve been trying to write a book on “becoming a real estate developer.” I believe there’s a lot of interest in this topic. It’s the number one question I receive from readers: “How do I become a developer?”

    But with everything that’s going on this year, I have decided to turn the research and writing I have done to date into a blog series that I’m calling BARED (Becoming A Real Estate Developer). I’ve interviewed a lot of fantastic people in the business and I want to get that information out there.

    The focus of the series – which was the intent of the book – is to uncover the early decisions and first projects that these now successful developers made and took on. In other words, it’s less about their current successes and more about what they did to get there.

    So no book. But expect to see the first BARED post very shortly. I think I’ll start with 3 posts and then gauge the response.

  • Two open real estate development positions

    I recently alluded to some life changes on this blog. Well, I am now ready to share: I am leaving my development position at CAPREIT.

    I wasn’t intending to leave. I wasn’t looking to leave. And frankly, I felt conflicted. But sometimes life has a funny way of presenting opportunities that you just have to say yes to. As my mother likes to tell me: “Life is what happens to you while you’re busy making other plans.” More on this in a later post. Stay tuned.

    What I would like to talk about today are the opportunities that this may create for some of you. There are now two open development positions at CAPREIT. Both positions would be based in downtown Toronto (St. Lawrence Market).

    The first opportunity is essentially a Director level role where you would be responsible for growing the development team at CAPREIT. You should be able to lead a team, identify new development opportunities, create pro formas, assemble/manage consultant teams, secure development approvals for complex urban infill sites, and generally lead projects and people through the entire development lifecycle. For more information and to apply, click here.

    The second opportunity is at the Coordinator level. You would be reporting day-to-day to the above person and you should have working knowledge of the development process. For more information and to apply, click here.

    I would just like to add that in both cases you would be working on some very exciting urban infill projects and you would be joining an organization with great people and a great corporate culture. I mean this sincerely. If you have any questions about the two roles, feel free to reach out to me directly. And if you’re in the market, consider applying.

  • Building new, better cities

    Earlier today my friend Saadat sent me the following tweet:

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    It’s a link to a new research project by Y Combinator – the famed Silicon Valley seed accelerator. They want to explore the possibility of building new and better cities.

    I don’t have the time for something like this, but if any of you are city experts (I know a lot of you are) and you’re based in or willing to be based in San Francisco (I think they are flexible on this), you should absolutely consider applying to be their full time “Cities Researcher.” The deadline is July 30, 2016.

    Here’s a taste of what they are thinking about…

    There are many high-level questions we want to think through, for example:

    – What should a city optimize for?

    – How should we measure the effectiveness of a city (what are its KPIs)?

    – What values should (or should not) be embedded in a city’s culture?

    – How can cities help more of their residents be happy and reach their potential?

    – How can we encourage a diverse range of people to live and work in the city?

    – How should citizens guide and participate in government?

    – How can we make sure a city is constantly evolving and always open to change?


    And there are tactical questions we want to dig into, for example:

    – How can we make and keep housing affordable? This is critical to us; the cost of housing affects everything else in a city.

    – How can we lay out the public and private spaces (and roads) to make a great place to live?

    – Can we figure out better zoning laws?

    – What is the right role for vehicles in a city?

    – Should we have human-driven cars at all?

    – How can we have affordable high-speed transit to and from other cities?

    – How can we make rules and regulations that are comprehensive while also being easily understandable?

    – Can we fit all rules for the city in 100 pages of text?

    – What effects will the new city have on the surrounding community?

    The convergence of city building and tech is something that I’m deeply interested in. I also think it’s inevitable. And I think that Toronto – thanks to our robust real estate industry – is in an ideal position to be a leader in this space. So I would love to see someone from here take on this job.

    But even if you’re not from Toronto, you should still apply because it’s an exciting initiative 🙂