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.
Mark Garner (Downtown Yonge BIA), Jon Simo (Neon Demon Studio), Rebecca Stubbs (Downtown Yonge BIA), Brandon Donnelly (Slate Asset Management), Rick Sole (Globizen Developments)
What a weekend.
Almost 4,000 people came through the Junction House sales office for our neon popup gallery. At one point throughout the day on Saturday, there was an over 1 hour wait to get in. The team had to implement a viewing time limit in order to keep the line moving.
The event surpassed all of our expectations in terms of visitors and buzz. Many of the local businesses in the area also experienced a pop in foot traffic as a result.
The Downtown Yonge BIA and Neon Demon Studio (as well as many others) did an incredible job coordinating and curating the exhibit. And we are thrilled to have played a small role in bringing it to life.
What is clear to me after this weekend is that people really love neon (and, of course, Instagramming said neon) and that there’s a market here in Toronto for a permanent museum. It’s going to happen.
For those of you who missed the exhibit, there’s no shortage of photos online. Check out #JunctionHouse and #NeonMuseumTO to get started. A big thank you to the entire team for making this happen.
For more information on our Junction House condominium project, click here.
This morning the Toronto Star published a profile piece on one of Junction House’s earliest purchasers: Barbara Martinez. Barbara downsized from a house to a 1-bedroom condominium in Roncesvalles, but then realized that she still wanted space to entertain and have guests over. So she decided to buy a 3-bedroom penthouse at Junction House with an approximately 350 square foot terrace. That’ll work. It is truly one of the nicest suites in the building, and will come equipped with a view of the Toronto skyline that looks something like this (see background projection below):
I am quoted in the article as saying that mid-rise condominiums in Toronto’s neighborhoods naturally tend to attract a different set of buyers compared to, say, a downtown tower. That is true and we are seeing it play out at Junction House. Yes, we have 1-bedroom suites that are perfect for young professionals and/or investors, but we also have some spectacular 2-storey suites (the House Collection) and larger single-storey suites for people just like Barbara. Congratulations on your new home purchase!
The Tax Cuts and Jobs Act of 2017 (US) created something known as Opportunity Zones. These are low-income and high-poverty census tracts that are designed to attract investment by offering a number of different tax benefits. I first wrote about it on the blog, here.
Now that some time has passed since the final Opportunity Zones were announced, Zillow Economic Research decided to look at the possible impact of this designation on real estate values. In other words: To what extent, if at all, are the tax benefits getting capitalized into the value of the properties?
Below is a chart showing the year-over-year change in the 12-month moving average sale price for low-income census tracts that were (1) eligible and selected as an Opportunity Zone; (2) eligible and not selected; and (3) not eligible.
My understanding is that the “not eligible” category represents census tracts with similar characteristics to the other two categories but, for whatever reason, were not eligible to become an Opportunity Zone. There are criteria.
The program is still quite new, but what Zillow found was that the eligible census tracts (green and yellow lines) seemed to exhibit similar sale price increases after the Act was signed, but before the final Opportunity Zones were announced. Once the final Zones were announced, sale prices in the selected category (green line) began to surge and move away from the pack.
This may be evidence that the tax benefits are starting to get capitalized, or it may not be. One question I have is about why pricing in the selected Opportunity Zones seems to be a lot more volatile — even before the Act was announced.
It has a VR setup that allows you to explore the building’s inner courtyard. It’s going to be a fun space.
And there’s even a KING Toronto candle for sale. (Aromatic woods with spicy overtones.)
I thought the overall exhibition was very well done and I am thrilled to see architecture and design so front and center. It is an exciting time to be living in this city.
Barcelona is one of the densest cities in Europe. And Márton Mogyorósy’s recent photo series, called Barcelona from above, does an excellent job of demonstrating that. My favorite photo is this one here, showing La Barceloneta neighborhood adjacent to the beach:
None of the buildings are particularly tall (maybe 6 or 7 storeys at the most), but the streets are probably only about 6m wide, including sidewalks. This is one way that you can achieve density without height and it is a good example of what I was getting at in my post, European-style height, but not density.
There’s a lot of debate within urbanist circles about whether or not supply alone can solve or at least mitigate housing affordability concerns. Richard Florida and others will say that, while beneficial, increasing supply isn’t the be all end all. We need to be building affordable housing.
Edward Glaeser, Joseph Gyourko, and others have, on the other hand, argued that middle-income housing is a supply problem and that low-income housing is quite simply a demand-side problem, which could be solved through things like a housing voucher program.
In other words, the cost of housing isn’t necessarily the problem, it’s the low income levels. One of the benefits of supplementing people’s incomes is that it empowers mobility. People can then move to where there are jobs, as opposed to being tied to a specific neighborhood or city.
But this debate is arguably just about the extent of the supply benefits. Intuitively, it makes sense to try and match new housing supply with demand and economic growth. But how far can that take us, particularly in high demand and high productivity cities?
Glaeser (Harvard) and Gyourko (Penn) have a relatively recent paper out called, The Economic Implications of Housing Supply, which looks at, among other things, the “implicit tax” imposed on development as a result of land use restrictions and other supply constraints.
Here are two excerpts:
We will argue that the rise in housing wealth is concentrated in the major coastal markets that have high prices relative to minimum production costs, and it is concentrated among the richest members of the older cohorts—that is, on those who already owned homes several decades ago, before binding constraints on new housing construction were imposed.
But in a democratic system where the rules for building and land use are largely determined by existing homeowners, development projects face a considerable disadvantage, especially since many of the potential beneficiaries of a new project do not have a place to live in the jurisdiction when possibilities for reducing regulation and expanding the supply of housing are debated.
If you’re interested in this topic (and sufficiently nerdy), you can download a PDF copy of the paper here.
Last summer Bloomberg ran a visual essay on how America uses its land. In case some of you missed it, I thought I would share it here today.
They started by breaking the country down into 6 main land uses. Each square represents about 250,000 acres.
What likely won’t surprise any of you is that urban areas punch well above their weight:
Even though urban areas make up just 3.6 percent of the total size of the 48 contiguous states, four in five Americans live, work and play there. With so much of the U.S. population in urban areas, it’s little surprise that these areas contribute an outsize amount to the economy. The 10 most productive metropolitan areas alone contributed to about 40 percent of U.S. GDP in 2016.
Here’s a further breakdown of the map:
There is a lot that is interesting here. Note that golf courses made the cut.
It looks at four possible approaches to improving housing attainability/affordability in the city:
Micro Living: Well-designed micro units can offer a cost-effective alternative to conventional apartments, particularly in central locations where higher land costs can be a barrier to affordability.
Shared Space: Co-living, where residents share amenities and services, can improve affordability and create a sense of community, particularly in walkable, transit-connected neighbourhoods where housing costs are high.
Home Unbundling: Features, finishes and amenities unbundled from the unit price of condominiums can allow greater choice and reduced costs for homebuyers.
Equity Options: With more households renting, and the transition from renting to owning growing ever more challenging, new shared-equity models can help families invest in their home, even if they rent.
In addition, the report also provides a number of project case studies from around the world. If you’d like to download a copy, you can do that here.
