Tag: development

• Building Tour: Oben Flats Leslieville

  

  I toured Oben Flats Leslieville today, which is a 48-unit purpose-built rental building at 1075 Queen Street East in Leslieville (Toronto). It was designed by superkül. 

  Oben Flats is doing some very cool things, so I would encourage you to check them out if you’re in the market for a new luxury rental (or you just want to nerd out about property). The image at the top of this post is the west view from the rooftop terrace.

  Here are 3 things that stood out for me:

  1. One of the interior amenity spaces for the building is actually on the ground floor attached to the main entrance. There’s a fireplace, a wet bar, a set of wine fridges and free wifi. Oben Flats hosts regular events in this space, but I was told that residents also regularly hang out in it. They’ll bring their laptop down and have a glass of wine. 

  What I like about this is that it encourages social interaction within a multi-family building typology. I would love to see more of this kind of thinking. Part of the reason you live in a city is to interact with other humans.

  2. Oben Flats has developed their own signature scent and regularly curates a music playlist with the help of BELLOSOUND. Both of these items are pumped throughout the common areas of the building, which is not that dissimilar from what you might find in some luxury hotels. I have one of their candles sitting on my desk right now, so my office smells like Oben Flats. I’m into it.

  3. Another unique feature of the building is the fully automated hydraulic car-stacking system. Here’s a photo of what the guts of that looks like:

  

  There are 3 platforms in each bay (the bottom one is below-grade in the above picture). And there’s always one empty spot so that the platforms are able to shuffle around both horizontally and vertically. However, as a user, you never see this. You simply hit a button and drive into your bay. It’s always the same one.

  I’ve said many times before on this blog that I think we will see way more of these types of parking solutions

  in the city

  going forward.

  There are other cool things I could mention about the building, but it’s far too nice out to sit at my desk any longer. Before I sign off though, I should mention that this is in no way a sponsored post. I simply admire what Oben Flats is doing. 

  See you tomorrow.

  2017.05.18

• Powerhouse: A case study in neighborhood infill

  

  Dezeen recently featured the above project in Philadelphia by Interface Studio Architects. It’s called Powerhouse and the goal was to provide a variety of different housing typologies and tenures within a dense infill project that, at the same time, remains in keeping with its context.

  The full block complex contains 31 residential units, which are a mixture of apartments, duplexes (stacked towns), live/work units, and single-family townhouses. There’s also a corner retail space. 10 of the units are rental and the balance are for sale. The development also incorporates 3 existing rowhouses on the block. (Were these the holdouts?)

  Here is a diagram from ISA to give you a sense of how these different housing types come together:

  

  The project feels germane to Philly’s urban fabric and it is certainly interesting in its own right. But for those of us from Toronto, it’s perhaps even more interesting because it’s a scale of infill development that we don’t see very often in this city: low-rise intensification. (Also commonly referred to as “The Missing Middle”.)

  Recently I’ve been speaking with a number of people about whether or not Toronto should be thinking differently about its low-rise neighborhoods. Because as it stands today, even this sort of gentle density can cause quite a stir. 

  Two thoughts immediately come to mind – one of which will not surprise anyone who reads this blog. Firstly, I see laneway housing as an elegant way to intensify low-rise neighborhoods without changing their character. That’s why I’m proposing this house.

  Secondly, I have long felt that we should rethink how we treat arterial roads that are not designated as “Avenues.” That is, we should encourage greater densities. An “Avenue” designation signals mid-rise. But absent this, our policies are frankly retrograde, given the way some of these arterial streets have evolved over the years.

  What are your thoughts about this scale of infill?

  Images: ISA

  2017.05.09

• Amazon is just getting started

  

  The Economist has an article up talking about what a behemoth Amazon has and will continue to become. Here are some interesting stats for you to think about:

  • More than half of every dollar spent online in America now goes to Amazon

  • Amazon’s share price has increased 173% since the beginning of 2015 (12x faster than the S&P 500)

  • With a market capitalization > $400 billion, it is the 5th most valuable company in the world

  • 92% of its value is supposedly being derived from profits expected after 2020 – they are playing the long game

  • Investors believe that revenue will go from $136 billion (2016) to half a trillion over the next decade

  If I can buy something online, instead of in person, I will do it. And that very often leads me to Amazon. In fact, I bought my new camera lens from them last week. Many others seem to be doing the same.

  When I go to a store now it’s because I need something immediately or because I’m looking for a new experience. I want novelty and I want to feel something special when I walk in. That, or I just need groceries.

  2017.04.01

• Landowner vs. city

  

  In my BARED post with Michael Cooper he described real estate development as being one of the most creative things you can do because of all of the constraints that one has to deal with. This certainly feels true on many days.

  A lot of these constraints also create competing tensions. One example is the tension between what landowners want and what the city may want.

  The value of development land is dependent on what you can build on it. It is, in theory at least, the residual claimant once you factor in all of your other development costs. But in a competitive land market, owners will naturally have high expectations around what their land is worth. And telling them about the intricacies of your residual claimant Excel model will fall on deaf ears if the output doesn’t match their expectations. They see what other land is selling for – even if the land use policies are entirely different – and they want the same or more.

  So to make the math work, it often becomes about density. In practice, many financial models are probably working in the opposite direction to what I described above: here’s how much money the landowner needs to sell; now let’s figure out if we can get enough density to make this work.

  Of course, the challenge with this approach is that you naturally start to push up against a ceiling with respect to density. Landowner wants more density. City wants less density. If I ever ran a development model today where this wasn’t the case, I would instinctively worry that my model wasn’t working properly.

  And therein lies the tension: how can I give this landowner the money that she/he wants, but at the same time satisfy the city and the community, and build enough density such that the project doesn’t lose money? For the time being, ignore the archaeological dig that will need to be done on the site and the creek running underneath it that is going to add $2 million to your underground costs.

  This is where you have to get creative. One potential solution is try and make the price dependent on achieved density. But not all landowners will go for this and sometimes the price spread is so great that even a density bonus isn’t going to close the gap.

  I like to believe that there’s always a creative solution to every problem. Try and make it work. Don’t give up. But the reality is that in many cases the land just isn’t worth the asking price and you’re going to need to walk away. That can be sad, but it can also be the smart thing to do.

  2017.03.21

• 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.

  2017.03.03

• Toronto’s first condo replacement project

  

  Last month a deal here in Toronto caught my attention because of how rare it is. 

  It was the sale 39-41 Roehampton Avenue as a development site for a new (proposed) 48 storey condo tower.  What’s unique is that it’s being called the first ever “condo replacement” project in the city.

  What that means is that the existing 27 unit condo building (built in the 80′s) was bought out (along with some other adjoining lands) and it will be replaced by a new condo tower.

  In order for this to happen a minimum of 80% of the condo owners had to agree to the sale. According to Bisnow, the owners received approximately $550 per square foot, which is thought to be above market for the building (though well below market for new construction).

  I wonder how many owners voted no. If everybody had voted yes, they probably would have mentioned 100% buy-in. I also wonder if this could mark the start of a wave of “condo replacement” projects.

  2017.03.01

• Rational nexus

  In Toronto we have something known as Development Charges. In the US, they are more commonly referred to as Development Impact Fees, which in my view, lends a certain precision to their intent.

  The idea behind these fees is that they account for some or all of the off-site public costs required to serve a new development. Initially this meant utilities, but today these fees usually include everything from transit and parks to child care and pedestrian infrastructure.

  According to Wikipedia, the first impact fees were implemented in Hinsdale, Illinois in 1947. By the 1980s, impact fees had become a universally accepted mechanism for funding the costs associated with growth.

  Not surprisingly, there’s substantial case law around impact fees. One of the concepts that comes up a lot is this idea of essential or rational nexus. That is, can the fee(s) be rationally linked to the impacts of a particular development?

  One well known example is Nollan v. California Coastal Commission (1987). 

  The Nollans proposed to build a 2-storey house within the exact same footprint of their current 1-storey house. As an approval condition, the Coastal Commission wanted a public easement across the beach in front of their house.

  The U.S. Supreme Court sided with the Nollans and held that the development exaction (public easement) was not adequately related to their new development (additional storey). A “rational nexus” did not exist.

  If you’re interested in this topic, the American Planning Association has a policy guide on impact fees available on their website.

  2017.02.19

• 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.”

  2017.01.31

• Where the cranes are

  Earlier this week the Seattle Times published the following graphic showing the US cities with the most (construction) cranes up in the air at the end of 2016:

  

  At the top of the list is Seattle with 62. And in second place is Chicago with 56. 

  You really need to see these numbers over time to get a better sense of activity. But supposedly, Seattle has been holding pretty steady. Also, these numbers only include cranes within each city proper. The suburbs don’t seem to be counted.

  To put these numbers into perspective, here’s a snippet from the article:

  “Seattle remains behind Toronto, which has 81 cranes, for the North American lead. In Australia, the Middle East, and elsewhere, there are cities where more than 100 cranes are at work.”

  I wonder which city has the global lead. Any guesses?

  2017.01.28

• The suburban Ponzi scheme

  The following image is a geographic representation of Lafayette, Louisiana’s finances. It is from this excellent article by Charles Marohn.

  

  What this 3D map shows is the city’s revenues and expenses by land parcel. The green areas are where the city is making a profit (revenues exceed expenses) and the red areas are where the city is operating at a loss (expenses exceed revenues). The height of each extrusion indicates just how much profit is being made and how much loss is being incurred.

  The glaring takeaway from this study is this: not only are post-war land use patterns environmentally unsustainable, but they are also fiscally unsustainable. The tax base is simply not there to pay for the infrastructure that gets built alongside it.

  They – the authors of this study – estimate that the infrastructure revenue gap for the median home in Lafayette is about $8,000 per year (median household income is $41,000). And yet despite this shortfall, it is common to look at infrastructure spending as a desirable economic stimulus.

  The following paragraph really brings this point home:

  “All of the programs and incentives put in place by the federal and state governments to induce higher levels of growth by building more infrastructure has made the city of Lafayette functionally insolvent. Lafayette has collectively made more promises than [it can] keep and it’s not even close. If they operated on accrual accounting – where you account for your long term liabilities – instead of a cash basis – where you don’t – they would have been bankrupt decades ago. This is a pattern we see in every city we’ve examined. It is a byproduct of the American pattern of development we adopted everywhere after World War II.”

  Thank you Daniel for sharing this article with me. 

  If you only read one other thing today (besides my blog), I recommend you read Charles’ article. It’s called: The real reason your city has no money.

  2017.01.12