Tag: development

• What is this a building for ants?

  One of the things you’ll often hear people deride at cocktail parties is the trend toward smaller urban dwellings. They get called “shoeboxes” and “cubby holes in the sky.” So let’s unpack that a bit today and try and better understand the economics behind it all.

  When a new building is being developed, pretty much everything gets normalized to a per square foot (or square meter) number. 

  This is important because saying that building X cost $50 million to build and building Y cost $100 million to build doesn’t tell you much if the buildings are completely different. 

  However, saying that building X cost $500 per square foot to build and building Y cost $475 per square foot to build, tells you that building Y, despite being more expensive in absolute terms, was actually cheaper and/or more efficient.

  The same is true on the revenue side. And typically, developers are looking (struggling) to meet a certain per square foot number in order to make the project financially feasible. 

  For instance, let’s say you’re building a 100,000 sf condo building. Once you subtract the non revenue generating spaces, you might determine that you need 85,000 sf x $600 per square foot in revenue in order to make the project feasible.

  But there’s a back and forth game that needs to be played here. You have to ask yourself: for the product that I’m hoping to build, does $600 psf translate into something that people can actually afford?

  You might think: everyone keeps telling me at cocktail parties that condos in this city are too small. So I’m going to build a bunch of 1,800 sf, 3 bedroom condos. Based on the above, these homes would be priced at around $1.08 million (1,800 sf x $600 psf). Your on-site signage would read: “Condos coming soon. From the low $1 millions.”

  But wait a minute, how many families can afford a condo north of $1 million? Some could, but definitely not the majority. So then you determine through rigorous market analysis that $600,000 would be a better number. That is something that is within reach of more families.

  But then you look at the math and realize that if you build that same 1,800 sf home, your per square foot revenue number now drops to $333 psf ($600,000 / 1,800 sf). 

  Given that you bought the land for $100 psf buildable (market price in the area) and that your construction costs alone are going to be $250 psf, you realize that you’re now underwater ($100 + $250 psf > $333 psf) without even adding in any soft costs (consultant fees, city fees, and so on). If you showed this to your investors on the project, they would throw you out of the room.

  So instead of building that 3 bedroom condo at 1,800 sf, you say to yourself: what if I made it 1,000 sf? You’re confident that your architect could lay out a terrific condo at that size and it now magically gets your per square foot revenue number back up to $600 psf. 

  This solves two problems: it returns the project to positive feasibility and it keeps the total sale price within reach of more people. It promotes greater affordability. So you go ahead and do it. Boom – shrinking urban dwelling.

  All of this is not to say that this is fair or unfair, good or bad. It is simply to say that this is the way it often is.

  2016.04.24

• A real estate dynasty without heirs

  

  Throughout history, real estate has been a tremendous source of wealth for a lot of people. Many family dynasties were created by accumulating property, holding it, and then riding the valuation wave.

  Here in Toronto, there was the Reichmann family. At one point they had created the largest real estate company in the world (Olympia & York). But I’m not sure exactly how much of that wealth remains today following the company’s bankruptcy in the early 90s. That was a tough time in Toronto real estate.

  In line with this, the NY Times recently published a fascinating account of the Wendel family in New York. In terms of how they conducted themselves, they were the polar opposite of some of today’s real estate families (i.e. Trump), but they certainly built an empire.

  Here are two snippets from the NY Times:

  In the early 20th century, the Wendels were perhaps the most powerful landlords in New York City, a dynasty with more than 150 properties in Manhattan worth over $1 billion in today’s dollars. The Wendels were the delight of the local papers, for, rich as they were, the family — six sisters and a brother, all unmarried — lived together in a shuttered mansion without electricity on the northwest corner of Fifth Avenue and 39th Street, and dressed in grim Victorian garb that had gone out of style half a century earlier. Tour buses regularly pulled up in front of “the House of Mystery.”

  Alongside their austere lives, they also practiced a strict and disciplined approach to investing: 

  Never mortgage a property; never sell anything; never pay for repairs; and never forget that Broadway moves uptown at a rate of 10 blocks a decade.

  In fact, they were so draconian in their approach, that the sisters were supposedly prohibited from marrying. Unions were not allowed because that, according to the NY Times, “would disperse the accumulated property and put it under other names than Wendel.”

  But in the end, this meant that the last Wendel – Ella, who died in 1931 – died alone and with no one to pass along the empire to. So instead it was distributed to various charities and the inevitable “cousins” that come out of the woodwork when a rich person passes.

  I guess the moral of the story here is the old saying that you have to “give to receive.” From the sounds of it, the Wendel family didn’t like to do that.

  Image from March 15, 1931 obituary

  2016.04.23

• Nest or cave?

  I was recently introduced to the work and writing of Japanese architect Sou Fujimoto. One concept that he writes about that I really like is the idea of nest vs. cave.

  The way Fujimoto describes a cave is that it’s a naturally occurring and pre-existing condition. It is exists independent of humans. So if and when a human decides to occupy a cave, he or she must assimilate their lives to that which is already there. They have to deal with the ambiguity of the spaces because it is not clear how everything should be used.

  A nest, on the other hand, is something completely created by and for the benefit of a person or animal. It would not exist without someone creating it and so it is prescriptive and functional in a way that a cave is not.

  Fujimoto is interested in exploring architecture that is analogous to caves. Which is why he designs houses like this one (House NA) in Tokyo:

  

  In most countries, a house like this would not meet code and would be illegal. But in Tokyo it’s obviously allowed. And his hope is that the owners will discover new and unintended ways to interact with the unusual pairing of levels and platforms.

  However, I think about this juxtaposition differently – likely incorrectly in the mind of Fujimoto.

  I’m actually more interested in nests. Because in a way, mass produced housing is like a cave. It exists whether or not we decide to occupy it. And it is generally created to appeal to lots of people, rather than to the idiosyncratic tastes of one person. So when someone does occupy it, they invariably end up trying to shape it.

  But not to the extent of a nest. A nest is custom. It is what you would build for yourself given the opportunity to do so. And that thought is really appealing to me. Maybe it’s because I don’t like the ambiguity of a cave. That could be a possibility.

  I could also be thinking about it differently because I tend to think of Japanese homes as being quite individualistic. Since Japanese people generally don’t care about resale value, they don’t have the same fixation with marketability and future value. That means they’re more likely to just build what they want.

  I’d love to have my own nest.

  Image: Wall Street Journal

  2016.04.22

• Coffee shops vs. fried chicken

  When it comes to a real estate market, there are always the typical metrics: sale prices, rents, vacancy and so on. But I’m always interested when somebody looks at the market in a different way and comes up with other kinds of metrics.

  That’s why I was intrigued when I stumbled upon this post by Sam Floy, where he looks at the concentration of coffee shops and friend chicken shops across London in order to determine which neighborhoods are in fact “up and coming.”

  To give you a taste, here’s his coffee shop map:

  

  His thinking was that if a neighborhood had a high density of coffee shops, a low density of fried chicken shops, and relatively low house prices, then it could probably be thought of as up and coming. 

  Coffee shops are often considered to be leading indicators of urban change (i.e. gentrification), and, well, friend chicken places I guess speak to a different kind of neighborhood.

  These sorts of playful studies aren’t going to tell you exactly which numbers you should be plugging into your development pro forma. But I think unconventional analyses can sometimes tell you a bit more of the story behind the numbers.

  2016.04.21

• Sprawling, but affordable

  The Wall Street Journal recently published an interesting article that ties in nicely with two of my recent posts. My post about North American population growth and my post about the San Francisco pro-development group known as BARF.

  The WSJ article is about the growing divide between affordable and expensive cities in the US. And the argument is that expansionist, or sprawling, cities are better at suppressing home values and maintaining affordability:

  “The developed residential area in Atlanta, for example, grew by 208% from 1980 to 2010 and real home values grew by 14%. In contrast, in the San Francisco-San Jose area, developed residential land grew by just 30%, while homes values grew by 188%.”

  Now, here’s a chart saying that same thing:

  

  The reality is that greenfield development (suburban sprawl) generally has far fewer barriers to development than urban infill development. So I’m not surprised to see cities like Las Vegas, Atlanta, and Phoenix clustered towards the bottom right.

  At the same time though, I’m obviously not convinced that sprawl is an optimal outcome. I think there are other costs not reflected in the chart above. So what’s the best solution here, assuming we want to build inclusive mixed-income cities?

  2016.04.19

• Gray on gray on gray

  This past weekend was gorgeous in Toronto. I always love seeing the city come to life after the winter and last weekend was the first sign of that this year.

  Being the fair-weather cyclist that I am, I had the flat fixed on my single speed bike and I was ready to go by the weekend. I managed to test out the GoPro handlebar mount that I mentioned last week but, quite honestly, the footage was so jittery and bouncy that it made me nauseous to watch it. So I need to rethink my city geek filming strategy. 

  (Sidebar: GoPro needs to make it easier to turn their raw footage into content that is actually worth sharing.)

  Still, I had a good ride over to the new Canary District on the east side of downtown. The gates just recently game down, so I was itching to take a look at it. Here are a couple of photos to give you some context for the rest of this post:

  

  None of the retailers have moved in, so the area currently feels like Toronto post zombie apocalypse (to use a friend’s description of the neighborhood). But all of the bones are in place for an incredible downtown neighborhood.

  Here are some of my thoughts as I was riding around:

  The opening of this neighborhood repositions the Distillery District. Initially, the Distillery District struggled as a kind of island on the edge of downtown. But thankfully they stuck to their initial vision for the community and now they get the benefit of this new mixed-use anchor to the east of it.

  Trinity Street to the north of the Distillery District proper is a fantastic opportunity to not only extend the magic of the Distillery northward, but also “plug” the area into Front Street East, which is the primary east-west spine that connects the Canary District back to the downtown core. I hope we (the city, developers, and so on) take advantage of this.

  The Front Street Promenade running through the Canary District and connecting into Corktown Common (park) is going to be an absolutely magical urban space once the restaurants, cafes, and retailers open up. I can’t wait for this to happen. Live Work Learn Play has been orchestrating the retail component.

  Finally, why are all of the buildings gray? 

  Gray brick. Gray window wall. Gray spandrel panel. It’s gray on gray on gray. We’re playing into that boring Canadian stereotype here. I hope the subsequent developments introduce some wild colors. Although some red brick to tie into the Distillery District would work well too. The best nearby architecture (just to the north) is the River City complex by Saucier + Perrotte.

  Notwithstanding the gray, I’m super excited about the Canary District and I am generally bullish on the east side of downtown. If you’ve had a chance to visit, I’d love to also hear your thoughts in the comment section below.

  2016.04.18

• BARF is fighting for more housing in San Francisco

  A new YIMBY activist group is starting to gain meaningful traction in San Francisco. They were recently featured in the New York Times and they have managed to secure the financial backing of people like Jeremy Stoppelman – co-founder and CEO of Yelp. 

  (All excerpts in this post were taken from the NY Times.)

  

  The group is called SF BARF, which stands for SF Bay Area Renters’ Federation. The group, however, supports new development of all kinds. So I think the name is more driven by the fact that the founder, Sonja Trauss, wanted the acronym to be BARF. It speaks to their shit disturbing approach:

  “Her group consists of a 500-person mailing list and a few dozen hard-core members — most of them young professionals who work in the technology industry — who speak out at government meetings and protest against the protesters who fight new development. While only two years old, Ms. Trauss’s Renters’ Federation has blazed onto the political scene with youth and bombast and by employing guerrilla tactics that others are too polite to try. In January, for instance, she hired a lawyer to go around suing suburbs for not building enough.”

  The impetus for all of this, of course, is San Francisco’s lack of affordability and severe housing shortage. Housing supply is decades behind the city’s population and job growth. 

  Most people are directing the blame at the tech community for bidding up housing. But there’s clearly growing recognition that housing supply matters.

  As a real estate developer, my industry obviously benefits from fewer barriers to building. So let’s get that out there:

  “Ms. Trauss’s cause, more or less, is to make life easier for real estate developers by rolling back zoning regulations and environmental rules. Her opponents are a generally older group of progressives who worry that an influx of corporate techies is turning a city that nurtured the Beat Generation into a gilded resort for the rich.”

  But let’s also be clear that I don’t believe we should be developing roughshod over our cities. New development should respond to what’s already there and give back. 

  At the same time, housing supply matters a great deal. A big part of the reason that cities like San Francisco, New York and Vancouver are so expensive is that they’re naturally supply-constrained markets. Geographically, they are either peninsulas or islands.

  When you overlay tight land use restrictions, fierce community opposition and/or foreign investment on top of this geography, it should come as no surprise to anyone that demand is outstripping supply. 

  New supply won’t solve every problem, but I do agree that it is an important part of the solution.

  2016.04.16

• Can starchitecture trump soul-crushing sprawl?

  Hunter Oatman-Stanford just published a longish read over on Collectors Weekly that talks about the history of suburban office complexes in America. That part alone makes it an interesting read.

  But he also makes the argument that innovative companies like Apple and Google are still stuck in a midcentury suburban mindset with their new mega headquarters:

  “I look at Apple’s Norman Foster building, and it’s 1952 all over again,” Mozingo says. “There’s nothing innovative about it. It’s a classic corporate estate from the 1950s, with a big block of parking. Meanwhile, Google is building another version of the office park with a swoopy roof and cool details—but it does nothing innovative.”

  Others have made this same argument. Back in 2013, Wired published an article talking about why Apple’s new Norman Foster spaceship could result in them losing the war for tech talent. 

  And if you read the piece in Collectors Weekly, you’ll see just how little, in some cases, the office environment has changed since the middle of the 20th century.

  Back then, we also had big name starchitects designing suburban head offices for innovative companies. Below is a photo from the GM Technical Center in Warren, Michigan. It was designed by Eero Saarinen and it opened in 1956.

  

  There’s lots of research that suggests that, today, both entrepreneurs and capital are flocking to urban centers, instead of the suburbs. And I certainly don’t need to repeat that to this audience.

  But given this shift, I think we will increasingly view the suburban sprawl of places like Silicon Valley as a serious competitive disadvantage. I mean, I am sure these new buildings will be lovely, but I certainly wouldn’t want to work there. 

  Would you?

  2016.04.15

• New curated city building bulletin

  

  I have decided to spin-off the Architect This City identity into a weekly newsletter that I’m referring to as a “curated city building bulletin.” (This is as a result of the unbranding of this blog last week.)

  The inaugural issue went out this past Monday at 9am eastern with a collection of city building-related links. And that was it. This is not another blog. I’m not writing any new content for it. It’s simply going to be a collection of links to things that I think city builders would find interesting and/or valuable.

  Here’s why I decided to do this:

  It allows me to keep this new bulletin entirely focused on one thing. You’re not going to find me sneaking in a link about snowboarding, wine or something else that I’m interested in. It’s strictly about targeting city builders. (Of course, city building can be a pretty broad topic.)

  Keeping in mind what I wrote yesterday about saying no, I also chose this format because the additional workload for me will be minimal. In order for me to write a daily blog like this one, I have found that I need to keep a running list of reading material. But a lot of what’s on this list (stored in Pocket) never sees the light of day – there’s only so much I can write about. This new bulletin will be a quick way for me to share the rest of it.

  Finally, I’m also hoping it’ll be an efficient way for me to share the links, events, projects, and other things I receive from readers. In an ideal world, the bulletin will evolve into having a “links” section and a “from the community” section – which will be things that subscribers send me but today don’t get shared.

  So that’s the plan. If that sounds good to you, please subscribe at architectthiscity.com. 

  To kick things off, I’m going to be giving away 5 x free ATC t-shirts. (See photo at the top of this post.) To win one, just (1) subscribe and tweet out a link to this new city building bulletin, (2) tag @athiscity, and (3) tell everyone which city/town you live in.

  Regularly scheduled programming will resume tomorrow.

  2016.04.14

• The Death and Life of Great Italian Cities

  

  I am sure that a lot of you know where the title of this post comes from. It’s a riff on one of the most important and influential books in the world of city planning: The Death and Life of Great American Cities by Jane Jacobs (1961).

  But when Jane Jacobs first wrote this book, there was no such thing as smartphones and nobody was “checking-in” to hipster dive bars on Foursquare. 

  So instead of leveraging big data, her analyses and arguments were based on observation. She walked the streets of New York and Toronto and figured out what made cities thrive and what made cities die. That was her brilliance.

  Today, however, we have data – lots of it. And so recently, a group of researchers set out to test Jane Jacob’s theories using mobile phone data. The study was called, The Death and Life of Great Italian Cities:
  A Mobile Phone Data Perspective.

  More specifically, they set out to test the following 4 essential conditions:

  “She [Jane Jacobs] argued that, to promote urban life in large cities, the physical environment should be characterized by diversity at both the district and street level. Diversity, in turn, requires four essential conditions: (i) mixed land uses, that is, districts should serve more than two primary functions, and that would attract people who have different purposes; (ii) small blocks, which promote contact opportunities among people; (iii) buildings diverse in terms of age and form, which make it possible to mix high-rent and low-rent tenants; and (iv) sufficient dense concentration of people and buildings.”

  To accomplish this, the team assembled and studied data from the following sources:

  • Mobile phone activity (specifically internet activity)
  • OpenStreetsMap Data
  • Census Data
  • Land Use Information
  • Infrastructure Data
  • Foursquare Data (Venues API)

  Ultimately, they determined that Jane Jacobs knew what she was talking about. The above conditions are essential to urban vibrancy and they apply to Italian cities, just as they did and do to American cities. But this test was valuable, because the more that we can measure and quantify cities, the better I think we’ll get at creating and promoting urban vitality. 

  Now imagine if you overlaid the findings of their report with residential and commercial rents. I bet you’d also find that there’s a strong business case for urban vitality.

  I’ve heard a number of people say that, eventually, every company will be a software/technology company. And I don’t think we’re far off from that reality. To me, this study feels like an early example of what that might look like for city building.

  On a side note, the picture at the top of this post is of the Spanish Steps in Rome. I took it on a weekend trip in 2007. I was living in Dublin at the time.

  2016.03.30