Tag: development

• Is it time to get rid of parking minimums?

  The cost of a parking spot in downtown Toronto has reached as high as $60,000 (per stall) in some new construction projects. If you convert that to a per square foot price (which is typically how people measure condo prices), you’re looking at over $350 per square foot for that parking stall. Is it worth it?

  Most cities around the world have what is called a parking minimum. This means that to build, say a new residential condo, developers need to provide a certain number of parking stalls. In Toronto, those minimums will depend on your unit mix. Bigger units have more stringent parking requirements. 

  In some cities, though it’s much rarer, they actually have parking maximums. Portland, for instance, has a maximum number of parking stalls that you’re allowed to build, which fluctuates based on the development’s proximity to transit.

  And finally, there are some cities, such as Berlin, with no parking minimums or maximums at all. In those cases, the market dictates the number of parking stalls that should be built. If people want a parking spot with their apartment and won’t buy or rent it without one, then the developer builds it.

  Though parking variances do happen in Toronto (for reasons such as proximity to transit), the city is generally skeptical of a market led approach to parking requirements. And there are a couple of reasons for that. They worry that investors might be buying the units (with no parking) and so the sales data may not be indicative of the end-user market.

  The city also worries that developers might actively discourage purchasers from buying parking spots, as it’s usually more profitable not to build them. Underground parking is costly and often subsidized by the sale of the condo units themselves. In fact, I’ve heard of instances where underground parking has cost upwards of $100,000 per stall because of buoyancy forces and other technical details.

  But I’m generally a free market guy. So I question if the market really isn’t capable of figuring out how much parking there truly needs to be. Undoubtedly, there will be families who demand 2 parking spots. I also bought a parking spot with my condo. But there may also be a number of people who would rather pay less for their home than subsidize a parking garage that they’ll rarely use.

  And as I wrote in a recent post called, Is traffic the right question?, we could be losing sight of the greater goal. If we truly want to build a sustainable and livable city, then we should be considering how our development activity encourages transit usage over driving, and how we can promote a more balanced modal split across the city.

  What are your thoughts? Would you buy a home without parking? Should we get rid of parking minimums, just as cities like Berlin have?

  2014.08.20

• Public consultation is broken

  Public consultation is broken. And by that, I mean that the way in which municipalities, developers, and other city builders solicit feedback from communities is fundamentally flawed.

  For new developments, the process works more or less like this: The developer makes an application to the city. The city reviews it and then agrees to move towards a public/community meeting (the goal of which is to solicit feedback on the proposal). Once a date is set, notices go out, and the developer secretly hopes that no one will show up. 

  Because what often ends up happening is that it’s only the people with the time or a bone to pick who actually go to these things. Rarely do people go simply to voice their support for a project. That’s why the benchmark for success is usually no community opposition – it’s rarely about support.

  But from writing Architect This City, I know that many of you care deeply about your community and about cities in general. The problem, is that I don’t think most of you get a chance to voice your opinions. How many of you have actually gone to a community meeting in order to show your support for a development project or city initiative? I’d be curious to know, but I suspect most of you haven’t.

  The result is a system whereby the voice of a few (often naysayers) have a disproportionate amount of weight. They set the tone. But that’s not how community input works best. It needs to be representative of a broad and diverse cross section of the population. It needs to be inclusive. Everyone in the community should have a say.

  So today I was thinking that there’s an opportunity for somebody out there to create an online platform for community feedback. Developers would post up their project and then everyone in the community, as well as in the larger city, would have an opportunity to vote on it and provide their feedback.

  To make it fair, you could assign higher weights to people the closer they live to the project. But the idea would be to make it as easy as possible for everyone to provide feedback – whether they’re on their smartphone or at the regular community meeting. 

  Obviously this would require greater openness, but I don’t think that pulling back is the answer to this problem. The solution isn’t to hide from the potential naysayers; it’s to galvanize the supporters. 

  If your community already has a platform like this, please share it in the comment section below. I’d love to see it.

  2014.08.19

• Pre-delivering new homes

  

  Today was my mother’s PDI for her new condo. For those of you who aren’t in the industry, a PDI is a “pre-delivery inspection” that happens about a week or two before you take occupancy of a new home. It’s basically a time for you to identify all the mistakes that the construction team has made and have them (hopefully) correct them before you actually move in.

  But for someone like my mother who is making the move from a house that she’s lived in for decades, a PDI is actually something much more significant: It’s the first time she saw her new “home.” And a home is something much different than just a house or a condo – it has emotional significance.

  It’s going to be an adjustment for her. One of the first things she did was open up the oven to see if she could fit her Christmas turkey in it. But in the end, I have no doubt that she’s going to love her new home. As I’ve mentioned before, people often overestimate the potential risks of change. But never be afraid to give up the good to go for the great.

  2014.07.26

• How Toronto is growing

  If there are two things we like to talk about here in Toronto it’s that there are a lot of condos going up and that it’s becoming increasingly difficult–some would say impossible–to get around. Just this past weekend, I had 2 or 3 people tell me that biking is the only practical way to get around downtown and that it’s fairly easy to outwalk a streetcar on either Queen Street or King Street.

  Usually these statements are followed by a question, asking what the city is doing to address these issues. The unfortunate reality is that I think urban mobility is going to get worse before it gets better (although I am thrilled about the Eglinton Crosstown line now under construction). If you’re a regular reader, you’ll know that I’m a supporter of a Downtown Relief Subway line and that I was disappointed by John Tory’s recent transit proposal.

  The best way to explain why I feel this way is to talk about how and where Toronto is growing. In my post on John Tory’s transit proposal, I talked about how Toronto is developing in the shape of an upside down letter T. And the reason for that is because in the city’s Official Plan, the “Downtown and Central Waterfront” area is identified as a growth node and is shaped more or less like an upside T. It’s the light orange in the following map.

  

  In addition to the downtown core, the areas shown in red are earmarked as “Centres” for growth. There’s one in each borough (Etobicoke, North York and Scarborough) and one at Yonge & Eglinton, which most people would consider to be the heart of midtown. Finally, you have the “Avenues” which are the greenish brown lines on the above map. Those are areas that city also hopes will accommodate future growth.

  Now, let’s look at where development is happening in the city. Here’s residential development from 2008 to 2012. The biggest circle represents 2,000 proposed residential units.

  

  And here’s non-residential development. The largest diamond represents projects with a non-residential floor area greater than 50,000 square meters (~540,000 square feet).

  

  What should become immediately apparent is that growth–particularly on the residential side–is happening more or less according to plan. The biggest “outliers” are really the development happening along Mimico’s waterfront and all the development happening along Sheppard Avenue East. But those are because of the water and the Sheppard subway line.

  In both the residential and non-residential cases though, the downtown and central waterfront area is quite clearly receiving a significant share of the development happening in the city.

  

  Which always makes me wonder: Why are we so reluctant to build proper transit in the core?

  The city’s Official Plan is clearly funneling growth to downtown and yet we continue to propose, fund, and build subway lines in areas where the population densities are lower and ridership levels will inevitably be less. Which ultimately means that the required government subsidies to keep those lines operating will be higher.

  I’m not suggesting that the inner boroughs don’t also need top notch transit and infrastructure. They absolutely do. But I get frustrated when politics trumps rational city building. And so does everybody else who’s stuck with inadequate mobility options.

  Images: City of Toronto

  2014.06.02

• The first 100 people

  

  This past weekend was a milestone weekend for Architect This City. The number of email subscribers surpassed 100 people for the first time. Now, that may not seem like a lot of people, but I think it is. I’m incredibly proud of and grateful for each and every one of you who subscribe to ATC. If I had all of your photos, I would make a collage just like the one above and call it “the first 100.”

  The reason I think 100 people is a lot is because I think of an email inbox as an incredibly personal thing. We live in an age of too much information and our inboxes certainly reflect that. So for somebody to invite and accept the ATC email into their inbox every morning (only a few people subscribe weekly), I consider that to be a big deal. Thank you for that. It really does mean a lot to me.

  I try to ensure that I’m always delivering value to you, which is why I ask for your industry on the full subscription page. I want to know where you’re coming from so that I can do my best to write content that will help you professionally, and perhaps even in life. But if you signed up elsewhere, you may have only entered your email. If you’d like to add your industry, click on “update subscription preferences” at the bottom of one of my emails.

  So far, I know that many of you are architects, city planners, real estate developers, brokers, policy makers, finance people, marketers, and entrepreneurs–to name only a few.

  If you have any specific feedback or have a topic you’d like to see covered on ATC, please feel free to email me or reply to this email (if you’re already a subscriber). I keep a queue of draft posts and I do eventually get to them when the timing is right. Finally, if you feel that somebody within your network would also get value out of what we’re all doing here at ATC, I would really appreciate it if you forwarded this email or shared this post.

  Happy Monday 🙂

  Image: Flickr

  2014.05.26

• Looking east

  There’s a fairly real divide between east and west here in Toronto. When people talk about real estate or describe the kind of person they are, they often say things like: “I’m an east end kind of person” or “I only want to buy on the west side.” There’s such a split that somebody recently said in a meeting I was in that the east vs. west real estate divide is like Christianity vs. Judaism. 

  Historically, the west has generally been considered more desirable than the east–regardless of what scale you’re looking at. Downtown west vs. downtown east, Etobicoke vs. Scarborough, and so on. And for whatever reason, this seems to be the case in a lot cities I’ve been to. Consider Montreal, Vancouver, New York, and London, to name a few. 

  But lately, I’ve been noticing a growing acceptance of the east side. Friends are telling me that, even though they don’t know the east all that well, they’re almost agnostic to which side they buy a home on.

  At the same time, we’re seeing Toronto’s development boom spread to the east along streets like Church and Jarvis; paralleling the kind of intensification we’ve already seen on the west along Bay Street, University Avenue and further. I’m also noticing a lot of west end restauranteurs open up on the east side. See Carbon Bar and Gusto 501 as two recent examples.

  But with the neighborhoods like the Distillery District and Leslieville attracting lots of yuppies and with neighborhoods like Regent Park and the West Don Lands coming online, it shouldn’t come as a big surprise to you that developers and other entrepreneurs are looking east. Maybe you should too.

  2014.05.10

• New York YIMBY

  Yesterday a friend of mine sent me this NY Times article covering a site called New York YIMBY.

  I’ve spoken about the term YIMBY before and this site is exactly that: a site dedicated to “saying yes in my back yard” to new development in New York. It was founded by 23 year old Nikolai Fedak and currently receives 75,000 monthly visitors. He has plans to expand to other cities and I’ve already emailed him to see if he has any plans for a Toronto YIMBY.

  At a time when it’s common to hate on developers and new developments, it’s refreshing to see a site dedicated to the exact opposite. That’s not to say that all developments are good (New York YIMBY has no problem blasting the ones that suck, as it should), but it’s certainly framing development as a positive thing for cities. 

  In growing cities like New York and Toronto, development is going to happen. And so I would rather we focus on how to make it happen in the best way possible instead of just saying no.

  2014.04.11

• What makes midrise development difficult?

  A reader recently suggested that I do a post explaining why we aren’t seeing more midrise buildings going up in Toronto. Specifically, why are midrise buildings considered to be “too risky” for developers and what could be done to improve the situation? So today I’d like to focus on that topic.

  But first, let me say that I think Toronto is already in the midst of its midrise development era. The push for intensification first brought about towers, but we’ve come to realize that the tower isn’t necessarily going to serve everybody’s needs.

  Here’s what John Bentley Mays recently wrote in the Globe and Mail regarding midrise developments:

  With Duke, SQ, Nest and similar structures, we may be seeing the start of a promising design trend in Toronto’s multifamily housing market.

  And given that our Chief Planner, Jennifer Keesmaat, has been a vocal supporter of midrise, I think there’s no question that we’ll only see more and more of this type of development. Nonetheless, there are challenges. Here are a few that come to mind.

  1. Fragmented sites

  Because midrise developments typically target established main streets with smaller lot sizes, developers often have to contend with fragmented ownership in order to assemble a site. So instead of talking to one owner (say the owner of a large parking lot downtown), a developer may have to contend with a dozen owners who all need to get on board for the development to happen.

  2. Scale is too small

  Developers have a lot of fixed costs that don’t materially change whether you’re putting up a 50 storey tower or an 8 storey midrise building. Some costs are certainly variable, but there are overall economies to scale to having more units in which to distribute costs over.

  3. Community opposition

  The whole point of midrise intensification is to increase the housing supply in established neighborhoods. But along with this comes greater risk for community opposition. You may have a neighbor who’s been living for 30 years adjacent to where you want to build. And when you come along and try and build a 10 storey midrise building, they can get grouchy.

  4. Strict guidelines 

  To try and counteract community opposition (and promote good urbanism), the city has developed a number of design guidelines for midrise buildings. And while they’re well intentioned, they can be onerous for developers and designers. For example, the requirement to terrace down towards adjacent residential neighborhoods produces a lot of inefficiencies (though it does create spectacular terraces). Oftentimes you’ll end up with more unit types than you would in a large tower.

  All this said, I’m a big believer in the midrise building typology. At TAS, I’m involved in two such projects–DUKE and Kingston&Co. Both are exciting projects and both, I think, are at the forefront of a new development era for Toronto. Vancouver pioneered the podium + point tower typology. Toronto is about to do the same with midrise buildings.

  2014.03.30

• Developer Dirt: Site selection and acquisition

  I’ve already spoken about why I became a developer and offered some insights into how you might be able to transition from architecture into development. So now I’d like to start focusing more on the day-to-day of what it means to be a real estate developer.

  And since I seem to be getting a lot of questions from readers on career and development related topics, I’ve decided that I’m going to turn these posts into a regular blog series. Right now the working name is “Developer Dirt”, but if you have a better name I’m all ears (let me know in the comments below).

  So let’s start with step 1.

  You’re ready to develop a new project and you’re now in the market for some land (also known as a site). It could be a greenfield site (meaning it’s virgin land that hasn’t yet been tainted by humans) or, on the other end of the spectrum, it could a brownfield site (meaning it probably once housed industry, it’s contaminated as all hell, and you’re going to need to clean that puppy up before you build).

  Without going into further detail about all the different kinds of sites you could potentially buy (which is a post in itself), here are 3 high level things to keep in mind as you move forward.

  Land is the residual claimant

  What this means is that you want to start with your top line. You want to start with revenue. What can I build on this site (use and square feet) and how much can I ultimately sell or lease that space for?

  Let’s say, for example, that you think you can build 100,000 square feet. If it were office space, you’d want to know that rents in your area are $30 per square feet and that that’s going to render you $3M a year in rental income. If it were residential condos, you’d want to know that the market is absorbing $500 per square foot and that if you sold 100,000 square feet worth of condo, that your revenue would be $50M. But remember this is top line.

  Once you know your top line, you then need to figure out what it’s going to cost to bring you that revenue stream. In other words, what are the hard costs (construction costs), the soft costs (consultant fees and other non-construction costs), the return my investors are going to demand, the money I need to keep the lights on in my business, and so on.

  Hopefully, once you’ve calculated all of these numbers, you’ll have some money left over from that original top line number. That residual money is what you can reasonably afford to pay for the land, which is why it’s often referred to as the residual claimant. But even though it comes last in this example, it comes first in development. If you overpay at the onset, it’ll be an uphill battle the rest of the way.

  You often don’t know what you can build

  But here’s the rub: You often don’t know exactly what you can build. When developers buy land they often consider what they can build “as-of-right” and what they think they can build as a result of variances, rezoning and other discretionary actions.

  As-of-right basically refers to what the current zoning permits. It’s what you could go out tomorrow and build (after you get the requisite permits of course). Unfortunately though, as-of-right uses and densities are not often inline with what’s actually happening in a neighborhood. So you need to go into the city for things like a zoning by-law amendment.

  Similarly, vendors want the most for their land and so they’re going to be aggressive on this front. As a developer, this is the point where you surround yourself with a team of smart people who can help you figure out what’s reasonably attainable for the site in question. And sometimes you have to worry about the politics as much as the planning.

  Approvals are uncertain

  During the due diligence phase, the goal is obviously to mitigate as much of your risk as possible. Nobody wants to get stuck with a piece of land that they overpaid for that they now can’t (profitably) develop. But sometimes shit happens.

  It may seem like a no brainer. You could have a site that’s surrounded by transit with lots of great precedences (this matters) for the height and density that you’re hoping to obtain and that you feel will be appropriate for the neighborhood. But sometimes the stars don’t align.

  And that’s why development is a risky game.

  2014.02.21

• Say hello to Kingston&Co

  

  As of today, Family Day Monday, you’re going to start seeing information released regarding TAS’s (in partnership with Main & Main) newest community called Kingston&Co. It’s located on Kingston Road, just east of Victoria Park Avenue, in a neat area called Kingston Road Village. You can already register at kingstonandco.ca. And as part of the registration process, we’re also soliciting feedback as to the types of retail the community would like to see added to the area. Note: There’s already a Starbucks 🙂

  At the same time, we’ve also launched a redesign of our corporate site (tasdesignbuild.com). The biggest change is that we’ve taken the blog—which was hidden under a “Neighbourhoods” tab—and made it front and center on the homepage. We see this as a pretty significant change. One that shows that we would like you to join us in a conversation around city building. We now allow comments on all of our blog posts and you can see right on the homepage who the author of the post is.

  If you have any feedback on either Kingston&Co or the new homepage, we’d love to hear from you in the comment section below.

  2014.02.17