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.
My good friend Taya Cook (of Urban Capital) and her development partner Sherry Larjani were featured in the New York Times today as a result of their Reina project and their remarkable efforts to gender balance the male-dominated commercial real estate industry. I am thrilled that their work is getting the attention that it deserves.
Here’s an excerpt:
That’s because, despite progress in many other professional realms, women remain severely underrepresented in real estate development and investment, particularly in senior roles.
Women held just 4 percent of senior investment roles at major real estate firms, according to a widely circulated 2011 study, and their numbers have improved only “marginally” since, said the study’s author, Nori Gerardo Lietz, who is a senior lecturer at Harvard Business School and a longtime real estate investor.
Ms. Lietz reviewed the senior ranks of 82 major real estate investment firms for the study, as well as many more private equity and venture capital firms, and found that women were noticeably absent from the most highly paid, “touch the money” jobs.
In June of this year, Sidewalk Labs released its draft Master Innovation and Development Plan (MIDP) for Toronto’s eastern waterfront. I wrote about it here. It was a draft document that was subject to further discussion and refinement, with October 31, 2019 being an important deadline for a lot of that to happen.
Some of the critical issues included project scope (just Quayside?), the possibility of a Waterfront LRT (needs to happen), data governance (who owns and manages the data that will be generated by this new smart city?) and, of course, land value. How much is Quayside worth?
A number of these key issues have now been “realigned,” including the land value piece. Waterfront Toronto and Sidewalks Labs have agreed on a fair market value of $590 million (before accounting for any investments that will be required in order to achieve Waterfront Toronto’s goals).
For a summary of the critical issues and what has been agreed to, click here. With these items now firmed up, Waterfront Toronto’s board voted unanimously to proceed to the next phase. The next critical date is March 31, 2020, which is when the project will seek final approval. Mark your calendars.
This week Bloomberg reported that Dubai is facing a “housing disaster” as a result of overbuilding. There’s simply too much supply coming onto the market. About 30,000 units are expected to be completed this year, which the industry believes is about 2x actual demand. As a result, the industry — yes, the development industry — is calling for a 1-2 year pause on all new construction in the city so that the excess units can be absorbed and demand can catch up.
I’m not an expert on the Dubai market. And I’ve only been to the city once. But my sense is that there are relatively few barriers to new supply, especially compared to markets like Toronto and San Francisco. And so it’s not surprising to hear that supply is and has been outstripping demand. According to Bloomberg, the market peaked about 5 years ago.
For the industry to call for a moratorium on new construction it must mean that there’s concern of a prolonged housing slump and perhaps even some sort of systemic collapse. But if the objective is more affordable housing, than you might argue that Dubai has been doing a pretty good job of that. Here is a global city with a “housing crisis” on the opposite end of the spectrum. So what is it that makes Dubai different than, say, London or San Francisco?
My friend Ben Stevens has just published a book called, The Birth of a Building. It is a primer on all the ingredients that go into a new building: finance, law, urban planning, architecture, engineering, construction, and development. It is a book that I wish I wrote. But at the end of the day, it’s a lot easier to endorse a book than it is to write a book. So I am doing the former here today. If you decide to purchase the book, you’ll also find my endorsement within it. But to be clear, the only reason I’m writing about this is because Ben is a great guy and this is a great book.
Congratulations on this huge accomplishment, Ben. For more information, click here.
We are looking to hire a Project Coordinator to join the Development team here at Slate Asset Management in our Toronto office.
This is an ideal position for someone who is passionate about development and cities; who wants to be part of an entrepreneurial and growing team; and who is able to be hands on and take ownership over what they do.
The Project Coordinator would work closely with the full Development team and support all aspects of project delivery from acquisition to exit/stabilization. Eventually, we want this person to lead a portfolio of their own development projects.
We’re looking for someone with the following skills and characteristics:
Demonstrated passion for city building, design, and urban affairs
Experience in real estate and/or development
Understanding of planning & land use policies, development finance, and design & construction (though, the right attitude and work ethic goes a long way)
High energy, with the ability to thrive in a fast-paced entrepreneurial environment while at the same time being extremely detail oriented
Strong communication skills, both written and verbal (well-reasoned opinions are crucial)
Proficiency in Excel, SketchUp, CAD/Revit and other relevant software considered an asset
Degree(s) in related field(s)
If you’re interested after reading all of this, please send your resume and cover letter to brandon@slateam.com. Your short cover letter should include why you want to work at Slate, as well as your favorite recent development project (it can be anywhere in the world but make sure to include why).
Alongside this, we would like to see a link/URL that helps us get to know you better. This could be your Twitter or Instagram, a personal blog, a portfolio, or something else that represents who you are. If you don’t have any of these, well then you’ll have to get creative.
This morning was the official ground breaking ceremony at Junction House. It was a beautiful sunny day and our FOREVER mural proved to be the perfect — albeit ironic — backdrop for our photos. Photos from the event will be released next week.
Junction House is a project that we have been working on since 2016. Development doesn’t happen overnight. So it’s important to celebrate these milestones — both for the team and for future residents of Junction House.
A big thank you to everyone who came out. We’re all looking forward to the next phase of the project: construction.
My recent post about minimum project sizes triggered some great follow-up discussions over email. Today, I learned about a Master Plan that was recently completed for Little Havana, Miami by the urban design and planning firm Plusurbia.
In it, they try to address some of the problems that I described in my post through something they call “Inverse Density.” Given the tendencies toward larger projects, they are proposing to incentivize the development of smaller and underused lots with more density.
The idea being that if you can encourage more smaller scale development, you can actually help to protect the character of a place. In 2017, the National Trust for Historic Preservation declared the neighborhood a national treasure.
What you are seeing here is existing vs. proposed policies. The proposed scenarios both result in higher densities, even though the lots are smaller. Alongside this, they are proposing to get rid of parking minimums for lots less than 7,500 sf.
It’s an intriguing idea and I’m glad they shared it with me. If you’d like to download a copy of the full Little Havana Master Plan, click here.
Many, or perhaps most, developers I know have a minimum project size that they will work on. That’s why you’ll hear people say, “No, that project is too small. I need at least X square feet or Y number of units.” Given that smaller scale development such as laneway housing and “the missing middle” are so in vogue today, I thought I would discuss some of the reasons why scale matters.
But first, it’s worth mentioning that “laneway suites,” as we have structured them here in Toronto, are intended to be built by individual homeowners and not by developers. The lots can’t be severed and most lots will yield less than 1,000 square feet. So this is a bit of a unique circumstance. As most of you know, I am a big supporter of this initiative.
When you get into larger developer-led projects, it’s a different ball game. For one, it’s hard to even find sites. And good luck if you need to deal with multiple owners as part of an assembly. Most landowners have pricing expectations that do not even remotely align with “missing middle” level densities.
But assuming you’ve been able to find land at a reasonable price, you still have to contend with the fact that projects have a lot of fixed costs, as well as diseconomies of scale. In other words, there are schedule, cost, and resourcing considerations that won’t change no matter how big or small you go. It’s still going to take this long and cost this much, and you’re still going to need a set of humans to manage it through.
This can then create a situation where there’s not enough margin for error. The project is simply too small to absorb any shocks, such as an unforeseen delay or an unforeseen groundwater concern that is now adding millions to your project budget. There’s a lot of risk with development and it’s prudent to have contingency room. That’s harder to do with smaller projects.
The other problem developers run into with smaller projects is that the construction subtrades also tend to think of them as smaller projects. They have their own set of fixed costs and margins to worry about. So unless you happen to catch them with an opening in their schedule, you run the risk of them telling you they’re too busy or them giving you a stinky price, which is just another way of them saying they don’t want the job.
On top of all this, there’s minimum project size inflation. If capital is not a constraint, there’s a tendency to want to do bigger projects (see above). And because the cost of everything keeps going up, it’s simultaneously getting harder and harder to make smaller projects pencil; unless you, maybe, go ultra luxury and ultra exclusive. But that’s kind of the opposite goal of this whole “missing middle” movement, is it not?
The Junction House team is excited to announce that construction will start this fall and that our ground breaking ceremony will be held at 11AM on Saturday, October, 19th. Mark your calendars.
It will take place at our Sales Gallery — 2720 Dundas St W. This will be one of the last opportunities to see the award-winning Junction House Sales Gallery before it is demolished in preparation for construction.
There will be photo opportunities for everyone in attendance, and so we encourage you to bring your phones/cameras. You’re welcome to extend this invitation to family and friends, but kindly RSVP by sending an email to info@junctionhouse.ca.
This week, RBC Economics published a study on Canada’s rental market where they argued that the pace of new supply needs to at least double in markets like Toronto in order to meet future housing demand and balance the market. Similar things, I’m sure, could be said about many other housing markets around the world.
The report pegs the current rental housing deficit in Toronto at about 9,100 units:
And because they believe that the cost of ownership is pushing more people into rentals, the number of renter households is expected to grow at an average rate of 22,200 units per year in Toronto.
If you take 22,200 units per year over the next two years, and add in the current deficit of 9,100 rental units, you get to a total count of 53,500 rental units. This is what RBC Economics believes must be delivered to the market in order to restore equilibrium, and decrease the upward pressure on rents.
Rental units are, of course, delivered to the market in two main ways. There’s purpose-built rentals and there are for-sale units that end up as rental housing. But even if you amalgamate both of these tenures, we are not building enough housing.
Against this backdrop, I find it curious that developers are so often vilified. Earlier this week, I saw Jennifer Keesmaat tweet out that — as we ready for this fall’s federal election — any sensible housing plan must move away from our current for profit housing delivery model.
Who, then, will build these 53,500 rental units? That part wasn’t clear to me.
