Brandon Donnelly

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.

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Tag: housing

  • Location over space

    This recent article about the kind of homes that “wealthy millennials” are buying is a useful reminder of just how expensive homes are in San Francisco. But it’s also interesting in that it speaks to the types of homes that people with options are deciding to buy. In other words: If you had all the money in the world, what would be your ideal home? (According to the article, there are about 618,000 people in the US between the ages of 24 and 38 who have a net worth of at least $1 million.)

    Traditionally, “luxury” has meant lots of square footage and a big lot. But as we know, that view is changing for some/many people. We are placing a greater emphasis on being closer to the city and on living in more walkable communities. The article provides a number of examples where historically desirable areas have lost ground to areas that are now popular with the under 40 set. And in some cases, there has been a complete reversal; areas have gone from being more expensive to now less expensive (on a per square foot basis).

    It would seem that being able to work from anywhere hasn’t made us forget the city.

  • A catalyst for Westside development — but not yet

    A new 280 acre park is currently under construction in an old quarry on the westside of Atlanta. It’s called Westside Park. When it opens this spring (that’s at least the target), it will be by far the largest park in the city. But already there are concerns that this investment in new public space could be triggering “rapid gentrification” in the surrounding area.

    So earlier this month, the mayor’s office issued an executive order that put in place a 6-month moratorium on all new construction permits in the communities surrounding the park. The order read like this: “…refuse to accept new applications for rezonings, building permits for new construction, land disturbance permits, special use permits, special administrative permits, subdivisions, replattings, and lot consolidations for non-public projects.”

    The objective is to avoid displacement. And since new development means change, this is a way to stop change. (Don’t you just hate when things go and change?) The problem, of course, is that a moratorium on new housing doesn’t stop change and it does nothing to address the desire to live next to this new amenity. It only stymies the supply of new housing to meet this demand. (It’s also incongruent with the park investment being marketed as a “catalyst for new development.”)

    In fact, Joe Cortright (of City Observatory) and Jenny Schuetz (of the Brookings Institution) have both argued — either directly or indirectly — that the above move could actually increase displacement in the surrounding area; because the moratorium on new housing could simply redirect demand toward the existing housing stock. The order does seem to suggest that you can still renovate an existing property.

    I wonder if any studies have been done on the externalities associated with temporary housing supply moratoriums. If so, I would be interested in reading them.

  • Learning from Steve Falk

    Building new housing — in the places that really need it — is exceedingly difficult. This recent New York Times article by Conor Dougherty is a good example of that. It tells the story of a man named Steve Falk.

    Steve was previously city manager for Lafayette, California (a suburb of San Francisco), but he eventually grew frustrated by his inability to affect positive change, and actually build things. He ended up resigning.

    Below is a quote from the article. Steve is talking about housing affordability and supply.

    “I’m not sure individual cities, left to their own devices, are going to solve this,” he told me once. “They don’t have the incentive to do so, because local voters are always going to protect their own interests instead of looking out for people who don’t live there yet.”

    Steve is right in this assertion. I think it was Charlie Munger who once said, “Show me an incentive and I’ll show you an outcome.”

    I don’t know the specifics of the proposed 315 unit apartment building in Lafayette (perhaps it was ugly), but the article claims it was an as-of-right proposal close to a BART station (transit).

    How does that turn into 0 units and numerous lawsuits, while we all continue to debate housing affordability? Something is broken.

  • How superstar cities can continue to scale

    Aaron Renn’s latest article in the Manhattan Institute is about how America’s top cities can “grow to new heights.” Usually when we talk about urban problems, it is because of failures. But in this case, it is about problems of success (though I suppose you could argue these are still failures).

    Cities such as New York and San Francisco have, in his view, stopped thinking like growth cities and that is leading to high home prices and overburdened infrastructure. But we all know that these problems are not unique to only “superstar cities.”

    Not surprisingly, Aaron argues that we need to stop implementing land use policies that only exacerbate our housing supply problems. Things like rent control and inclusionary zoning. And in some cases, it may be time for states to start intervening in local planning decisions.

    For the full article, click here.

  • Tokyo Jewel

    I have a fascination with “small” Japanese homes. Many, or perhaps most of them, would be illegal to build in a place like Toronto. This one here in Tokyo, called Jewel, is only 1.4m wide on its narrowest elevation. See above photo. Designed by Apollo Architects & Associates, the ~80m2 home was built on a “flagpole” site. Narrow approach. More site area in the back. Here is a plan of the ground floor (via Dezeen) to give you a better sense of what I’m talking about:

    According to Dezeen, the client is a fan of minimal design and, in particular, the work of John Pawson. His work was a source of inspiration for the project. But if you read the article closely, you may notice that he is referred to as the “British architectural designer Pawson.” I learned last week, following this post, that John Pawson is not a licensed architect. Hence the carefully chosen language. I guess there’s hope for those of us who are not architects.

    Photo: Masao Nishikawa

  • Where renters want to move

    Every quarter, Apartment List publishes something that they call their Rental Migration Report. What they do is use search data from their website to determine where their (registered) users are hoping to move to and from. Their first report of 2020 is now out and below is their list of the most attractive US metros. It is based on search data from June to December, 2019.

    Now, it’s important to note that this is really only a form of intent — taken from one particular website. This list may not, and probably doesn’t, accurately mirror how and where people are actually migrating within the US. But it is still interesting to see what is top of mind for Apartment List’s users. (If there were multiple search inquiries during a visit to the site, they counted the first metro area.)

    Beautiful mountains. Great snowboarding/skiing. And a burgeoning tech ecosystem. I am not at all surprised to see Denver at the top of this list.

    Images: Apartment List

  • The “jobs” of co-living

    Earlier this week I wrote about the age groups that are most likely to live in an urban neighborhood in the United States. It was people in their 20s and, to a lesser extent, baby boomers. The data I was relying on used population density to measure urbanity.

    Interestingly enough, the demand for co-living seems to mirror this. (Feel free to disagree.) From what I’ve been told, the fastest growing co-living segments are young people recently out of school and retirees. Intuitively this makes sense to me.

    If we think back to teachings of Clayton Christensen (another recent post), we “hire” products and services because we have “jobs” that need to be done. In the case of a McDonald’s milkshake that job might be a breakfast that’s appropriate for a long and boring commute.

    In the case of co-living, and in urban neighborhoods in general, one of those jobs has got to be social connections. (Again, feel free to disagree.) We do also know that single person households are increasing in many cities. Are these phenomenons related? How big could co-living get?

    Note: This post was written on my phone on a flight, which is why there are no links or images.

  • Canal houses and rental barracks

    Feargus O’Sullivan’s CityLab series on European housing typologies started in London, but has since gone on to cover Berlin’s mid-rise tenements — called Mietskasernen — and Amsterdam’s canal houses. The series is exactly the sort of thing that I like to geek out about. In fact, I can see a book on this topic staring at me from my bookshelf.

    If you end up taking the time to read the articles, you’ll be reminded of a couple of things about the way cities work. One, the way we use buildings changes over time. Two, the kind of architecture we pursue is always a reflection of the socioeconomic milieu at that particular moment in time. And three, the way we perceive buildings also changes over time.

    In the case of Amsterdam’s canal houses, their original function was live/work. They were residences, but they were also warehouses. Amsterdam’s maritime dominance meant that it was more profitable to store things, instead of just house people. (Sometimes as much as half of the house was dedicated to storage.) Trade patterns had moved from the Mediterranean up to the North Atlantic, and that worked out pretty well for the Dutch in the 17th century.

    In the case of Berlin, their typical mid-rise “rental barracks” went from reviled to coveted as the buildings aged, elevators made the penthouses desirable, and people started to appreciate some of their idiosyncrasies. It’s an example of what I was getting at when I spoke to the CBC for this article about Toronto’s skyscraper boom. Some things, including buildings, take time. They need to settle in.

  • A cycling mecca in northeast Spain

    Today I learned that Girona in northeast Spain is a mecca for cycling. Bike enthusiasts like it because the climate is mild; the roads are well maintained; the lifestyle is relaxed; and there’s easy access to the European Grand Tours in Spain, France, and Italy. Apparently Lance Armstrong bought an apartment there in 2001. Though there were other pro cyclists who had come before him.

    Interestingly enough, all of this is allegedly having an impact on the real estate market. According to the WSJ, there has been a surge in the tourist licenses required to operate a short-term rental in the city. Ten years ago, the city had only issued 10 of them. But today, more than 700 have been issued. And as of the end of 2019, residential sale prices had increased about 15% year-over-year.

    I’m not sure how much of this is a result of cycling tourism, Airbnb, Spain’s overall housing market recovery, or other factors. But it certainly sounds like a nice place to go for a bike ride.

  • Berlin apartment rent freeze has frozen capital expenditures

    Last year, the city of Berlin agreed to a five year rent freeze for some 1.5 million flats constructed before 2014. The way it was initially approved is that it would freeze rents at mid-2019 levels and allow for only 1.3% inflationary increases. All of this is being challenged in the courts, but the Financial Times is suggesting that it could still come into force by March 2020. Here is an excerpt from a recent article. (Guy Chazan isn’t holding back about the kind of people that he believes Berlin attracts.)

    The legislation, which should come into force by March this year, is City Hall’s response to a lingering housing crisis that shows no sign of easing. Packed out with Brexit refugees, international party people and wannabe tech entrepreneurs, Berlin is in expansion mode, its population growing by 40,000 a year. Yet affordable housing remains scarce. Rents have doubled over the past decade, as new residential construction fails to keep up with soaring demand.

    As I mentioned before on the blog, these policies are not intended to apply to new buildings. That would surely choke off new construction, which would only exacerbate the underlying supply issue that Berlin is facing. But not surprisingly, this move has also put a freeze on capital expenditures, according to the same FT article. Local trades are complaining that, “It’s as if someone’s just turned out the lights.”

    Photo by Gilly on Unsplash