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

  • Low cost energy efficient homes perched atop of surface parking

    A regular of this blog recently suggested (in the comments) that I take a look at the London-based design firm ZED Factory. ZED stands for Zero Energy Development.

    The first project that caught my attention was ZED Pod. ZED Pod is a small, low cost energy efficient modular home that is designed to sit atop of surface parking lots. In other words, it’s a way to repurpose under-utilized surface parking without compromising existing parking ratios. All you really need are the air rights. And since the “land” is cheaper, the homes can be cheaper. They can also be easily relocated if the parking lot were to get developed in the future (though they are designed as permanent structures).

    image

    In some ways, there is something perverse about the way that driving and parking have such a profound impact on the urban landscape. Even when it’s buried underground and hidden from sight, the structural column grid needed to layout efficient parking will often carry up through the building impacting suite layouts. We’ll even restrict housing supply when parking requirements can’t be met. Should it be parking or people who come first?

    But cars aren’t going away. And ZED Pod is a clever way of dealing with an existing urban condition – however suboptimal it may be. I found the concept interesting and I thought you all might as well.

    Image: ZED Factory

  • Building new, better cities

    Earlier today my friend Saadat sent me the following tweet:

    //platform.twitter.com/widgets.js

    It’s a link to a new research project by Y Combinator – the famed Silicon Valley seed accelerator. They want to explore the possibility of building new and better cities.

    I don’t have the time for something like this, but if any of you are city experts (I know a lot of you are) and you’re based in or willing to be based in San Francisco (I think they are flexible on this), you should absolutely consider applying to be their full time “Cities Researcher.” The deadline is July 30, 2016.

    Here’s a taste of what they are thinking about…

    There are many high-level questions we want to think through, for example:

    – What should a city optimize for?

    – How should we measure the effectiveness of a city (what are its KPIs)?

    – What values should (or should not) be embedded in a city’s culture?

    – How can cities help more of their residents be happy and reach their potential?

    – How can we encourage a diverse range of people to live and work in the city?

    – How should citizens guide and participate in government?

    – How can we make sure a city is constantly evolving and always open to change?


    And there are tactical questions we want to dig into, for example:

    – How can we make and keep housing affordable? This is critical to us; the cost of housing affects everything else in a city.

    – How can we lay out the public and private spaces (and roads) to make a great place to live?

    – Can we figure out better zoning laws?

    – What is the right role for vehicles in a city?

    – Should we have human-driven cars at all?

    – How can we have affordable high-speed transit to and from other cities?

    – How can we make rules and regulations that are comprehensive while also being easily understandable?

    – Can we fit all rules for the city in 100 pages of text?

    – What effects will the new city have on the surrounding community?

    The convergence of city building and tech is something that I’m deeply interested in. I also think it’s inevitable. And I think that Toronto – thanks to our robust real estate industry – is in an ideal position to be a leader in this space. So I would love to see someone from here take on this job.

    But even if you’re not from Toronto, you should still apply because it’s an exciting initiative 🙂

  • Market vs. subsidized

    Miriam Zuk and Karen Chapple of the University of California, Berkeley, recently published a research brief called Housing Production, Filtering and Displacement: Untangling the Relationships. 

    It’s a nuanced look at the impact of both market-rate and subsidized housing production on affordability and displacement within the San Francisco Bay Area.

    The report is essentially a response to the debate around whether increasing market-rate housing production alone can address affordability and displacement concerns, or whether the only way to do it is through subsidized housing. What they found was that both matter, but…

    “What we find largely supports the argument that building
    more housing, both market-rate and subsidized, will
    reduce displacement. However, we find that subsidized
    housing will have a much greater impact on reducing displacement
    than market-rate housing. We agree that market-rate
    development is important for many reasons, including
    reducing housing pressures at the regional scale and housing
    large segments of the population. However, our analysis
    strongly suggests that subsidized housing production is even
    more important when it comes to reducing displacement of
    low-income households.”

    If you’re interested in this topic, I recommend reading the full brief. It’s only 12 pages. I particularly liked the information around filtering and how new housing steps down over time to ultimately serve lower-income households.

  • The cost of parking minimums

    Access Magazine has a good piece on parking minimums and the cost they create for our cities. The article is by Donald Shoup, who is Professor of Urban Planning at UCLA. He is also the author of The High Cost of Free Parking.

    Here is his argument:

    “Minimum parking requirements create especially severe problems. In The High Cost of Free Parking, I argued that parking requirements subsidize cars, increase traffic congestion and carbon emissions, pollute the air and water, encourage sprawl, raise housing costs, degrade urban design, reduce walkability, damage the economy, and exclude poor people. To my knowledge, no city planner has argued that parking requirements do not have these harmful effects. Instead, a flood of recent research has shown they do have these effects. We are poisoning our cities with too much parking.”

    And here’s his summary of what it costs to build a parking stall in various US cities (both underground and aboveground):

    To put these numbers into perspective, he also looks at the median net worth of US households (2011) to show just how expensive this parking is for some groups. 

    Because remember, these parking costs get embedded into the cost of housing, retail stores, and so on.

  • More thoughts on inclusionary zoning

    Alan Ehrenhalt recently published a balanced piece in Governing that largely reflects my own views on inclusionary zoning. It’s called: Why Affordable Housing Is So Hard To Build.

    His argument is that there are lots of cities trying to build more affordable housing, but that most strategies have not yet proven to be all that successful.

    I’ve written a few posts on inclusionary zoning. The most recent is this one. And though I believe that a mix of incomes is a critical component of good city building, I am having a hard time believing that inclusionary zoning is the silver bullet that will get us there. Admittedly, it sounds like a great idea. But how does that translate into reality?

    Here’s a snippet from Alan’s article (shout out to Daniel Hertz of City Observatory who seems to get cited in almost every article I read these days):

    Just about every city that has tried an inclusionary zoning law in recent years has had a similar experience. In some cases, the results have been much worse. According to BAE, Chicago’s inclusion law produced $19 million in 11 years, but only 760 affordable units. Thirteen years of inclusionary zoning in Seattle brought the city $31.6 million in fees and a grand total of 56 units. As the urbanist Daniel Hertz wrote recently, inclusionary zoning has been “more powerful as a symbol than as a way of helping people.”

    Of course, the devil is in the details. Many inclusionary zoning policies allow cash in lieu of actual housing:

    San Francisco actually has had an inclusionary zoning law since 2002, and it has been a flop. It mandates a 12 percent affordable set-aside, but allows developers to escape the mandate by paying a fee to the city. As in Arlington, this is what they have done. A study by the research firm BAE Urban Economics found in 2014 that after 12 years the San Francisco law had brought in $58.8 million in developers’ fees and had generated 1,560 units. That’s better than nothing, but it’s a drop in the bucket for a city facing an affordability problem in virtually every neighborhood.

    All this said, I’m still not so sure that it’s as simple as eradicating the cash in lieu option and forcing mandatary inclusionary zoning. As Alan rightly points out in his article, if we set the bar too high, then all of a sudden it starts making some market rate housing infeasible to build. 

    And if this ends up lowering the overall supply of new housing, then we could be hurting affordability while at the same time trying to mandate more of it. Does that make sense? Clearly this is not as simple as it may seem.

    I get the appeal for cash poor cities. It sounds like free affordable housing. But I’m always suspect of “free” lunches. In any event, I think we can all agree that this is an important discussion to be having.

  • The answer to San Francisco’s housing affordability problem

    Blogger and programmer Eric Fischer has an excellent post up on his site where he looks at: “Employment, construction, and the cost of San Francisco apartments.” It’s worth a good solid read.

    What he did was dig deep into whatever data he could find – the data goes back to the beginning of the 20th century in some cases – to try and figure out a solution to San Francisco’s housing affordability problem.

    Many (including myself) have argued that, at least part of the solution, is to build more, not less, housing. However, others, such as Tim Redmond of 48 Hills, have argued that building more market-rate housing would simply exacerbate the current situation.

    In Eric’s analysis, he looked at everything from median rents and new housing units constructed (above graph) to annual wage growth and income inequality. I particularly liked his summary of the city’s various building booms. 

    In the end, here’s the conclusion that he came to:

    “In the long run, San Francisco’s CPI-adjusted average income is growing by 1.72% per year, and the number of employed people is growing by 0.326% per year, which together (if you believe the first model) will raise CPI-adjusted housing costs by 3.8% per year. Therefore, if price stability is the goal, the city and its citizens should try to increase the housing supply by an average of 1.5% per year (which is about 3.75 times the general rate since 1975, and with the current inventory would mean 5700 units per year). If visual stability is the goal instead, prices will probably continue to rise uncontrollably.”

    By visual stability, he is referring to maintaining the current urban fabric of San Francisco just the way it is. In other words, he is making the link between preservation and affordability in a prosperous and growing city.

    Intuitively, this makes sense to me. It’s unrealistic to think that you can maintaining some level of housing affordability without allowing supply to increase alongside demand.

    At the same time, I do not believe that preservation needs to equate to no changes whatsoever. Urban preservation, to me, should be about dutifully respecting the past while still looking firmly towards the future. And that’s how I believe successful should be approaching this problem.

  • 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

  • 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.

  • Population growth across North American cities

    The Centre for Urban Research and Land Development at Ryerson University recently published the following chart on their blog:

    It’s a look at population growth across a few North American cities, broken down according to natural increases, net internal migration from other parts of the respective country, and net immigration from outside of the respective country.

    When you sum up the pluses and minuses shown above, you get to population growth numbers that look like this:

    Houston, Dallas, and Atlanta are monsters in terms of population growth. They’re obviously smaller than New York and Los Angeles, and so on a percentage basis they are really adding a lot of people. Much of this has to do with the ease in which housing can be added in those cities and their relative affordability.

    Toronto is competitive with New York and Los Angeles in terms of an absolute number, but again our base is smaller so on a percentage basis we are growing faster. The big story with Toronto is our dependence on immigration to grow.

    The one city on this list that might surprise some of you is Chicago. Toronto and Chicago share many similarities and are often compared. But when you look at how the Chicago metropolitan area is shedding people, you see that, at least in this regard, it’s in structural decline.

  • 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.)

    image

    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.