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: land use

  • Three ways to optimize investments in transit

    Sometimes I’ll hear people in Toronto talk pejoratively about all of the development that’s been happening at Yonge & Eglinton (in midtown). They’ll say it’s too much density.

    But then you come across charts like the ones above (source previously shared here) and you realize that this location is the only section along the new Eglinton Crosstown LRT line that is actually starting to have enough people.

    Based on 2021 Census data, there were about 40k people within 800m of the future Eglinton and Mount Pleasant stations. In contrast, there are many downtown stations along the Ontario Line (also under construction) with around 80k people.

    Why this is important is because if the objective is to get people to ride this new transit and collect a lot of fares, then the single most important factor is going to be the amount of people that live, work, and play adjacent to each station.

    Now, I’m not a transportation planner, but in my mind there are three simple ways to think and go about optimizing for this:

    1. You can look at where population densities are already high and then add new transit to service these densities. This is what is happening with the Ontario Line and it was long overdue. We know that ridership is going to be relatively high because of the chart at the top of this post.
    2. You can look at where there’s existing transit and then work to optimize the land uses around it. This is what we should be doing a better job of along the Bloor-Danforth line, where certain station areas have actually lost people over the last few decades. This is the opposite of what you want next to transit investments.
    3. Lastly, you can also proactively plan new transit while simultaneously encouraging more density. An example of this would be the Vaughan Metropolitan Centre (just north of Toronto). Extend the line and encourage growth. This is good. The only thing with this approach is that it can seem a bit misaligned if you’re currently failing at #1 and #2.

  • Geography of activity centers

    We need more “activity centers”. That is my takeaway from this report by Brookings.

    Activity centers are exactly what they sound like. But to be more specific, the definition used in the report is based on five categories of assets: community, tourism, consumption, institutional, and economic. And what the authors did was look at the relative concentration of each across the 110 metropolitan statistical areas (MSAs) in the US with at least 500,000 residents.

    They then came up with 3 different kinds of activity centers. Monocenters (blue in the above map), secondary centers (yellow), and primary centers (orange). Monocenters have, as you’d probably expect, a lot of one kind of asset. Secondary centers, on the other hand, have “some of at least two kinds of assets.” And primary centers have “a lot of at least two kinds of assets.”

    Looking at the above map, it is pretty clear — and not at all surprising — that Manhattan is, for the most part, one giant activity center. There is a lot going on. But this is not the typical condition. In the 110 metro areas looked at in the study, activity centers only occupy about 3% of land on average. The remaining 97% of land is, based on the above definition, a non-activity center.

    Why this matters is that activity centers punch above their weight. Despite representing a small land area, activity centers are home to 40% of all private sector jobs in the US. Supposedly, they also increase productivity (by an additional ~$1,723 per worker), yield higher property values (+26%), increase inclusivity, and reduce vehicle miles travelled.

    So yeah, more activity centers sounds like a good thing for our cities. Though as we have learned in recent years, we need to be careful with monocenters.

    Map: Brookings

  • Everything looks in place here

    I was in the mood for some light reading before bed earlier this week, and so I pulled out this comparative critique of Euclidean zoning. Many of you are probably familiar with how single-use zoning works. It is the dominant form of zoning in North America and it is predicated on the idea of “everything in its place.” Meaning, land uses are best off when they are segregated and put into distinct zones: commercial here, industrial over there, residential in these areas, and so on.

    But there are a whole host of arguments for why this is bad cities. Among other things, it makes them less sustainable, because typically you need to drive between zones when you want to do things. It makes them less resilient, because you’ve now created monocultures. And it also encourages segregation, because if this zone is only for 2-acre single-family lots, then only people who can afford a 2-acre lot get to live there.

    I’m sure that many of you are already aware of these arguments. So what I found most interesting from this light bedtime reading was the comparison to the French model of urbanism. One of the key differences in cities such as Paris is that the French have historically preferred to zone for structures over uses. In other words, aesthetics and how buildings look have long been a priority, but what happens inside of them has been less of one.

    The result is an incredible mix of uses that makes the city what it is today. And this is perhaps the great irony of Paris. Its visual harmony might make you believe that “everything is in its place.” But really things are often all over the place — as they should be in a city. Adding to this irony is the fact that many single-use cities do not actually appear very orderly, even though they’re kind of supposed to by design.

    I thought this was an interesting way of looking at these two different models of urbanism. It makes the case that not everything needs to be in its place; maybe it just needs to look that way and the rest will figure itself out.

  • Displacement and gentrification

    Let’s consider a scenario where we have a relatively affordable 20-unit apartment building in a rapidly growing global city. This particular building happens to be of an older vintage and so let’s say that the in-place rents are about 40% below market.

    Next let’s assume that the zoning has just been updated for the land and it is now possible and economically feasible to build a total of 300 housing units in a new high-rise building. This would mean demolishing the existing 20 apartment units.

    But because this global city has rental replacement policies in place, these 20 units would need to be rebuilt within the new high-rise and offered to the current residents at exactly the same rents. So same price, but new housing.

    Compensation would also need to be provided to these residents to cover the cost of moving around. Because they would obviously need to move off site to allow for construction and then, if they’d like, move back once construction is complete.

    How would such a scenario make you feel?

    The typical objections usually involve, among other things, concerns around displacement, gentrification, and overall built form. There is a concern that investments of this magnitude might push people out of the area and also change the character of it.

    But at the end of the day, these 20 existing homes are not disappearing from the market. They will remain part of the housing stock, but now with the addition of 280 new market rate homes.

    I think it’s important to remember that in a rapidly growing city, trying to maintain the status quo by limiting new development can actually have the opposite effect. Because what you end up doing is creating a scenario where more and more people are fighting for a relatively fixed supply homes. And that is certainly one way to encourage displacement and gentrification.

  • Toward more multi-family housing

    This recent article by Brookings is a good reminder of the all too important link between land use policies/patterns and GHG emissions. Because electric vehicles are cool and all, but they’re still not as efficient as just walking around and/or taking transit.

    As has been argued before on this blog, we need to not only electrify our transport network, but we also need to change how we get around. And probably the best way to encourage a modal shift, is to plan and build our cities differently. Something that is simple, but not easy.

    It also turns out that people who live in multi-family buildings tend to consume less energy (on a per capita basis) than those in single-family houses. So there are numerous benefits to encouraging denser housing on top of transit and within mixed-used communities.

    With all of this in mind, here are some interesting charts from the above Brookings article.

    This first one shows new housing permits in the metro areas of Atlanta, Chicago, and Washington DC, according to their urban, suburban, or exurban status. Here, Chicago is an outlier, with the “urban core” (defined as Cook County) now making up about half of all new housing.

    If you look at the entire study period, the number is less. The urban core accounted for about one-third of new housing permits in Chicago, and only 15% of permits in Atlanta and DC. But in all cases, housing permits in the urban core have been increasing since the 2008 financial crisis.

    But here’s the other thing. Looking at these next two charts, there appears to be a clear trendline toward more urban housing typologies. The first of these next two is showing single-family housing permits as a percentage of all new housing. And the second is structure type over time.

    Atlanta is still building mostly single-family housing, but less of it. And based on these charts, Chicago has already passed its inflection point. DC is not far off. Every city region is of course going to be different, but it does look like there is some kind of broader housing shift underway.

  • Built form and climate impact

    Building height and density are not one and the same. You can have tall buildings configured in a low-density way (think post-war towers in the park). And you can have low/mid-rise buildings configured in a high-density way (think Paris and Barcelona). This is one of the reasons why it is important to decouple density and tallness when thinking about our cities.

    This line of thinking is the approach that a recent study took when trying to determine the optimal built form for minimizing climate impact. In the study they define four building typologies: 1) high density, high-rise, 2) low density, high-rise, 3) high density, low-rise, and 4) low density, low-rise.

    What they found was that taller environments tend to have higher life cycle GHG emissions, but that lower-density environments are (obviously) far more land consumptive. To determine life cycle GHG emissions they looked at both embodied and operating emissions, which is why the taller stuff didn’t score as well under their methodology. There’s typically a lot of concrete and steel in tall buildings.

    This lead the team to conclude that if you want to optimize around climate impact, you should probably aim for that perfect middle ground: dense, but not super tall.

    But as Joe Cortright (City Observatory) rightly pointed out in his email newsletter, one of the big limitations of this analysis is that it does not consider transportation-related impacts. And since we know that transportation is one of if not the largest source of GHG emissions and that how we get around is heavily dependent on land use patterns, it is probably an important piece to consider.

    Photo by Alfons Taekema on Unsplash

  • The housing supply narrative is a sham

    That is the argument that Joshua Gordon, who is an assistant professor in the Simon Fraser University School of Public Policy, recently made in this opinion piece in the Globe and Mail. In his view, there’s no evidence to suggest that housing supply can actually help housing affordability. It’s just something that developers throw around to “stymie action on the demand-side” and to help with their rezoning efforts. Really, the housing problem is due to intense demand from foreign buyers, investors, and from “high rental demand.”

    Now, as many of you know, I am a developer, and not a professor. So you can take this post however you would like. But I do have a few thoughts.

    One, I think it’s an oversimplification to argue that there have been no regulatory changes over the last decade that have meaningfully and negatively impacted the supply of new housing. To give you one example, this fall, development levies in Toronto will complete a phase-in that has seen them double over the last couple of years. Almost a quarter of the price of a new residential condominium now goes to pay government fees and taxes. This has an impact on supply, even if the “regulatory environment” hasn’t necessarily changed.

    Two, I don’t buy the argument that, “surrounding cities have also seen rapid price appreciation and it’s easier to build there, so housing supply mustn’t be the problem.” Building outside of cities like Toronto and Vancouver isn’t necessarily easier. In fact, in some cases it can be more difficult if they’re not accustomed to more progressive urban infill-type developments.

    Three, it’s important to keep in mind that we have a financing structure in place that biases the types of homes (specifically residential condominiums) that get built. This approach is designed to mitigate financial risk, but it also means that investors serve an important function in the delivery of new housing. I’m not saying that the system is perfect; but I am saying that things are maybe not as simple as they may seem.

    Four, just because there are cities with lots of single-detached homes and relatively affordable housing, I don’t think we can safely assume that single-family land use policies have no impact on supply and pricing in cities like Toronto and Vancouver. In fact, I would argue the opposite. This probably goes to show you the importance of an elastic housing supply. Indeed, some of the most affordable housing markets are dominated by low-rise houses precisely because it is a typology that is quicker and cheaper to build than most urban infill housing.

    Finally, I’m not sure why anyone would consider high rental demand and a strong labor market to be symptomatic of a problem. Isn’t that what you usually want out of cities? You want there to be an abundance of good jobs that pay people money so that they can, you know, have a life and consume things like housing. But maybe that’s just the way that I look at things. I am a developer after all.

    Photo by Wiktor Karkocha on Unsplash

  • How America uses its land

    Last summer Bloomberg ran a visual essay on how America uses its land. In case some of you missed it, I thought I would share it here today.

    They started by breaking the country down into 6 main land uses. Each square represents about 250,000 acres.

    What likely won’t surprise any of you is that urban areas punch well above their weight:

    Even though urban areas make up just 3.6 percent of the total size of the 48 contiguous states, four in five Americans live, work and play there. With so much of the U.S. population in urban areas, it’s little surprise that these areas contribute an outsize amount to the economy. The 10 most productive metropolitan areas alone contributed to about 40 percent of U.S. GDP in 2016.

    Here’s a further breakdown of the map:

    There is a lot that is interesting here. Note that golf courses made the cut.

  • Increasing housing supply in Ontario

    The Government of Ontario is currently working on a Housing Supply Action Plan that they hope will address “the barriers getting in the way of new ownership and rental housing.”

    Through initial consultations, they have already identified 5 key themes (my words below):

    1. The approvals/entitlement process for new housing is too slow
    2. There are too many restrictions on what is allowed to be built (that is, we should be encouraging more “gentle density” and “missing middle” type infill)
    3. Development costs are too high
    4. Tenants need protection; regulation is making it increasingly difficult to be a small landlord
    5. Overall housing innovation

    The province is also looking for public input and is currently running this online survey. It is open until January 25, 2019. And I would encourage all of you to complete it and help shape the action plan.

    My understanding is that the plan should be ready by Q2-2019.

  • Planning staff reports

    A bunch of people have asked me lately about what they should do if they want to get smarter on land use planning and on the entitlement process for development projects. It was specific to Toronto, but I don’t think my answer is specific to only this city.

    I took a few planning classes in graduate school when I was in the US. But I was more focused on architecture and real estate, and so I did not leave school an expert by any means.

    I learned about the failures of euclidian zoning and about things like the Low-Income Housing Tax Credit, which always seemed like a sensible supply-side tool to get the private sector to invest in affordable housing.

    But what I have found most useful is to just read planning staff reports. These are the responses to actual development proposals and they show you how staff interpret the policies that are in place and how staff apply them to real buildings.

    I may be in the minority in that I actually find these reports interesting. But regardless, they are a great crash course in planning and development approvals and they can help you manage your entitlement risk.