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: los angeles

  • Zoning controls, sprawl, and housing affordability

    Maybe it’s confirmation bias, but I continue to feel like there is a groundswell of interest in trying to improve housing supply and overall affordability. The YIMBY movement continues to gain steam. Here are are few excerpts from a recent M. Nolan Gray article where he calls for an end to zoning as we know it today:

    In nearly every major U.S. city, apartments are banned in at least 70 percent of residential areas. San Jose prohibits apartments in 94 percent of its residential areas. The most a developer can build in these zones is a detached single-family home.

    The results speak for themselves. Houston builds housing at 14 times the rate of peers like San Jose. And it isn’t just sprawl: In 2019, Houston built roughly the same number of apartments as Los Angeles, despite being half its size. Since reforms to minimum-lot-size rules were put in place in 1998, more than 25,000 townhouses have been built, overwhelmingly in existing urban areas.

    To be clear, Houston has made its share of planning mistakes. But, free of zoning, the city can constantly remake itself. That Houston is now one of the most affordable and diverse cities in the country is no accident.

    The relationship between housing affordability and constraints on development is a well-documented one. If you want more affordable housing, you generally want fewer, rather than more, constraints on delivering new housing.

    But as I was reading through the article, I couldn’t help but think more specifically about the relationship between sprawl and affordability. Because it is also true that, for a variety of reasons, the former has tended to help the latter (or at least coincide with it), which is why Gray felt it was important to say “and it isn’t just sprawl” when talking about Houston.

    Part of this relationship has to do with the fact that expansionist development tends to be of the low-rise stick-built varietal, which is a relatively cost effective way to build. Whereas the higher density infill stuff tends to be built using more expensive materials like reinforced concrete. But of course there are many other factors at play, including lower land costs.

    So I think one really interesting question is this one here: To what extent could we break this relationship between sprawl and affordability with what Gray is advocating for? In other words, how cheap could we make new infill housing in our older cities if we were to greatly loosen zoning controls or possibly even remove them all together?

    I don’t know the exact answer, but I know that directionally it would be better.

  • Developer advertising turned cultural monument

    I don’t really have an opinion on the debate surrounding public access to Los Angeles’ famed Hollywood sign. I just don’t know enough and I’ve never visited it myself.

    On the one hand, if you live in Hollywoodland, I can see how having 10 million or so people traipse through your neighborhood each year to take photos of the sign might be a little annoying.

    On the other hand, living in a big city like Los Angeles means dealing with certain annoyances. And doesn’t everyone deserve a selfie with the sign? It also doesn’t seem to be impacting values (see above).

    What is more interesting to me is that all of this is a reminder that many/most of the neighborhoods and communities that people love today were, at one point, built be developers.

    The Hollywood sign was first erected in 1923, and originally read Hollywoodland. It was developer advertising at its finest and intended to sell new homes. The sign cost $21,000 at the time.

    Today the sign is a LA Historic-Cultural Monument and one of the city’s most recognizable icons. Isn’t it funny how this stuff works?

    Chart via the WSJ

  • Where US students want to live after college

    Axios and Generation Lab have something new called the Next Cities Index. The goal is to track US work and culture trends through people’s geographic preferences. For their first cities index, they asked over 2,100 students in the US, on two separate occasions, the following question: “Considering all factors that matter to you, where would you most like to live after college?”

    The aggregate answer to this question is shown above. But they also collected people’s incomes (anticipated since they’re students?), political affiliations, and gender. The list of cities changes slightly when you sort based on these different factors, but not by much. Seattle, New York, and Los Angeles remain top cities — at least in people’s minds.

    It is, however, interesting to note that about 45% of respondents had different answers to where they want to live and where they think they will live. For a number of reasons, the city of people’s dreams isn’t often a practical or realistic choice it would seem. Still, wanting a particular place still tells you certain things I suppose.

    Given all the chatter over this pandemic, I would have thought that Miami would have appeared higher up on this want list.

    Chart: Axios/Generation Lab

  • The productization of housing is set to start in San Jose

    Nabr, which I wrote about last year over here, recently announced its first residential project in San Jose’s SoFA district. Named SoFA One, the project is expected to have 125 apartments that will be offered up on a hybrid lease, own, and lease-to-own model. In this latter scenario, the company is saying that people will be able to buy with as little as 1% down. Construction isn’t scheduled to start until later this year, but if you’d like to get early access, you can add yourself to their waitlist, here.

    As a reminder, Nabr is touting itself as a direct-to-consumer real estate company that aims to bring the same manufacturing and supply chain efficiencies that we have seen in virtually all other industries to the production of housing. This, of course, is not a new ambition. The flatlining of construction productivity is well documented, and lots of architects, builders, and entrepreneurs have tried to innovate in this space over the years. But it’s clearly a notoriously difficult problem to solve. So the obvious question here is: What is going to make Nabr any different?

    Nabr is trying to productize housing. To do this, they’re building a vertically integrated process, going deep into supply chains, and trying to standardize their product offering as much possible. In the case of SoFA One, the base building is expected to consist of a CLT loft-style frame that can then be fitted out with various interior offerings. The idea here is that 90% of the build will be a repeatable system but that the remaining 10% is something that their customers will be able to customize — similar to when you’re buying a new car. The car is the same, but would you like black leather or brown leather?

    Continuing with the car analogy, the company is also taking a move out of Tesla’s playbook for how they plan to roll out their products. The plan is to start at the top of the market (like what Tesla did with its expensive roadster) and then move downmarket as they drive efficiencies and cost savings in their delivery process. What they are trying to do is find the compounding innovation that has been present in most industries but that has been noticeably lacking from construction.

    This all sounds great, but we know that buildings have a myriad of unique challenges compared to other products like cars and smartphones. My iPhone is the same as your iPhone, except for maybe the color and the case I put on it. But each development site is unique. Some have a high water table below it and some don’t. Some have adjacencies that will impact how you need to build and some don’t.

    Each jurisdiction also has unique codes and regulations — everything from urban design guidelines to more or less stringent seismic requirements. Some cities have snow and some cities don’t. The list goes on. So what Nabr is going to have to do is create regionalized products with as much repetition as possible. And if they can generally lock the ~90% base building systems and just adjust the balance as needed, maybe that’s enough to do it.

    At the end of the day, our industry is not completely void of innovation. It’s just a bit slow to change. We never used to build skyscrapers, but now we do. So I’ve decided to cast my developer cynicism aside. Today, we don’t have truly productized housing, but maybe we will.

    As an aside, Nabr also recently shared their leaderboard of cities where people want to see a future Nabr building. Those cities are New York, London, Los Angeles, Toronto, and San Francisco.

    Image: Nabr

  • Informal settlements are the desire lines of housing

    Toronto’s new garden suite (accessory dwelling unit) policies are headed to Planning and Housing Committee this week for approval. If you’d like to leave a supportive comment, you can do that over here by clicking “submit comments” at the top of the page. I just finished doing exactly that.

    Given that this is happening, I figured I would share this related article from the New York Times talking about ADUs and informal housing in Los Angeles. I discovered it through this Strong Towns article by Jay Strange. And I love how he refers to informal structures as the “desire paths” of housing.

    Desire paths, for those of you who may be unfamiliar, are the naturally formed paths and lines that get created when people just walk where they want to walk. Usually these are the shortest and/or most logical routes and, by definition, they don’t align with any designed paths or walkways.

    Jay’s point with informal housing is that it is similarly what people actually want to do, but maybe can’t, usually because of restrictive zoning and/or building codes.

    The New York Times gives the example of a family that illegally built an accessory dwelling unit at the back of their house in the 1990s. It was rented to friends and family, and it helped them get through some difficult financial times. But again, it wasn’t lawful.

    According to some researchers at UCLA, Los Angeles County is estimated to have some 200,000 informal units. Many are forced into demolition, but many, like the above example, manage to sneak under the radar because lots of other people are building them and nobody in the community wants to disrupt things.

    Of course, Los Angeles now allows backyard cottages. And so what was once illegal is now not only permitted, but encouraged. Funny, isn’t it? I don’t know if it was the “desire housing” that ultimately made it happen. But it is clear that many people wanted it and they were voting with their actions.

  • Some cities in California are exploring ways to make housing more difficult to build

    Earlier this year, California joined Oregon to become the second state to pass policy that would allow additional housing density in single-family neighborhoods. Set to take effect on January 1, 2022, Senate Bill 9 requires that communities across California allow duplexes — and in some cases four units if they sever their lot — in most low-rise neighborhoods.

    This is similar to what Toronto is looking at doing, though the details seem to be different. But as I mentioned before, sometimes you can have the broader permissions in place and yet very little building actually takes place because of other land use restrictions or market factors.

    People in California seem to get this dynamic, because the Los Angeles Times just reported that some/many cities in California are now looking at local policies that would mitigate the effects of Senate Bill 9. In other words, they’re looking at policies that would make it harder to build the housing that this new law was hoping to unlock.

    Land use planning is a funny thing.

  • Largest US cities grew faster and became more diverse over the last decade

    The last decade has been pretty good for many cities. Recent 2020 Census data tells us that of the 50 largest cities in the US, 46 of them grew their population over the last 10 years. On average, these 50 cities grew by about 8.5%, compared to 5.6% for the decade between 2000-2010.

    As you might expect, the fastest growing cities tended to be in the south and the west. The top 3 fastest growing cities over the last decade were Fort Worth (24%), Austin (21.7%), and Seattle (21.1%). The cities with the biggest population declines were Detroit (-10.5%), Baltimore (-5.7%), Milwaukee (-3%).

    It’s important to keep in mind that city boundaries can skew these numbers depending on how they are drawn. A declining “city” population doesn’t necessarily mean that the broader urban area is losing people. Though it does still tell you something about the “city.”

    Another thing that happened over the last decade is that most of the largest US cities continued to become more diverse. In 2000, white populations were a majority (>50%) in 25 of the 50 largest cities. This dropped to 17 cities in 2010 and then 14 cities last year (2020). Meaning that 36 of the largest cities are now “white minority” cities.

    For more data check out this recent article from Brookings.

  • 79 container ships are waiting to berth in Los Angeles

    Most of us have felt the effects of supply chain disruption during this pandemic. When we were building Mackay Laneway House this past winter, it was right when lumber prices were peaking. We had no choice but to just absorb the cost premiums and move forward with the job. On bigger projects with longer construction schedules, I know that a lot of us are trying to time what they can with the expectation that things will eventually sort themselves out.

    When things are working as they should, this is the sort of thing that you can take for granted. But now you really need to consider lead times and cost premiums. I was reading this morning that the average number of wait days from anchorage to berth in a port in Los Angeles is now 13 days. What that means is that vessels are sitting out in the water, on average, for almost 2 weeks waiting a spot. This costs money.

    As of last week, this translated into 79 container ships sitting in front of Los Angeles and Long Beach waiting to berth (see above chart). If you do the math, which Freight Waves tried to do over here, you get to a value of somewhere around $26 billion worth of stuff sitting out in the water. As I understand it, a big part of the problem is a lack of trucks and drivers to pick up the cargo once these ships have berthed. So you can run the ports 24/7, but you still have a bottleneck.

    Logistics clearly matter.

    Chart: American Shipper with data from Marine Exchange of Southern California, via Freight Waves

  • In real life in New York City

    This past weekend Bright Moments opened up their NFT art gallery in New York’s Soho. This is the company’s second gallery. The first was in Venice, California. And there are plans for eight more cities, with Berlin being the next one. (When is Toronto?!)

    Bright Moments is a decentralized autonomous organization (DAO), which is interesting in its own right but is a topic for another post. You can read a bit more about Bright Moments and DAOs, here and here.

    What I would instead like to talk about today is how Bright Moments is operating at the intersection of NFT art and real-world spaces. They are in effect a community. It’s a place for artists to release/showcase their work and a place for people to connect.

    One of the things that the company is doing with each gallery launch is minting an NFT collection that is tied to the city and that uses the local demonym. When they opened their popup in Venice, they launched the CryptoVenetians. And last weekend in New York they launched the CryptoNewYorkers.

    In each case, 1,000 NFTs were minted and the idea is that once they have expanded to their 10 cities, there will be a collection of 10,000 NFTs.

    I have said it before, but this is an exciting time in the world. Maybe this current NFT craze ends up being a massive bubble, or maybe it doesn’t. Either way, things are exciting.

    But here’s the thing.

    Organizations like Bright Moments show you just how important physical spaces, live communities, and cities continue to be. It doesn’t matter that this is digital art being displayed on a screen and that one could be viewing it from anywhere. People want to hang out in the same room and experience these sorts of new things together.

    I can’t see that ever going away.

  • A few observations from Paris

    The last time I was in Paris was in 2006. That’s a long time ago and so it was great to be back in the city earlier this week. I don’t know the city as well as I do many other cities, but I speak enough French to be dangerous and we spent a good amount of time on this trip just exploring. On average, we clocked about 20,000 steps a day. So here’s a list of some of the things I was reminded of or learned of on this visit. If any of you are more familiar with the city, please feel free to speak up in the comment section below.

    • I love Paris.
    • The Parisian art of people watching is alive and well. One of my favorite things about Paris is how so much of the cafe seating faces out toward the street. That’s what you’re supposed to be watching: urban life.
    • Most cities have a clear message. In Los Angeles, it’s probably that you should be more famous. In Boston, it’s arguably that you should be smarter. And in New York, it is perhaps that you should be richer. In Paris, the message feels loud and clear: You should be more fashionable.
    • Compared to Toronto, the center of Paris feels far more static. Less construction. Less change. Less that is new. That’s not such a bad thing given how beautiful the city is. But in my view, cities are about balancing preservation and progress. From what I could tell, a lot of the new construction seemed to be happening in the suburbs and in the outskirts of the city.
    • That said, COVID feels much further along in Paris. The city was very open and everyone seemed to be back in the office. Locals said that the city was operating at maybe 80%. It felt busy.
    • Dress shoes are dead in Paris. Everyone wears cool sneakers no matter how young or old. Think business suits with Nike Air Maxes. My hypothesis is that it’s just far more practical given how much people walk in Paris. I plan to adopt this strategy immediately.
    • In addition to walking, everyone seemingly bikes and/or uses an electric scooter. Again, it didn’t seem to matter how young or old. Paris also seems to have solved the scooter clutter problem, as has many other cities. There are designated spots (painted lines next to on-street car parking) and that’s where you’ll find the scooters. Toronto needs to get on board.
    • Traveling at 300 km/h on a train is a highly civilized way to move between urban centers.
    • There’s nothing wrong with having a picnic and drinking a bottle of wine (or two) in a park. In fact, it is probably something that should be celebrated. Let people be grown-ups.
    • When you purchase a baguette, you should immediately take a bite out of it to see how fresh it is.
    • The Eiffel Tower, much like the CN Tower, looks far better when illuminated.
    • Balconies of any size can be wonderful. We had a small Juliet balcony off of our hotel room in Nice and we used it every day for croissant eating and to dry our bathing suits. In a more permanent situation, I am sure we would have started growing things on it.
    • Midrise buildings do indeed create nice urban street walls. But it’s important to keep in mind that Paris’ midrise blocks are also deep and dense and with lots of courtyard conditions. That’s how the city is able to house so many people at such low building heights.
    • Facing conditions between buildings is less of a concern when you employ less glass. Smaller punched windows allow you to better manage privacy. I would go so far as to argue that if Paris were an all-glass city, much of its current built form would be fairly unlivable.

    What did I miss in this list?

    Photo by Alexander Kagan on Unsplash