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.
I came across this French paper over the weekend, while I was at the gym pretending to work out my legs. It is a fascinating look at the evolution of Parisian urbanism from 1600-1902, including how the city’s height limits have changed over the centuries. Here, for example, are two section diagrams showing the allowable building envelopes for both an 8 meter street and a 10 meter street:
The way to read these is to start at the bottom with the width of the right-of-way (“voie”). As you move up, it then gives you the allowable heights for various dates. So for example, in 1667, the allowable building height for a 10 meter street was 15.60m. After this height, there was then a requirement to stepback following a 45 degree angular plane. Or in some cases, following a certain radius:
We don’t have a ton of 8 and 10-meter wide streets here in Toronto, but there are obvious similarities between what is shown here and what is in our mid-rise design guidelines. Of course, the big difference is that we’re mostly zoned for low-rises houses and Paris is not. This broader context matters a great deal and it’s why I keep asking: Are you sure you want Parisian-style urbanism?
According to this annual survey by Henley & Partners (first chart from Bloomberg), these are the top 10 wealthiest cities in the world when you count the number of high-net-worth individuals (i.e. people with investable wealth greater than US$1 million):
However, if you instead count billionaires, the top city flips from New York City to the Bay Area (which includes San Francisco and all of Silicon Valley). This isn’t all that surprising.
Also not surprising is the precipitous decline in the number of HNWIs residing in Hong Kong. From 2012 to 2022, the number declined by 27%. That said, a bunch of other cities fared even worse. The city that lost the most millionaires over this same decade was Moscow. It declined by 44%.
For those of you wondering about Toronto, we placed 12th, just after Chicago, with 105,200 millionaires, 193 centi-millionaires, and 18 billionaires:
The next city in Canada on the list is Vancouver, and following that is Montreal:
It is interesting to see how much further behind Montreal places with these metrics given that it is an urban region with about 1.6x the population of that of Vancouver’s.
Also interesting — given its size and global importance — is Paris (18th when it comes to HNWIs):
However, when it comes to seasonal draw, Paris is second only to Miami, which appears to be the undisputed global destination for rich people in the winter. Paris has 126 centi-millionaire residents, but during its peak holiday month (presumably summer), this number is believed to increase to over 300:
Finally, looking at Park City, Utah, it has 8 permanent centi-millionaires and this number is thought to increase to over 100 during the winter snowboarding season. And to be clear, this transient population figure only includes people who own a second home there. It does not include rich people paying US$3,700 per night to stay at Deer Valley. That’s pretty good for a small town of only 8,500 permanent residents.
To check out the full list of 97 cities, click here.
There are lots of ideas out there for how to improve the supply of new rental housing. But it is important to remember, at least here in our market, that the playing field is not level between new condominiums and new rental homes. We have spoken about this before, over here, where I compared the (per square foot) revenue generated from your average new condo against that generated by your average new rental home. Of course, since I wrote that post in 2020, we have seen upward pressure on cap rates (meaning downward pressure on values). So feasibility has gotten even more challenging.
Land is not the factor preventing rental these days 1. Upfront equity requirements 2. Cost escalation: construction, interest rates, DCs, HST 3. Revenue uncertainty (build first lease later) & lease-up risk 4. Take-out financing availability 5. Better investment alternatives
The important thing to remember is that developers do not have some philosophical aversion to building more rental housing; it is that the math is challenging. You generally need economies of scale (really big projects), patient long-term capital, and a belief that rents will continue to exhibit meaningful positive growth. If you want to negatively impact new supply, cap rental growth. But if you want to encourage new supply, somebody needs to pull out a development pro forma and make the call to improve the cost structure for new rental housing.
In my opinion, two obvious line items to focus on are development charges (as well as the other government levies) and HST (our harmonized sales tax). The point of development charges, as we always talk about, is for growth to pay for growth. They are intended to pay for municipal services like roads, transit, water and sewer, and so on. In the other words, they’re supposed to capture of the cost impacts of new housing. But what about the impact of not building enough new rental housing? Are we thinking about this the right way? Especially if you consider the possibility of more new rental housing in our existing transit nodes.
The HST charged on new rental housing is also significant. There is a new residential rental property rebate available to builders (not tax advice!), but the thresholds have not been indexed and so it’s grossly out of date compared to where values sit today. In any event, if the goal is more homes, why not make new rental homes exempt? Developers are simple. If the math works, they will build. If the math doesn’t work, they will not build. And these two line items, alone, would go a long way to helping the former.
This Sunday, Paris will be hosting an important referendum that has nothing to do with France’s retirement age. The question is whether shared electric scooters should be banned citywide. And while there are concerns about whether this single-question referendum will draw many people out to vote, the city has said that, whatever the outcome, the results will be binding.
To be clear, this would only apply to the three micromobility rental companies that operate in the capital: Lime, Dott, and Tier. It would not apply to privately-owned scooters, of which there are many. In fact, France might just be one of the scooter capitals of the world. Over 900,000 scooters were purchased across France in 2021, and last year the number was about 759,000.
Mayor Anne Hidalgo has publicly said that she thinks these scooters should be banned. But does that really solve things given the number of private scooters in circulation? And are the current problems truly ones we can’t solve? As I have said many times before, I like scooters. I like them a lot. They’re convenient and fun to ride, and I see their value in helping to solve the last-mile problem.
I also can’t help but think back to the early 1900s when cars were just starting to infiltrate our cities and there were absolutely no traffic regulations to think of. It was chaos, it was dangerous, and I’m sure it was similarly divisive at the time. So should we have banned them and stuck with horses? Hmm. Maybe.
On the exact same day last week, the Toronto Star published two articles about housing. The first one, this one here, is about how “Toronto has protected huge parts of the city from anything denser than detached or semi-detached houses” and how this has resulted in an “uneven city.” The second article, this opinion piece, is about the “many repercussions to replacing little bungalows.” And one of the implied repercussions is that 3-storey sun blockers that invade privacy might actually kill people. Hmm.
In effect, these are the two sides of this debate. If you zoom out and look at Toronto, you will largely see a contrasting and uneven city of tall buildings and low-rise housing. Instead of building like Paris, which is consistently mid-rise — but also far denser on average than Toronto — we have chosen peaks and large plains to constrain new housing. And if you zoom in across those plains, you’ll find many areas without sidewalks, along with people, such as the author of the second article above, who believe that nothing more than a single storey is appropriate for human health.
All of this has persisted because it has been politically popular. But time continues to show us that it actually runs counter to our goals of building an inclusive and globally competitive city region. Thankfully, it feels like we are finally reaching a tipping point.
Last week, the Centre Pompidou — which is Europe’s largest modern art museum — announced that it has acquired its very first NFTs (18 pieces by 13 artists) and that it will be exhibiting the collection this spring. This makes them the first museum in France to own NFT art and, I’m guessing, one of the first in the world. (The Los Angeles County Museum of Art recently got some as well.)
This is fun for a few reasons. The obviously fun reason is that it’s good for NFT collectors and people who generally support this space. Big institutions bring legitimacy. It’s one thing to say that these JPEGs are stupid while sitting at home on your computer, but it’s an entirely different thing to travel to Paris, visit the Centre Pompidou, look at its white gallery walls, and then say that these JPEGs are stupid!
The other fun thing about this is that it shows a continued openness to new ideas and new technologies. Here are some words from the Pompidou (that have been translated, by Google, from French):
The idea was not to be the first, but to bring together a relevant collection, which could testify to a creative and critical appropriation of a new technology by artists, and how this disrupts and displaces the art ecosystem. From its creation, the Center Pompidou has relied on the idea that contemporary technological creation and creativity should be at the heart of the institution. From 1974-1975, therefore even before the opening of the Center, the National Museum of Modern Art acquired major works and installations by Dan Graham and Bruce Naumann. Video installations using real time, and it was the very first institution to do so.
This wasn’t always the case in France. One of my favorite art history classes from university was one that covered Impressionism. Partly because I thought their work was cool, but mostly because Impressionist painters were, in a way, early modernists. They rejected the academic approaches to painting and instead decided to make up their own rules.
At the time, in the 19th century, this was seen as entirely radical. And it meant harsh criticism from the established art world and an inability to meaningfully exhibit at the Salon (which was everything at the time). But history has a way of showing us that if something is inherently a good idea, you can only remain stubborn for so long.
The Impressionist painters began hosting their own exhibitions starting in 1874 and, by 1881, the government had withdrawn its official sponsorship of the annual Salon. The jurors wanted to cling to only traditional painting styles and the world wanted to move on. And here it is doing that again, today.
Michael Beach used to have a YouTube channel where he “looked at Google Maps a lot.” Meaning, he would pan around various cities and comment on their planning and overall built form. Technically the channel still exists, but he stopped making new videos a few years ago. Here is one where he talks about Dubai being “an absolute mess” (3.8 million views) and here is one where he looks at North York (in Toronto) and asks: “why is it here?”
The most important point from his North York video is that it illustrates the deep divide that exists in Toronto (and other North American cities) between single-family “Neighbourhoods” (a defined planning term) and higher-density transit nodes, where things like tall buildings are allowed to go.
In the case of North York, this contrast is perhaps at its most stark. Even the street network is designed to stop these two urban forms from commingling with each other too much. There are ring roads that surround the transit-oriented density, and separate, more suburban streets on the other side of it:
This contrast is why there are so many people talking about the “missing middle.” And I’m sure that if you started asking random people on the street, most would agree that it would be nice if we could build more moderately-scaled housing. You know, like those buildings you see in Paris.
The problem: Where should it go? Some people would probably suggest the left side of the above ring road. Just don’t build as tall, okay? But this kind of land is already a scarce commodity in a city like Toronto. We need these tall buildings because most of the city is codified to look like the right side of the above ring road.
So if we have any chance of actually finding the missing middle, it is going to need to happen here, on the right side. Some progress has been made, not just in Toronto but across North America, with accessory dwellings (laneway suites). But it’s not going to be enough.
This was simply a first step. It was us finding a solution to, “how can we add some more housing here without changing the look and feel and character of these residential streets in any way?” But even this small and incremental change has proven to be exceedingly controversial. People still react to new laneway suites like this:
If you’re a homeowner that decides to create a new rental home at the rear of your property, you might be viewed as greedy. You are creating something (a home) that someone needs, and you intend to make a small margin on the transaction. It’s like making and selling bread for a small margin, except that selling delicious bread to people is typically viewed in a positive light. On the other hand, ensuring that the value of your house remains as high as possible is generally good practice here. Greed doesn’t factor in this way because, you know, single-family homes.
There is no surprise why the missing middle is missing. It is missing because we have decided that we want it to be. But hey, $2,145 per month seems like a very reasonable price for a 2-bedroom house.
We have spoken many times over the years about Paris’ investments in cycling infrastructure and about its plans to become a 100% cycling city. And my twitter feed (see above/here) seems to suggest that it’s working really well.
Between 2015 and 2020, the city saw a doubling of its bike lanes. And from September 2018 to September 2019 alone, the city saw a 54% increase in cycling usage, with its street meters recording about 840,000 daily bike trips in the center of the city.
Of course, if you’re a cycling skeptic, you’re probably thinking at least two things right now. One, Paris is Paris. Not all cities have the benefit of such a compact urban form. And two, Paris doesn’t get real winters. So sure, it’s easy to cycle there. Where’s the snow?
While it is true that density is a key ingredient for walkability and active transport, the real catalyst for Paris was its cycling network. A lot more people are cycling in Paris today because it is now safer and more convenient to do so.
It is also true that Paris generally doesn’t get as cold as, say, Toronto.
However, Helsinki does. It has the same humid continental climate (and a lower average annual temperature). And if you look at the Copenhagenize (Cycling) Index, you’ll see that, in 2019, Paris had a bicycle modal share of under 5%, whereas Helsinki had a modal share of 11% (plus a near equal gender split).
Maybe it’s the over 1,300 km of bicycle infrastructure.
Toronto has a lot more CCTV cameras than I would have thought.
According to this (2022?) data from Comparitech, there is estimated to be about 19,236 cameras installed around the Greater Toronto Area. With a population of around 6.31 million people, this translates into a per capita rate of 3.05 (CCTV cameras per 1,000 people). What this means is that there is almost surely footage of me enjoying a late-night shawarma sandwich after the bar somewhere on the streets of Toronto.
In some ways, this is a high number of cameras. Tokyo, which is usually considered to be the largest metro area in the world with nearly 40 million people, only has 1.06 cameras per 1,000 people. Dhaka is 0.71. Sao Paulo is 1.04. Osaka is 1.57. And Montreal is 1.03. Though to be totally fair here, Rio de Janeiro is up at 3.34 (and it may be the most dangerous city mentioned in this post). Paris is 4.04. New York is 6.87. Los Angeles is 8.77. And London is 13.35.
But where things get really exciting is in authoritarian places. Moscow is estimated to have 16.85 CCTV cameras per 1,000 people. And in China as a whole, there is estimated to be roughly 540 million cameras scattered around its cities, which works out to an average of 372.8 cameras for every 1,000 people. For a city like Shanghai, this crudely equals something like 10.6 million cameras.
Vyborov wasn’t arrested that day, but the police informed him that he was under surveillance through Sfera, one of Moscow’s face recognition systems, for participating in unsanctioned rallies. Considered one of the most efficient surveillance systems, Sfera led to the detention of 141 people last year. “Facial recognition, and video cameras in general in a totalitarian state, are an absolute evil,” Vyborov says.
Here’s the other thing. Safety is usually touted as the reason to have lots of cameras. But Comparitech’s data suggests that there’s an almost non-existent correlation between lots of cameras and lower crime. I mean, just look at Tokyo. It is basically the model megacity, and its per capita camera rate is only 1.06. The real utility, it would seem, is using cameras and face recognition software to restrict personal freedoms.
But here’s where things get really remarkable: the area of this corner site is less than 100 m2 (~1,000 sf), the construction budget was €940,000 (excluding VAT), and almost the entire structure was built out of cross-laminated timber. So overall, this is an incredibly sustainable build: it uses land and services efficiently and it uses low-carbon materials.
At this point, you should now be wondering, “why can’t we just do this everywhere?” And this would be the right question.
Lloyd correctly points out in his article that one of the things that makes this building feasible is that it only has one exit stair (as well as no elevator). Typically you need two means of egress, which can serve as a real barrier to smaller builds like this one here.
But in this case, and this is part of the argument, the building is small enough that, should a fire or emergency happen, occupants could be rescued through their windows. So technically there are still two ways of getting out.
In this year’s predictions, I mentioned that we would see “supportive building code changes”, which would help to encourage more infill housing. Exiting is one of the changes I had in mind when I wrote the post. So here’s hoping that policy makers are reading this blog, looking to projects like this one in Paris, and recognizing the benefits.
Talking about exit stairs may not be as exciting and seemingly impactful as something like a foreign buyer ban, but I promise you that removing the many barriers to building this scale of housing would ultimately bring more benefit to our cities.
