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: planning

  • More homes, less rezonings

    One of the really positive things that is happening in the world of Toronto land use planning is that the minimum scale of development that is permitted as-of-right continues to grow. We’ve gone from fourplexes to 6-storey apartments, and now we’re talking about mid-rise buildings (6-11 storeys) and even some tall buildings (12 storeys or more).

    What this ultimately means is being able to build without a rezoning application. That means no site specific negotiation, and no fighting over whether the building should be 32 meters tall or 30.5 meters tall with a 2.4 meter stepback because of shadowing concerns on someone’s heritage-designated garden gnome. It means getting under construction sooner.

    Here are some of the specific ideas being reviewed:

    • Expand the number of streets designated as “Avenues” throughout Toronto (Avenues are a defined term and where we have decided that mid-rise buildings should go)
    • New Official Plan policies that would encourage more mid-rise buildings on Avenues
    • Eliminate the rear angular plane requirement (currently a mid-rise performance standard); this is expected to produce ~30% more homes in your typical mid-rise development
    • Increase as-of-right permitted heights to 6-11 storeys (the city estimates that this will unlock ~61,000 additional homes)
    • Introduce “transition zones” between Avenues and low-rise neighborhoods, which could then accommodate things like low-rise towns and apartments up to 4 storeys (it’s worth noting that transition zones were initially part of Toronto’s mid-rise performance standards but then got removed for some reason)

    This is meaningful progress. Let’s enact and keep going.

  • Power of the pen

    Yikes. To be completely honest, I was not expecting this post and this post to blow up in the way that they did. But hey, here we are and here’s the blogTO article: “Developer shames City of Toronto into issuing permit for bold new skyscraper.” What all of this suggests is that most people are shocked by how long it takes and how difficult it is to build a building. I mean, what I wrote about is just one sliver among the countless other things that need to come together for it to happen. But to my mind, these are productive discussions to be having. Because the more everyone is aware, the more likely we are to improve things.

  • We received our building permit!

    As a follow-up to last week’s post about giving free land to the City of Toronto, I am now thrilled to report that, today at 12:14 PM, we received our building permit!

    Some of you were keen to hear about what happened following the post. So here’s the update. I published the original post last Wednesday. And to be honest, it received far more attention than I was expecting.

    On Thursday morning I received a call from the city. They weren’t thrilled about my post, but were very helpful and said that they would ensure the conveyance happened immediately. It then got done before noon that same day.

    Planning then sent a note to buildings saying that the permit was ready for issuance. Yay. Buildings acknowledged that they were working on it, and on Monday of this week we received a summary of the outstanding fees and the instructions for the wire transfer.

    We paid the fees immediately and on Tuesday we received a payment receipt from the city. Then today — Wednesday — we received the building permit. So it was exactly one week from post to permit. A big thanks to everyone who helped to finally move this forward.

    Hopefully it’s clear that last week’s post came strictly from a place of prolonged frustration. I wasn’t trying to be mean. Our lawyer reminded me, after the post, that we’ve actually been working on this land conveyance for over 2 years.

  • Rear-yard suites and secondary suites built in Toronto over the last decade

    Here is a mapping, from the University of Toronto’s School of Cities, showing the number of “closed” building permits issued in Toronto between 2013 and 2023 for both rear-yard suites (laneway houses and garden suites) and secondary suites (like basement apartments).

    A “closed” building permit probably means that construction is complete. However, it is not uncommon for a permit to inadvertently remain open. This happened to me with Mackay Laneway House. The permit was supposed to be closed, but it wasn’t.

    So here’s the same mapping with open (i.e. active) permits also turned on:

    Three things immediately stand out:

    1. Secondary suites seem to be somewhat evenly distributed across the city.
    2. Rear-yard suites are heavily concentrated in the older areas of the city, flanking the downtown core.
    3. North Toronto is wealthy and isn’t having either of these housing typologies.

    Looking at these mappings, it probably seems like a decent amount of new housing. But that’s not really the case:

    • From 2013 to 2023, Toronto issued 2,209 building permits for secondary suites (1,525 have been closed and 684 remain open as of December 31, 2023).
    • And from 2020 to 2023, Toronto issued 898 building permits for rear-yard suites (192 have been closed and 706 remain open, which does suggest some increased adoption). Rear-yard suites only became permissible in 2018, which is why the date range is shorter.

    To be fair, I would imagine that many secondary suites get built without a building permit. So I think the above number is probably underestimating actual supply. But even still, it doesn’t change the conclusion: A lot more needs to be done to increase the supply of new housing in Toronto.

  • 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

  • Housing supply in low-cost and high-cost municipalities

    Here is a housing study that looked at housing supply — in the US from 2000 to 2020 — relative to median housing values. And here is the key takeaway:

    What this chart is saying is that new housing is rarely added in cities with the lowest-value homes. The bar on the left represents municipalities whose median housing values are less than 50% of the metropolitan average. And this makes sense. If values are low there is likely little to no incentive to build. The math just doesn’t work.

    However, as home values increase, the incentive to build and the ability to finance new projects also increases, and that is what we see in the above chart. This also makes sense.

    But something interesting happens in the highest-value cities — housing supply once again starts to fall off. And it turns out that there is a bit of a sweet spot. Municipalities whose relative housing values are 110 to 130% of the metropolitan average actually produce the most overall housing. Any higher than that and things start to decline.

    Why is that? The answer likely has to do with restrictive land-use regulations. The highest-value cities (and wealthiest suburbs) often have a lot of large single-family lots, as well as policies to ensure that this kind of built form doesn’t change. This has the effect of both limiting supply and enshrining values.

    So when it comes to housing supply, what you don’t want are low-cost areas. But you also don’t want the highest-value areas. What you want are areas that are doing well, but no so well that they start really restricting new entrants. This is what our industry often refers to as exclusionary zoning.

    Now, one of the most common ways to respond to this problem is to develop an opposing policy, namely inclusionary zoning. But usually what this policy doesn’t do is direct more supply to these high-value and low-density areas. Instead what it typically does is force the segment that is producing the most housing — let’s call it the 110 to 130% band — to deliver more affordable housing.

    It’s a neat trick that sounds pretty cool, but it is not at no cost.

  • Use-it-or-lose-it entitlements

    One of the things that cities often try and stamp out is speculation. Homes should not sit empty (enter vacant home tax). Storefronts should not sit empty (enter vacant commercial tax). And development land should not sit undeveloped. To correct this latter problem, one idea that is sometimes floated around is “use-it-or-lose-it” zoning.

    The way it works today in, I believe, most cities, is that if you do a site-specific rezoning on a property — and secure additional density — you get those special permissions forever. If you want to wait 100 years before starting construction, you are technically entitled to do that. Of course, in the interim, no new housing is actually being created. It’s all just on paper.

    The idea with “use-it-or-lose-it” entitlements is that — instead of these permissions lasting forever — they would expire after a certain period of time, which would mean that the entire rezoning process would need to be done all over again. These take time (at least a few years) and cost money (it’s in the millions). And so it has been suggested that this would incentivize developers to not sit on entitled land.

    While I do understand where this line of thinking is coming from, let me make a few points:

    • Generally speaking, most developers don’t just sit on entitled land for fun. They need things to happen, and to happen quickly, so that value can be realized. If there is a problem of too many developers not actually building, it could be a sign that there are other market factors impacting feasibility.
    • There is nothing wrong with rezoning a property and then “flipping it out” to another developer. This is often viewed negatively. But some developers only rezone properties and some developers only buy zoned sites. These can be different phases of the value chain. A rezoning can take years and millions of dollars, and so sometimes developers don’t have the wherewithal or desire to do both.
    • A use-it-or-lose-it approach unfairly punishes developers during market cycles and bear markets, like the one we are experiencing right now. There is no way to predict when the next global pandemic will hit, when construction costs might surge 40%, and when the fed could start rapidly increasing rates to calm inflation. Maybe waiting out the storm is all you can do.
    • If you’re building condominium housing in our market, you generally need pre-sales in order to secure a construction loan. Let’s call it 70% pre-sold. What happens if this takes longer than expected? And what happens if you sell 50%, your site-specific rezoning expires, and then you have to restart the entire process? At this point and in this current market environment, you would likely have to cancel the entire project and reboot it.
    • Timing is important. To give a specific project example, we had planned to launch condominium pre-sales for our One Delisle project in the fall of 2020. And we were ready to do that. But sentiment didn’t feel right. Too pandemic-y still, and so we waited until the spring of 2021. This turned out to be the right decision. But what would have happened had we had this timing gun to our head? (Truthfully, it always feels like there’s a timing gun to our head.)
    • I have written about this before, but go-to-market strategies are changing in this current environment. It is taking longer to start sales and construction because, among other things, developers are spending more time trying to pin down their construction costs. Would rezoning expiries take all of this into consideration and adjust accordingly?
    • Finally, if one is going to do something like force developers to pull all of their building permits within X months of receiving zoning approvals — or else suffer the consequences — then everything required to get there should also have a maximum timeline associated with it. In other words, cities would also need to do things like commit to issuing permits within Y months of receiving a submission — or else. It’s only fair that this cuts both ways. But just to be very, very clear, I do not think this is a good idea.

    What I am broadly saying is that (1) development is a pain in the ass and (2) developers are already heavily incentivized to move quickly and make things happen. It is not uncommon for projects to take 5-10 years from site acquisition to completion. And a lot of unexpected things can happen during that time period. Hopefully losing your entitlements doesn’t become one of them.

  • The even narrower streets of Noto, Sicily

    So it turns out that the narrow streets in Le Panier (in Marseille) are actually far too wide at nearly 13 feet. What were the planners even thinking back in 600? Here’s a street I found in Noto, Sicily at just over 4 feet. I’m not sure if this is considered some sort of tertiary lane or not, but it had a street sign, addresses, and businesses in a courtyard at the end of it. So I’m going to assume it’s a bona fide street. It’s hard to imagine getting much tighter than this. I wonder if Jeff Bezos delivers here.

  • Consistency over intensity — rethinking Toronto’s low-rise neighborhoods

    Toronto’s chief planner, Gregg Lintern, published this piece in the Toronto Star over the weekend where he argued that “expanding housing options in [Toronto’s] neighbourhoods is the missing piece of the growth puzzle.”

    What he is saying is that if we’re going to have any chance at reasonably accommodating the 700,000 or so people who are expected to move to this city over the next three decades, we’re going to have to evolve our low-rise neighborhoods. That includes more retail, more amenities, more density, and yes, built form that houses multiple units.

    I immediately thought that this was meaningful progress in the right direction. It is acknowledgement that things need to change and that our low-rise communities need to change.

    But others felt that this was a case of soft-serve ice cream, arguing that there’s “danger in praising incremental, belated change when dramatic change is what’s needed.” I also see this point.

    To quote the late architect Daniel Burnham, “make no little plans.” But this is arguably a little easier to subscribe to when you’re rebuilding after a great fire has decimated your entire city (he was instrumental in the rebuild of Chicago following its fire of 1871).

    The unfortunate reality today, at least in this environment, is that bold vision isn’t often rewarded politically. The status quo bias is simply so great. Change is painfully slow. That’s why we rely so heavily on pilot projects when it comes to city building.

    So while I too am a fan of bold vision, I also see value in what Simon Sinek and others refer to as consistency over intensity. Small, repetitive, and compounding actions can have powerful long-term results. You just have to keep going in the right direction.

    And I think that many of us, or perhaps most, will agree that the right direction is rethinking our low-rise neighborhoods.

    Photo by Tungsten Rising on Unsplash

  • Why housing is so expensive

    A friend of mine sent me the above podcast episode this morning (click here if you can’t see it embedded above). I’ve only listened to a bit of it, but I plan to finish it up over the long weekend. Here are the topics it covers:

    We discuss why the states with the highest homelessness rates are all governed by Democrats, the roots of America’s homelessness crisis, why economists believe the U.S. gross domestic product could be over a third — a third! — higher today if American cities had built more housing, why it’s so hard to build housing where it’s needed most, the actual (and often misunderstood) causes of gentrification, why public housing has such a bad reputation in the U.S.; how progressives’ commitment to local democracy and community voice surprisingly lies at the heart of America’s housing crises, why homeownership is still the primary vehicle of wealth accumulation in America (and the toxic impact that has on our politics), what the U.S. can learn from the housing policies of countries like Germany and France, what it would take to build a better politics of housing and much more.