Tag: real estate

• Anachronistic employment areas

  Today I was at the Land & Development Conference here in Toronto. I started live tweeting during the breakfast, but my vintage iPhone 6 couldn’t keep up, so I had to stop. Some insights throughout the day. But a lot of what you would expect. I suppose it’s more about the networking.

  I would, however, like to reiterate something that Ken Greenberg mentioned about Employment Areas/Lands in Toronto. For those of you who aren’t familiar, these lands are essentially intended to serve one, and only one, purpose: employment. And the process for introducing a mix of uses, including residential, is an onerous one to say the least.

  I appreciate why this is the case. But I agree with Greenberg in that this kind of single use zoning is antiquated. It does not reflect the realities of the market today. There are other mechanisms we can use to maintain and provide for employment, and ensure that we don’t end up with a city of all residential.

  2018.05.15

• Pre-application community meeting in Hamilton

  

  At the end of last year, Slate hosted a “pre-design community meeting” for the redevelopment of Corktown Plaza in Hamilton. It was the first time we hosted a meeting like this.

  We learned things that evening and this May 24th we’ll be hosting our “pre-application community meeting.” See above for the full invite details. Lots of pre things.

  At last year’s meeting we had no design. It was about learning. At this month’s meeting we will be presenting a design proposal for the site. So hopefully some of you will be able to make it out.

  Regular scheduled programming will resume tomorrow on the blog.

  2018.05.12

• Could high low-rise infill buildings work?

  Dylan Reid recently wrote an interesting article about, what he calls, high low-rise infill buildings along Toronto’s main streets. 

  He describes the typology in this way: “These are generally 4-storey mixed-use buildings built quickly on one or two lots, replacing smaller previous buildings. They are often inserted beside existing, attached buildings.“

  Now, Reid acknowledges that this a challenging scale to develop at. He links to one of my articles in Urban Capital’s Site Magazine where I talk about exactly that: the diseconomies of scale associated with building small. (Though, I was talking about mid-rise, not high low-rise.)

  Reid addresses these challenges with a number of potential cost savings, including no parking minimums and no rezoning process. He also suggests that these projects may be better suited to existing landowners (who may own the land free and clear of a mortgage).

  Getting rid of parking minimums and streamlining approvals would certainly help, though I remain doubtful about overall feasibility. But what I wanted to comment on today was the last point about these projects being better suited to existing landowners.

  One problem with this line of thinking is that if we’re talking about land on a street where greater densities such as mid-rise are also permissible, the land is going to get valued based on mid-rise and not high low-rise.

  So when a prudent landowner thinks about developing their land, they may also consider the opportunity cost of simply selling their land based on its highest and best use.

  That thought process might go something like this. I own a piece of land. If I were to sell this land today and take on no development risk, I could make $X. If I were to instead develop this land, I could make $Y.

  If $Y is less than $X, then I’m obviously not going to develop. But if the spread between $Y and $X isn’t enough to compensate me for the risk of developing (and there’s lots of risk in developing), then I’m also not going to do it. (Developers run a similar test by marking the land cost in their pro forma to market.)

  And if $X is based on greater densities than $Y ($X is based on mid-rise densities and $Y is based on high low-rise densities) and if $Y is also being challenged by further diseconomies of scale, then I’m sure you can start to see how the math may not pencil.

  I say all of this not to shit on Reid’s article. It’s a good article. You should go read it. And we should all continue to think about ways to increase the supply of housing in this city and in others.

  2018.05.08

• Everything delivered on demand

  

  Last week I had something delivered from Amazon almost every single day. They weren’t necessarily big things though. One day it was a new corn broom for the patio. Another day it was a small set of hooks that I wanted to hang some lights. And the list goes on. 

  This is what Amazon wants us to do. Order every little thing, instantly, as soon as you think about it. And it’s magically convenient.

  Developers and architects are of course thinking about the implications of this shifting shopping habit on new residential developments. Usually it comes in the form of a large “Amazon room” and/or a parcel locker system. 

  I recently measured the package room in my building (geeky, I know). It’s about 10′ x 6′ and it sometimes isn’t enough for the volume of daily packages generated by ~360 units. 

  The other thing that happened last week is that my concierge said to me: “Brandon, we have become a full fledge post office with the amount of packages that come through here every day.” Every evening there’s a lineup of people waiting to collect their packages. 

  That immediately signaled to me that simply providing a larger room probably isn’t enough. This trend is only going to continue. How could we better design and optimize for this shift?

  I am sure that there many companies working on this problem. Hopefully they will surface in the comments and in my inbox following this post.

  Photo by Maarten van den Heuvel on Unsplash

  2018.05.06

• What’s Manhattan worth?

  I like looking at real estate values over longer periods of time because it helps to put things into perspective. 

  Below is a land value index for Manhattan running from 1950 to 2014 that was recently created by economists out of Rutgers University.

  

  The study was also cited in this recent article by Richard Florida.

  Here are some of the highlights from their study:

  We find three major cycles with land values reaching their nadir in 1977, just after the city’s fiscal crisis.

  Since 1993, land prices have risen much faster than population or employment, at an average annual rate of 15.8%.

  We estimate the entire amount of developable land on Manhattan in 2014 was worth approximately $1.74 trillion.

  We estimate the long run return to Manhattan land values [since the island was first inhabited by Dutch settlers in 1626] to be about 6.4%.

  What’s fascinating to me is the accelerated appreciation. The index starts at 100 in 1950, ends up slightly above that by 1993, and then simply takes off.

  2018.05.01

• A unique taste in buildings

  

  A condo developer friend of mine once told me something along the lines of this: “Brandon, I have generally learned over the years that if I like something, it probably means the general public [our purchasers] isn’t going to like it. And that’s because if I like it, there’s probably something unique or quirky about it.”

  When he told me this it made perfect sense to me, because there’s a well documented taste divide that seems to exist between architects and design-types and non-architects and non-design-types (whatever this latter categorization means).

  A few years ago The Architects’ Journal published an article referencing a 1987 study that took a group of students – some architecture students and some non-architecture students – and asked them to rate the attractiveness of a series of photos containing both unfamiliar people and buildings.

  What they discovered was that most people had similar views on the attractiveness of the people. I guess hotness is somewhat universal. But when it came to the buildings, the viewpoints were completely opposite. The architecture students’ favorite buildings were what everyone else disliked the most.

  The conclusion in the article: “Professionals are, empirically, the very worst judges available of what people want or like in the built environment.”

  Photo by Simon Goetz on Unsplash

  2018.04.28

• More than a real estate company — a state of consciousness

  Matt Levine’s most recent Money Stuff article is classic Matt Levine. It is both entertaining and informative. This one is on WeWork – the coworking startup that has committed to 14 million square feet of office space around the world and will have $18 billion in rent payments due over the next decade.

  Here is an excerpt:

  WeWork Cos. is a real-estate company with a couple of innovative twists on the model. First, rather than owning its buildings, it rents them: It leases office space from regular real-estate companies, adds … beer? … or whatever, and then subleases the space to tenants at higher rates. And second, rather than being valued like a real-estate company, it gets valued like a hot tech startup — “the sharing economy,” ping-pong tables, etc. — so it can raise gobs of money from SoftBank Group Corp. at a $20 billion valuation without ever getting particularly close to profitability. And look at all these words:

  “Indeed, to assess WeWork by conventional metrics is to miss the point, according to [Chief Executive Officer Adam] Neumann. WeWork isn’t really a real estate company. It’s a state of consciousness, he argues, a generation of interconnected emotionally intelligent entrepreneurs.”

  Really, what sort of multiple would you put on a state of consciousness?

  2018.04.27

• New York City’s retail vacancy problem

  The New York Post has some interesting articles, here and here, on the growing retail vacancy problem in NYC. (Thank you Michael for the link in the comments this week.)

  The vacancy rate on Amsterdam Avenue in the Upper West Side is said to be around 27% and it is said to be around 20% on a stretch of Broadway in Soho. It has become such a problem that Mayor Bill de Blasio wants to implement some sort of retail vacancy tax:

  “I am very interested in fighting for a vacancy fee or a vacancy tax that would penalize landlords who leave their storefronts vacant for long periods of time in neighborhoods because they are looking for some top-dollar rent but they blight neighborhoods by doing it,” he said on WNYC. “That is something we could get done through Albany.”

  But this is based on the assumption that greedy landlords are simply holding out for exorbitant rents. It doesn’t consider the fact that, maybe, there is simply too much retail space:

  Only a few grasp the true scope of the problem. Vornado Realty Trust titan Steven Roth said we can only cure the national plague through “the closing and evaporation” of up to 30 percent of the weakest space — which would take five years.

  All of this, of course, has me thinking about the future of ground floor main street retail. What are your thoughts?

  2018.04.11

• 11 Hoyt, Brooklyn

  

  Tishman Speyer just unveiled a new condo project in Brooklyn called 11 Hoyt. And it just so happens to be Studio Gang’s first residential project in New York City. Preview above. More renderings over here.

  It’s a 51 storey condominium with 480 residences and 55,000 square feet of indoor and outdoor amenities. The unit mix ranges from studios to four-bedroom residences, and prices range from $600,000 to over $4 million (USDs, of course).

  If you’re from Toronto, you’re probably looking at the renderings and thinking to yourself: “There are no balconies or outdoor spaces.” But that’s fairly typical in the NYC market, as I understand it.

  2018.04.09

• What’s the realtor jiu-jitsu move?

  Today’s post is a set of related questions for all of you.

  Fred Wilson has a post up on his blog today called, The Jiu-Jitsu Move. It’s about how people often dismiss new technologies, market entrants, and/or consumer behaviours as silly; whereas the real power move is to embrace and leverage them. That’s what he is calling the jiu-jitsu move.

  He gives a few examples, but for obvious reasons this one stood out to me:

  I spent the day yesterday at a real estate industry event and talked to a lot of agents about the fact that their clients are often more informed than they are these days. I encouraged them to embrace that fact and use it to their advantage and not fear it. It is hard when you have grown up in an industry when your advantage was information and you no longer have that working for you.

  For all the agents (and real estate consumers) who read this blog, I am curious if you agree with the above. Are consumers increasingly more informed than agents? I am sure that many of you will disagree. But if things are really changing, what should the jiu-jitsu move be?

  2018.03.29