Tag: real estate

• 3 stages of intensification

  

  We all know that the Greater Toronto Area is growing and intensifying at an incredible pace. In fact, last year the region set a record with 25,571 new condominium units completed.

  If you listen to industry experts, such as George Carras of RealNet, they’ll tell you that this level of intensification — which usually means condominiums — is really a decade in the making. That’s when the government set out to explicitly encourage this type of growth.

  But in the decade since that decision, we’ve seen both government and the market evolve in terms of what that intensification should look like. It started out with a largely high-rise building typology. Tall buildings were to be allowed in the downtown, as well as in specific growth nodes throughout the region. But for everything in between — the officially designated “neighborhoods” — there was to be no development.

  This is what I’ll call the first stage of intensification.

  Then, we started to think about mid-rise intensification along the avenues. Most of these “avenues” (also an official term) cut through those same stable neighborhoods, but the main streets were seen as an appropriate place to allow additional growth. It makes perfect sense and so guidelines were created to help dictate what this new building typology should look like.

  This is what I’ll call the second stage of intensification.

  And it’s one that I’d argue we’re currently living through with new mid-rise projects like DUKE in the Junction (TAS project), Kingston&Co in Kingston Road Village (another TAS project), Abacus Lofts on Dundas West, and The Hive in Etobicoke. These are all mid-rise buildings going up in established neighborhoods.

  With the recent decision to also allow wood frame buildings up to 6 storeys in Ontario (instead of 4), we’ll probably see an even greater surge in mid-rise buildings once the private sector gets its head around this shift.

  So what’s next?

  I think it’s inevitable that we’ll eventually see low-rise intensification within our established neighborhoods. We started by avoiding them altogether, and then deciding that it was desirable to build along their periphery. But as demand for urban housing continues to increase, I believe it’s only a matter of time before we start to loosen the reins on our single family neighborhoods.

  Some of you might be thinking that this is going to be a bad thing, but I actually think the opposite. Projects such as Vancouver’s Union Street EcoHeritage prove that it’s entirely possible to intensify existing neighborhoods through sensitive and beautiful infill interventions. And of course, let’s not forget about laneway housing.

  The fact of the matter is that Toronto has already been intensifying its neighborhoods for a very long time — likely since the beginning — by converting single family homes into duplexes, triplexes, and other multi-family dwellings. We just haven’t been doing it in any sort of structured way.

  I don’t know when this will change, but I think it’s only a matter of time. And that will be the third stage of intensification.

  Image: Flickr

  2015.01.27

• The hard things about retail

  

  Retail is one of the hardest – if not the hardest – real estate category to get right. If you don’t have the right setup, the right location, and the right tenant mix, you can fail pretty easily. It’s a bit of an art. And that obviously applies to both landlords and tenants. I mean, we all know what recently happened with Target Canada.

  This past weekend I had the opportunity to visit the Aura Condos in Toronto, which is supposedly the tallest and largest residential condominium in Canada. There’s about 1.1 million square feet of residential space across 79 floors and somewhere around 150,000 to 180,000 square feet of retail space (the estimates I found online varied). The main anchors include Bed Bath & Beyond, Marshalls, and Hard Candy Fitness (which also serves as the gym for the residences above).

  

  But what’s probably most unique about the retail component of this building is the P1 level (the first underground level). It’s made up of small retail condos, some of which looked to be about 90 square feet. That means that each retail unit is individually owned, just like a residential condominium, and there’s no singular landlord focused on curating the tenant mix and ensuring the entire retail center does well.

  Now, I’m told that this approach works perfectly well in other parts of the world and I know that we’re trying it in other parts of the Greater Toronto Area, but I worry about the long term viability of this (P1) space in particular. When I was there on Saturday there was almost no foot traffic and probably half of the retail units were vacant.

  Maybe it’s because there isn’t enough employment density in the area. Maybe it’s because it’s not well connected to other P1 level retail. Or maybe it’s because the anchors all sit above this space, as opposed to around it (as they do in traditional malls). Whatever it is, I wasn’t feeling product/market fit.

  I hope I’m wrong.

  Images: P1 Retail at Aura Condos

  2015.01.26

• Marginal cost = 0

  Earlier this week I wrote a post called: The pull from services to products. And in it I made mention of the fact that part of what’s driving this pull towards products is that the marginal cost of servicing additional users or customers is almost nothing in a world of internet services and products.

  Well the reality is that this phenomenon is driving a hell of a lot more. It could – and probably will – fundamentally change almost all aspects of the economy.

  I know that sounds like a pretty audacious statement, but if you watch the following 10 minute talk by Albert Wenger (Union Square Ventures) you might start to feel the same way. He outlines 5 changes being driven by the fact that in the digital world, marginal cost = 0. The impacts go well beyond tech, capturing sectors such as transportation and industrial real estate.

  [youtube https://www.youtube.com/watch?v=sVEtTzlqsoE?rel=0]

  If you can’t see the video, click here.

  2015.01.24

• How are you attracting and retaining top talent?

  Yesterday I received a comment on my post about service and product companies with a suggestion to check out an interesting Fast Company article talking about the future of work (thank you Amy). The article was based on a research report – commissioned by CBRE and a real estate developer in China (Genesis) – called Fast Forward 2030: The Future of Work and the Workplace.

  This is a topic that’s getting a lot airtime right now because Millennials are starting to impact work in a big way. But what’s interesting about it is how broad these impacts will be. Changes in how we work will affect the way we design our cities; the way architects and developers build and lease space; the type of people and roles companies will need to hire and create; and so on.

  Here’s a snippet from the report:

  “Providers of commercial buildings and places to work will need to develop new, sometimes counter intuitive, business models and work with partners who understand service and experience in order to compete with emerging workplace competitors. Successful providers will work with tenants to unlock ‘win win’ solutions that reduce occupier costs, increase flexibility, and simultaneously provide enhanced levels of community, amenity and user wellbeing. Cities will have a role to lead and nurture changes that will support the changing landscape of work.”

  I plan to go through the report in more detail this weekend, but I did want to point out one thing. When business leaders from around the world were asked what their biggest competitive advantage would be by the year 2030, the top choice was: the ability to attract and retain top talent. This topped organizational vision and even the ability to innovate.

  This might not come as a surprise to some of you, but it’s worth repeating. And in many ways, it’s a chain that begins first with cities. 

  If you’ve ever watched The Startup Kids documentary, you’ll know that when Alexander Ljung (CEO of Soundcloud.com) was about to found his company, he actually started by first traveling around Europe looking for the coolest city in which to base his company. The last city on his trip was Berlin and that just so happened to be the team’s favorite. So that’s where Soundcloud was founded.

  My point with that story is simply that the “workplace” of today – forget the future – means so much more than just your rentable area. Yes, that’s important. But there’s a lot more to consider when trying to get the best people. Cities play a huge role.

  2015.01.22

• Before and after at 109 Hazelton Avenue

  I recently connected with one of the principals of a Toronto-based construction management firm called Ripple Projects, which focuses primarily on contemporary custom homes (credit to 52 Pick-up for the introduction).

  They’ve only been in business for a few years, but the founders spent many years prior to this doing similar projects at similar companies, such as Wilson Project Management.

  Since they don’t yet have a lot up on their website, I asked if he could share one of his recent projects with me. He was happy to do that and so, with his permission, I’d now like to share it with all of you.

  It’s a renovation and expansion of a semi-detached house at 109 Hazelton Avenue in Toronto’s upscale Yorkville neighborhood. The end result is roughly 3,000 square feet with 3+1 bedrooms and 5 bathrooms. If I remember correctly, it sold for close to $3 million.

  Here are a few before pictures. It wasn’t in bad shape – just a bit dated.

  

  

  

  And here are a few after photos.

  

  

  

  

  

  I personally would have gone with something even more modern, but that’s just me and I wasn’t the client. It’s still a phenomenal project. So if you’re in the market for a new custom home, I would encourage you to give Ripple Projects a call. I was really impressed by our conversation.

  Note: I have zero affiliation to the company. I just believe that good people deserve exposure.

  2015.01.21

• The pull from services to products

  

  This morning I woke up to a fascinating post by designer Tobias van Schneider called: The agency is dead. Long live the agency.

  What he’s talking about is the phenomenon of design agencies being gobbled up or “acqui-hired” by product firms such as Facebook and Google. The latest of which is (or was) Toronto-based design agency Teehan+Lax. The partners have closed up shop and are in the process of moving to San Francisco to join Facebook Design.

  But what he’s really talking about is the pull from services to products.

  When you’re a services firm, you do work for outside clients and they pay you for that work. But there are only so many hours in the day, which is why the marginal cost of taking on new clients is relatively high – to scale up you generally need lots more people.

  On the other hand, when you’re a software company creating products, the marginal cost of serving additional customers is almost nothing. Sure, there are some variable costs, but the impact to your cost structure is not nearly as significant as when you’re a services firm. That’s how a company like Instagram can be bought for $1 billion with 30 million users and only 13 employees.

  So products are a bit of a holy grail in some circles. You can achieve greater scale. You can focus on fewer projects as opposed to jumping around from client to client. And you can make a lot of money.

  But it’s often easier said than done. Back in 2012, Teehan+Lax wrote a great post where they talked about the allure of products and the challenges they faced in trying to build their own:

  37Signals* was the worst thing to happen to services businesses trying to make products. They fucked it up for all of us, because they made it. For those of us old enough to remember, 37Signals was a services company like Teehan+Lax. They had clients and did work for hire. Of course, 37signals isn’t a services company anymore. They make amazing digital products and their success is enviable. (*37Signals became Basecamp)

  So why is it so hard to transition from services to products?

  Clayton Christensen, the father of disruptive innovation, says, “you can’t start a disruptive business from inside an incumbent one.” The incumbent business will always take the resources from the disruptive one. He argues that if you want to create a disruptive business you need to isolate it from the incumbent business. The disruptive business needs its own values, processes and resources to be successful.

  Regardless of whether you’re trying to build something disruptive or not, amazing products are hard to build. They take focus.

  But what’s also interesting about services and products is that there’s a parallel in the world of architecture and real estate development. As an architect, you’re basically a service provider. You have clients and they pay you for the work that you do. However, as a real estate developer, you offer a product: physical space. The cost structures are not nearly as beneficial as with software, but it’s a product nonetheless.

  And similarly, we’re already starting to see some developers bring architecture in-house. Will we see more of this in the future? Will there be a similar pull from services, to products?

  Image: Flickr

  2015.01.19

• Why Dovercourt Village is the next Ossington

  

  Back in 2011, blogTO ran an article calling Geary Avenue one of the ugliest streets in Toronto. And it’s certainly up there. It’s an industrial street with a mixture of different building types (lots of autoshops), giant power lines running along the south side of it, and a railway disconnecting it from the city to the south.

  But as somebody who used to live around the corner from this street, I’ve had my eye on it for a number of years. Despite the fact that it was never very pretty, it always felt like an area with lots of potential. And sometimes it’s the areas that seem most unlikely to gentrify, that end up doing exactly that.

  Probably the first signs of hipness came with the opening of places like Kitch Bar on Geary Avenue and Actinolite on Ossington Avenue. More recently though, it was announced that Dark Horse Espresso will be opening on Geary and that Bellwoods Brewery will be opening their second location on Dupont Street in this incredible building:

  

  So whether you call it Dovercourt Park, Dovercourt Village, or some other name, I think it’s only a matter of time before Ossington cool moves north and the area in and around Dovercourt Road and Dupont Street becomes one of the hippest areas in the city. Get ready.

  Full disclosure: I own a house very close to this neighborhood.

  Images: Actinolite and Bellwoods Brewery

  2015.01.15

• Is Toronto’s urban growth boundary really making the city less affordable?

  

  This morning the Globe and Mail published an article by Toronto’s chief planner, Jennifer Keesmaat, called Greenbelts make cities more livable, affordable and transit-friendly.

  The headline immediately caught my attention because conventional economic wisdom would suggest that supply constraints – whether natural or artificially created – generally have a negative effect on housing affordability.

  To be clear though, I support Ontario’s greenbelt. I think an urban growth boundary is the right thing to have if we want to build sustainable, walkable, and transit-oriented communities. But I’m also not blind to some of the potential (negative) externalities.

  However, Keesmaat’s article got me wondering just how prevalent those externalities might be and to what extent our greenbelt is actually impacting housing affordability in Toronto. In her article she cites a recent report by the Pembina Institute that very clearly argues the following:

  “There is no shortage of land throughout the GTA [Greater Toronto Area] to build single-family homes for decades to come, but this land is predominantly located far from the City of Toronto and other established centres of employment in the GTA.”

  More specifically, the report found that of all the land available for development in the region (within our growth boundary), 81% of it is projected to still be unused by 2031. This got me thinking: it’s not that there isn’t land still available in the region; it’s that there isn’t land in the areas where demand is the greatest.

  Put differently, young families aren’t clamoring for single family homes in High Park and Leslieville because the greenbelt has restricted their ability to find new housing. They’re doing so because they want to live in neighborhoods like High Park and Leslieville.

  If you dive into the data, the report shows that in 2004 the average price of a detached home in Toronto was about $117,000 more than the rest of the Greater Toronto Area. As of 2013, that spread had grown to about $200,000. And indeed the data shows that it’s the core of the city where home prices seem to be appreciating the fastest.

  

  So when it comes to housing affordability and supply, the greenbelt may actually be a red herring. Releasing it would not increase the supply of housing in areas where demand is already high, which is probably why this same report also found that – with or without an urban growth boundary – most Canadian cities are seeing similar increases in home prices.

  So what should we be doing?

  I think we should do two things: (1) focus on accommodating more growth in the areas that people already want to live in, and (2) figure out ways to transform the less desirable areas into more desirable ones. This second one will be the hardest, because it’s likely going to mean changing car dependent areas into transit-oriented ones, which is no easy task.

  The good news though is that we are already doing these things. There’s more that I would like to see happen, but we’re headed in the right direction.

  If your city has a greenbelt or you have experience with greenfield development in the Toronto region, I’d love to hear your thoughts in the comments. This is an area of development that I’ve never really been involved with.

  Image: Flickr

  2015.01.13

• Why Bitcoin might still be a big deal

  Welcome to 2015!

  To start off the year, I thought I would talk about something pretty geeky, but very forward looking: Bitcoin.

  I wrote about Bitcoin just over a year ago when I was first starting to wrap my head around it, but a lot has happened since then. Many of you might know that 2014 was a terrible year for Bitcoin and that its price has declined significantly (chart from Coinbase):

  

  But does that mean Bitcoin is a flop, or that the hype has just died down a bit?

  If you follow what’s being discussed within the tech community, you’ll know that there are still lots of people who are bullish on Bitcoin. But more precisely, they are bullish on the underlying architecture behind Bitcoin and something that is called the Blockchain.

  I’m not going to get too technical in this post (if you want that, go here), but I do want to talk about three things (that I’ve mostly learned from the folks over at Union Square Ventures): the Blockchain, why it matters, and what it could mean for specific industries such as transportation and real estate. I promise to make it relevant at the end.

  The way to think about all of this is in layers.

  The Blockchain is the foundation or base of Bitcoin. It’s essentially a decentralized public ledger that keeps track of all the Bitcoin transactions. Decentralized means that not one single person or company owns the database. It’s free for anyone and everyone to see. This structure is important because it enables peer-to-peer transactions across the internet, as opposed to going through a bank or other intermediary.

  But the key takeaway is that Bitcoin is simply one example of a “protocol” built on top of the Blockchain. And there are many others in the works, including a protocol for realtime ride sharing (Lazooz) and a protocol for a decentralized peer-to-peer marketplace (OpenBazaar). And so the real innovation is the Blockchain, not Bitcoin itself.

  Why does this matter?

  It matters because these protocols are, again, not owned by a single entity, which is remarkably different than the way most things work today. Take for example the residential real estate industry. In the Greater Toronto Area, the data that emerges from home listings and sales is owned by the Toronto Real Estate Board.

  And since this data is privately owned, a lot of it remains only accessible to “members” or real estate agents. The Competition Bureau has been fighting for more openness, but the Toronto Real Estate Board obviously wants to keep as much of this data as it can to itself. Who can blame them.

  But what if somebody came along and created a new protocol for a decentralized peer-to-peer home marketplace? In that case no one would own the data, which means everyone would have access to it. And that would completely change the landscape. I’m fuzzy on what this protocol would even look like, but it seems entirely possible given what else is in the works.

  And if this Bitcoin Blockchain revolution does actually take place, it wouldn’t be restricted to only non-tech legacy industries. Joel Monegro of Union Square Ventures believes that “decentralized protocols” such as Lazooz and OpenBazaar (mentioned above) could even have a big impact on companies such as Uber and eBay, respectively.

  I’m still trying to wrap my head around all of this, but I want to understand it and I thought you all might as well. Because even though it seems very tech right now, the implications would also be very non-tech if it turns out to be true.

  2015.01.02

• That’s a wrap

  

  Today is the last day of 2014.

  It felt like a frenetic year for me, and so I have to say that I’ve been really enjoying this holiday break. I needed the downtime. I needed the time to think and strategize. And I got all of that this holiday. (The only thing that would make this break even better would be some more snow on the mountains.)

  I’m super excited for the new year and what’s ahead, but before getting into that, I thought it would be worthwhile to look back at what happened in 2014.

  I was initially going to list out some of my thoughts, but then I figured that a better way would be to simply list out the most read Architect This City posts. That way it’s my (daily) thoughts, but curated according to what readers cared about most this past year.

  Click here for the top 15 most read Architect This City posts of 2014. I’ve listed them on a “topics” page that I plan to update every year.

  If you’re looking for some other 2014 themed reading material, I recommend also checking out the best #cityreads of 2014 by CityLab; the best articles of 2014 from ArchDaily; and what just happened? by venture capitalist Fred Wilson.

  Happy new year everyone! Thanks for reading. See you in 2015.

  Image: Family and friends lunch at Pizzeria Libretto, University

  2014.12.31