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: san francisco

  • Are multi-way boulevards at least part of the answer?

    This short video by City Beautiful makes the case for multi-way boulevards. The way to generally think about a multi-way boulevard is that it is a really big street that has been subdivided into areas that move cars relatively quickly and into areas that are a bit more conducive to calmer traffic and doing things like cycling and walking. More specifically, they are streets that have local access lanes on either side.

    And in this video, it is proposed as a possible fix for two kinds of situations: (1) as a solution for what to do when you take down an elevated highway and (2) as a solution for retrofitting suburban arterial roads. I thought this would be a good video to share given that I can think of an elevated highway that should come down and because I have written before about how challenging it can be to change streets after they’ve been built. They tend to be pretty sticky.

    But beyond this, it’s also a good primer on how suburban transportation approaches are highly effective at making cities that you can’t walk around in.

  • Sticking close to home — two-thirds of young Americans live near where they grew up

    Here in Canada, there is often a belief that Americans tend to be more mobile than Canadians. Don’t like the cold weather? Just move south. Taxes too high? Just move south. Housing too expensive? Just move south.

    But just how mobile is mobile? A new study by the US Census Bureau and Harvard University found that by age 26, more than 2/3 of young adults in the US actually just live where they grew up, with 80% living within 100 miles, and 90% living within 500 miles.

    Migration distances were also found to be impacted by both race and parental income (though these two things likely exhibit a relationship on their own). If you are a young white or Asian adult, the “radius of economic opportunity” tends to grow and you’re more likely to live further away from where you grew up.

    The most popular destinations overall are New York, Los Angeles, Washington, and Denver (in this order). And while New York and Los Angeles remain at the top regardless of who you are, San Antonio and Phoenix are top destinations for Hispanics, and San Francisco is a top destination for Asians.

    Regardless, home appears to be a pretty sticky place.

    But what about Canadians? Are we less mobile? Looking at net domestic migration rates, Canada saw 254,143 interprovincial migrants between 2018-2019, whereas the US saw just over a million between 2020-2021. So on a per capita basis, Canada’s rate is actually higher.

    Statistics Canada also estimated earlier this year that as of July 1, 2016, somewhere around 4 million Canadians were living abroad — or about 11% of citizens. This is a much higher percentage compared to Americans.

    Of those living abroad, roughly half are believed to have received their citizenship through descent, meaning they were born abroad to Canadian parents. About 1/3 are Canadian citizens by birth. And about 15% are naturalized citizens.

    So it turns out that Canadians are in fact pretty mobile. We also seem to like going further afield.

  • A headquarters in the cloud

    Venture firm a16z just announced that it will be “moving its headquarters to the cloud.” At the same time, it announced 3 new offices in Miami Beach, New York, and Santa Monica. These will be in addition to their existing offices in Menlo Park and San Francisco.

    Part of their argument is that hybrid work is weakening the network effects and agglomeration economies associated with being right in Silicon Valley. So they’ve deiced to be virtual, but still have offices where they can “materialize physically” when needed.

    They acknowledge that physical presence is important for developing a company’s culture, building relationships, and helping entrepreneurs (their core business).

    What’s interesting about all of this is that it’s further validation for Miami (Beach). Here is one of the most important venture firms out there saying that when they quickly materialize in real life, they want to be able to do that in Miami Beach.

    It also raises some interesting questions. Because even if the network effects of Silicon Valley are weakening when it comes to tech, this announcement still speaks to the importance of agglomeration economies. These three new office locations were chosen for a reason.

  • Rent control and inclusionary zoning

    I received an email from a reader over the weekend saying that my comments around rent control have been too critical, and that they are not doing proper justice to the challenges that renters face in today’s cities. I thought this was a fair comment and so I’d like to respond to it publicly on the blog.

    But before I get into that, it’s worth saying that housing issues are incredibly complex. And I am certainly not professing to have all of the answers. In fact, part of the reason I write this blog is so that I can think critically about these topics and hear what other people have to say.

    It is obvious that wages have not kept pace with home prices in many cities around the world. This is a problem. And so we can all agree that we need more economic opportunities, we need more housing, and we need more attainable housing. The question is how best to go about this.

    Mechanisms like rent control and inclusionary zoning might seem like obvious solutions. Just cap rents and force developers to build affordable housing. Problem solved at no cost to anyone, right? It’s not that simple. Every intervention creates distortions in the market.

    To give just one example, studies suggest that rent controls end up creating a misallocation of housing. Because if you are living in a rent controlled home and your rent is well below market, you are now heavily incentivized never to move. Even if you have an empty nest with 5 bedrooms, why would you?

    Of course, there are other possible repercussions. Residential contracts are typically gross leases (though some utilities might be sub-metered and paid for by the tenant). This is in contrast to commercial leases where net leases are common and most, if not all, of the operating costs are passed through to the tenant.

    Why this matters is that if your rents are capped but your utility costs, taxes, and other operating expenses are continuing to rise, you may run into a situation as a landlord where you can no longer afford to upkeep your building. And you’re certainly not going to invest in any new improvements if this is your situation.

    Rent controls could also impact the supply of new housing by making it no longer feasible to build. This is similar to what we have seen with policies like inclusionary zoning. Just last month San Francisco went on the record saying that it’s going to rethink its inclusionary zoning policies because of a view that it is now choking off new housing supply.

    And so herein lies one of our great housing challenges. We want more housing and we want more affordable housing. But depending on how we approach the latter, it could hurt the former, which ends up creating a viscous cycle.

    Building new rental housing is very challenging in Toronto (and elsewhere). Typically the way the process goes for a developer is that you start by preparing a detailed development pro forma. This pro forma will then tell you that your new rental development is infeasible. And so you go back, convert it to a condominium development, and then it magically becomes feasible.

    I am exaggerating, but only slightly. The point is that there are lots of developers out there who would love to build more rental housing — they just can’t make the math worth.

    My goal with this post was to explain where I have been coming from with some of my past comments. I also used the opportunity to link to a number of my related posts. But I haven’t really put forward any possible solutions. I plan to do that in a follow-up post, and I think I’m going to call it “the definitive but crazy guide to creating more affordable housing.”

    So if any of you have any crazy ideas, please send them over.

  • San Francisco is kind of on the verge of abolishing single-family zoning

    The headline sounds pretty promising: San Francisco is on the verge of abolishing single-family zoning, and will soon allow 4-plexes across the city and up to 6 units on corner lots. It is also clear recognition that, “hey, we have a housing problem and should probably figure out a way to increase overall supply.”

    Unfortunately, when you look at the policy details, you’ll see that this is likely to be more symbolic than effective. What is being proposed is to take the 40% of San Francisco’s land area that is zoned exclusively for single-family houses and upzone it to allow for duplexes on an as-of-right basis.

    And then, if you happen to have owned the property for at least 5 years — or inherited it from a family member that did — you can apply for a special “density exception” from the city. This would allow you to build 6 units on corner lots and 4 units on all remaining mid-block lots.

    But here’s the other thing: if you are granted this density exception, the additional units (beyond your as-of-right two) will be subject to rent control. So the important question here is about whether or not anyone will end up building more than luxury duplexes and, if they do, will there be enough scale to produce a meaningful impact.

    I’m not familiar with development cost structures in San Francisco and I’m not sure if there will be any incentives/subsidies for delivering these additional rent controlled units, but the above feels like far too many barriers if the goal is more housing.

    But it remains a step in the right direction. Symbolism certainly has its merits.

    For other posts on infill housing, click here.

    Photo by Braden Collum on Unsplash

  • What kind of monster wants to bulldoze wild roses?

    I just finished reading this article by Nellie Bowles about how San Francisco became a failed city. Here’s an excerpt that relates to housing supply:

    Consider the story of the flower farm at 770 Woolsey Street. It slopes down 2.2 acres in the sunny southern end of the city and is filled with run-down greenhouses, the glass long shattered—a chaos of birds and wild roses. For five years, advocates fought a developer who was trying to put 63 units on that bucolic space. They wanted to sell flowers there and grow vegetables for the neighborhood—a kind of banjo-and-beehives utopian fantasy. The thing they didn’t want—at least not there, not on that pretty hill—was a big housing development. Who wants to argue against them? In San Francisco the word developer is basically a slur, close to calling someone a Republican. What kind of monster wants to bulldoze wild roses?

    Decades of progressive governance in San Francisco yielded a thicket of regulations—safety reviews, environmental reviews, historical reviews, sunlight-obstruction reviews—that empower residents to essentially paralyze development. It costs only $682 to file for a discretionary review that can hold up a construction project for years, and if you’re an established club that’s been around for at least two years, it’s free. Plans for one 19-unit-development geared toward the middle class were halted this year because, among other issues raised by the neighbors, the building would have increased overall shadow coverage on Dolores Park by 0.001 percent.

    These are just two examples of San Francisco’s exclusionary zoning problem, but of course, the city has other unfortunate things going as well. For the full article, click here.

  • New York City is back

    So here’s the headline: More people are moving to Manhattan than before the pandemic. This is true. But an even more accurate description might be that New York City was losing people before the pandemic and it is still losing people. But things have rebounded since the lows of the pandemic and it is now losing less people. Here are two charts from Bloomberg:

    This is generally good news since the increased exodus (to places like Miami) led some to believe that one of the most important global cities in the world was now dying. I never thought that was the case. But there’s no arguing against the fact that the fastest growing cities in the US are the ones with more affordable housing and fewer constraints on new development.

  • The car versus transit job access multiple

    I haven’t seen this sort of data before and it’s an interesting way of looking at job access, transit connectivity, and overall built form:

    The above is a table from New Geography (using data from the University of Minnesota). And what it shows is how many more jobs, across the US, can be accessed within a 30-minute commute by car versus by transit. For example, what this data tells us is that, on average across the US, there are about 56x more jobs that can be quickly accessed by car versus by transit.

    But there is also huge variation across the 50 largest cities in the US. On the top end is Detroit, where there about 130x more jobs that can be accessed by car (again within 30 minutes). This isn’t at all surprising. Also not surprising is the fact that New York is on the lowest end with only 5.6x as many car-versus-transit jobs. This is one of the reasons why I spoke yesterday about NYC being such an ideal candidate for something like NYC 25×25.

    What a lower number tells us is that the city is far less reliant on personal vehicles and almost certainly has a higher urban density. That’s why you see cities like New York, San Francisco, Boston, and Chicago near the top of this list. And in my opinion, this is where you want to be. The goal should be to minimize this multiple.

    I haven’t seen a dataset like this before, but I’m now curious to see how it varies globally. It feels like something that more of us should be monitoring. Because we know that there are strong links between jobs access and the overall economic performance of a city.

  • Zoned housing supply vs. actual housing supply

    This Twitter thread by UC Davis Law Professor, Chris Elmendorf, is a good reminder that there can be a meaningful difference between actual completed homes and zoned land that might one day becoming new housing.

    The point he makes is as follows: The state of California’s housing needs allocation for the city of San Francisco is approximately 80,000 new homes over the next decade. In the past, cities could demonstrate that they were able to meet these targets through, as I understand it, some fairly loose assumptions. But more recently, amendments have made it such that the probability of new homes actually getting built needs to be considered.

    San Francisco has been doing this and, according to Chris, the conclusion was that the city should upzone portions of the city — primarily on the west side — to allow for some 22,000 new homes. Sounds cool. But as part of this process, the city also hired an outside consultant to run indicative pro formas and assess overall development feasibility. This is what they found:

    I haven’t seen any of the actual numbers, but what this chart is saying is that nobody is going to develop on the west side of the city no matter what entitlements you put in place (tier 3 and tier 4 market areas). The only new development that is likely to take place is high-rise development over 24 storeys in the highest value submarkets (tier 1 and tier 2 market areas).

    Based on this, the 22,000 new homes figure is probably closer to 0 new homes.

  • San Francisco now has autonomous vehicle taxis

    These are two short videos of autonomous Cruise vehicles driving around San Francisco. Cruise, which is owned by General Motors, received a permit from the state of California to operate autonomous vehicles — without a safety driver — in September of last year. In November 2021, one of the cofounders of Cruise took the first ever driverless taxi ride in the company’s history. And on February 1, 2022, Cruise announced that it was opening up to the public.

    If you read the comments on Twitter you’ll see that some people have found these vehicles to be hyper reactive to traffic lights and to do oddly long pauses at stop signs. So I guess they’re not perfect. But oddly long pauses are certainly better than not stopping at all. Either way, this is a big deal. I’m not sure if these are the first unsupervised autonomous vehicles out in the wild, but they are easily some of the first.

    There has been a lot of discussion over the last few years about autonomy being a hugely tricky technical problem to solve. One that is perhaps more difficult than a lot of people thought it would be at the outset. I’m assuming that this is at least one of the reasons why ridesharing companies like Uber and Lyft ended up selling off their AV divisions while searching for profitability.

    But the market never gave up and it’s pretty exciting to see this coming to fruition. Oliver Cameron is VP, Product at Cruise and the former CEO of Voyage (which was acquired by Cruise last year). If his tweets (above) are any indication, San Francisco is going to be seeing many more autonomous vehicles in the coming months.

    This is going to have a profound impact on the unit economics for ride sharing companies like Uber, but more importantly it is likely to have a profound impact on our cities. Mobility innovations have a way of doing that. Some of the impacts might be negative, but I believe that many of the impacts can and will be positive.

    As most of you will know, I am a believer in dense and walkable cities. I do not believe in planning cities around cars. And so that is not what I am advocating for here. My view is simply that I think autonomy grants us the ability to rethink our definition of a “vehicle.” And maybe it becomes something that more closely resembles public transit. That could be a positive thing for our cities and something that draws people away from private vehicle ownership.

    So I remain both optimistic and excited about what’s to come.

    Have any of you had a chance to ride in an autonomous vehicle? If so, leave a comment below or on Twitter.