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 love cycling. And I have been using Toronto’s bike share system to get around over the last few weeks (both for work and personal stuff). There’s no better way to get around when the city is busy. But it was also a reminder that we have a lot of work to do when it comes to cycling infrastructure.
Here are a few observations:
The Bike Share mobile app has got to be the worst app that I have ever used. First of all, it’s called PBSC. I think this was a deliberate choice so that it’s impossible to remember and impossible to locate on your phone. Because once you do find it, it’s an awful experience.
I struggled to make it from downtown up to midtown a few days ago. Can I blame the Bike Share bike instead of my lack of physical conditioning? I can’t see the majority of people wanting to do this sort of ride. This is where e-bikes and e-scooters come in.
Many of the bikes have something wrong with them.
We don’t have enough bike lanes and bike-friendly streets. I know that some you don’t want to hear this. But it’s the truth. There are a lot of streets in Toronto where it is terrifying to be on a bicycle. This is true even in the center of the city.
If you’re not familiar with Toronto, you won’t get this point. But Queens Quay is a seemingly complicated street for many people to navigate. Cycling along here in peak summer is an exercise in dodging people as they meander across the bike lane.
We need dockless bikes. I’m sure that the team is doing their best to load balance across the network, but it is often a challenge to find an available dock at the end of a trip. There are ways to do this that avoid bikes being left everywhere.
Yesterday evening I visited the future of Toronto’s neighborhoods. It is located at 367 Howland Avenue. And it takes the form of 10 homes on a lot that previously used to house only 1. Developed by Green Street Flats and designed by Craig Race Architecture, it is a near perfect example of what Toronto hopes to achieve with its new multiplex policies. As Craig put it last night, “we found the missing middle!”
Now to be fair, this is a double lot, measuring about 10m wide in total. And so this is twice the size of what the new policies now allow on a single lot — a fourplex plus a laneway suite or garden suite (4+1). But it is still generally consistent with what you could do today if you had two contiguous lots.
That said, this project predates the new multiplex policies, meaning it required a long list of zoning variances and it led to an inevitable fight with the neighbors. This small project required an 8-day contested hearing before it was granted approval! Start to finish, Howland took over 3 years.
That is ridiculous and so I think all of us should view the new multiplex policies as meaningful progress in our city. What was once contentious and a huge pain is now permissible as-of-right. Isn’t it funny how rules and perspectives change? “No, you can’t do this! Okay, now you can. Please do a lot of it.” So for the purposes of this post, let’s talk about Howland as if it were built on an as-of-right basis and you could do the same on your own lot if you were so inclined.
From a design perspective, the homes are organized as follows:
There’s a full-floor basement suite, a full-floor suite on the main level, two back-to-back two-storey upper suites, and then a laneway suite at the back. One reason for this configuration is that it means you never have to walk up more than one flight of stairs to get to your main living space. This was one of the design criteria and I think it works very well. Here’s an example of what this looks like (this is a suite #3):
For this particular site, the entrance to suite #4 is at the back of the fourplex and accessed via an adjacent laneway. But for the “inboard” fourplex, each suite is accessed via the main street. Once again, I think this all works very well. I just wonder if there could be an opportunity to shave additional costs by moving some of the circulation outside (kind of like this). I guess it would depend on the width of the lot.
Of course, the big question remains: Do projects of this scale actually make any money? Because if they don’t, then people aren’t going to continue building them. Though, I would say there are two ways to think about underwriting a project like this.
The first is from a 100% investment standpoint: build 5 homes, rent 5 homes, and then collect a reasonable risk-adjusted return. The second is a hybrid approach. Maybe it’s build 5 homes, rent 4 homes, and live in the other one. In this case, the math is likely a bit different. It could just be about subsidizing your living expenses as opposed to generating a commensurate return.
But in both cases, we know that these are very skinny projects. You need to be extra careful with your costs. And from what I gleaned last night, 6 or more suites is a better underwriting starting point (compared to 5). We also know that these projects only pencil with CMHC financing. Period. Full stop. If CMHC financing were to go away or meaningfully change, so to do these missing middle projects.
So as we look toward the future of housing in Toronto’s neighborhoods, we need to keep in mind that these projects happen very much on the margin (as does all development, but it’s an even thinner line here). Meaning it remains to be seen whether these will happen at scale across the city, which is now the hope. It’ll also be interesting to see if developers like Green Street don’t scale up over time. I suspect they will.
Congratulations to Green Street Flats, Craig Race Architecture, and the rest of the team on helping to pioneer this new housing typology. It’s a glimpse of the future and, judging by the turnout at last night’s open house, Toronto is ready for it.
This proposal by Dubbeldam Architecture + Design, called Incremental Density, is both an obvious step in the right direction and a problem. It is directionally right because it is exactly the kind of “gentle density” that we need and that many of us hope to see in our cities.
Four to six storeys, prototypically built on an as-of-right basis all across city, possibly by small-scale owner/developers. In fact, this approach is one of the things that Toronto’s new mayor, Olivia Chow, has been speaking about on her first day in the office:
Further, Chow said she wants to make it “easy and fast” for those who want to “build up” their single-family, often detached, homes to address what is known as the “missing middle” due to a history of “red tape” around zoning.
“What I’m saying is ‘build, build, build, build,’ up to four storeys if you want to have four units,” she said. “You can rent out three of them and some money right. Then you are creating more housing, and you’re earning some extra dollars,” she continued.
“So I want to unleash the power of the homeowner and say to them, ‘go build it,’ because we need housing right here now.”
Here’s the problem, though. I’m going to go out on a limb and assume that at least a few people will not want 6 storeys beside them and their backyard. I mean, I struggled with a 2.5 storey laneway house for many years. (11 to be exact.)
So how do we get from where we are today to what you see above? It’s going to take some finessing. Maybe it’s only in specific areas and on certain sites to start, or maybe we need to gradually increase the massing over time. Either way, I too am ready to “build, build, build, build.”
If you’re a regular reader of this blog, you’ll know that I have a thing for narrow streets. Which is why when I travel I sometimes (okay, oftentimes) bring a laser distance measuring device with me. I like measuring things so that I have dimensions that I can feed back into our own development projects. But perhaps most importantly, it allows me to appear as nerdy as humanly possible while traveling. Walking around with just a camera in hand isn’t enough. You need to try harder than that. And so far the narrowest street that I have come across was in Noto, Sicily at just over 1.3m wide.
If you also like to fawn over narrow European streets, you may enjoy this recent video by City Beautiful. In it, Dave Amos compares European cities, like Rome, to US cities, like Salt Lake City and Philadelphia, and then asks: Can the US build European-style street networks? His immediate answer is, “probably not.” And this is something that we have talked about before on the blog. Street networks tend to be really sticky. They’re hard to change. However, there is another possible solution: create new smaller mid-block streets. And that’s the focus of Dave’s video:
But if you think about it, this condition already exists in a number of cities. Here in Toronto, we have somewhere around 300 kilometers of laneways, which tend to range in width from 4 to 6m. These are European-scaled streets and amazingly they’re already in place! The only difference is that, today, they mostly serve a back-of-house function. They provide access to garages. However, that is quickly changing with the introduction of laneway suites. And so over a long enough time horizon, our laneways are going to inevitably flip from back-of-house to primarily residential.
Though maybe there’s even more we could do with this asset. European cities manage to fit retail, restaurants, patios, and more within 6m. Why not do the same with some of our narrowest streets?
I was a little surprised by some of the numbers here, namely municipal fees. But that is not the point here. The point is that this is a great idea and that, judging from the comments on Twitter, many people seem to want this.
The obvious benefit is that it allows consumers to better understand where their money is going. But I also think that by showing people all of the costs that get levied on new housing, it could benefit the overall development industry.
What do you think? Should developers in Toronto adopt a similar approach? Let me know in the comments below.
As many of you know, I am an advocate for high-speed rail in Canada. Specifically along the Windsor-Quebec City corridor, which is the most densely populated part of the country. And so I found this comparison interesting:
“If there is one project that would create thousands of jobs, improve business productivity, clean up the air, reduce the output of greenhouse gases and cut the demand for endless highway construction, it would be high-speed electric rail between Toronto, Ottawa and Montreal, where population densities are high enough to make the project sensible. Cost estimates are all over the map. The University of Toronto’s Munk School of Global Affairs & Public Policy put the price tag at about $12-billion, which is $2-billion less than the bucks being thrown at the Volkswagen battery plant alone. But forget it – the Canadian government wants more cars, not fewer. Canadian cities will remain car sewers forever.”
The above excerpt is from this opinion piece talking about EVs and the public subsidies being paid to encourage battery production within Canada. I get that we want to be part of this important mobility shift. But we are way behind when it comes to high-speed rail.
And by behind, I mean that we don’t have it at all in this country.
The typical way to do it looks something like this:
Hire a creative agency
Come up with a new name and brand identity that speaks to your target market
Create a new website and new social media accounts
Start marketing the project with this new single-purpose brand and identity in the forefront (the developer’s brand is usually far less prominent)
Of course, this is the typical way and things do vary. What I would like to discuss today is this last point: the interrelationship between new project-specific brands and developer brands. Because in most other industries, the brand of the company is paramount. It is everything. When BMW releases a new car model, it is BMW and then the something. It is not the something, with BMW hidden at the bottom of the page.
So why is real estate any different?
One possible explanation is the entrepreneurial and opportunistic nature of development. New projects are often the result of people and groups coming together to make a specific “deal” happen. And unless you’re an established player with a long history, you may not have a consumer-facing brand with much equity in it. So you rely on a new single-purpose one instead.
But perhaps the main reason is that, as an industry, we have never really succeeded at making buildings a product (architects sometimes despise when you call buildings this). It is for this reason that every building can feel like a prototype and that prefabrication remains this dream that never seems to become a reality. A product implies something repeatable and producible at scale. And buildings are generally not that. Every market and site are unique.
All of this said, there are ways that developers are building meaningful brands for themselves.
The first way is to obviously focus on building your own brand alongside or in lieu of strong project brands. One example of this is Toronto-based Urban Capital. They build a specific kind of condominium building/product and, to the extent that it’s possible, it doesn’t change whether they’re building in Saskatoon or in Halifax. David Wex, one of the partners, describes this as branded vs. opportunistic real estate development.
Another example is Toronto-based Fitzrovia (which I wrote about, here). They are one of if not the most active rental developers in the city. And if you go into one of their apartment buildings, you’ll find the same No. 10 Dean coffee shop and bar in the lobby; the same rooftop pool (called LIDO); the same gym (called The Temple); and the list goes on. Their goal is to build a consistent and hospitality-like experience for apartments.
The second way to go about building a brand is to make it so attractive that other developers will pay you to use it. The best example that I can think of is London-based YOO. A partnership between John Hitchcox (a developer) and famed designer Philippe Starck, they have built a business out of creating branded residences for third-party developer clients. And this is in some ways the holy grail of development: you get paid without taking on the risk of building.
Of course, this same licensing model is also used with hotels. And hotel brands are globally the most common kind of branded residence. What this obviously tells us is that brands matter a great deal in real estate. They matter so much that developers will pay to use the right one, because it will likely command a premium and it will likely increase sales/leasing velocity.
It is for this reason that I’ve always felt it important to grow the parent brand alongside any project-level brands. And it’s why we never bother creating new social accounts for our individual development projects. Brand building takes time. If you’re going to invest time and money into one, why not take advantage of the compounding at the very top of the house.
We have spoken about this topic — of larger family-sized suites — many times before on the blog. And my argument then, as it is now, is that the largest barrier is cost. We can talk about cultural biases (which I do think exist in North America) and, sure, we can talk about how to better design for families. But until we solve the problem of costs or until low-rise housing gets so prohibitively expensive that it tips the scales in favor of multi-family buildings, I’m not sure we’re going to see a meaningful shift.
To be fair, it does appear that the number of families living in apartments and condominiums is increasing here in Toronto. My neighbor is one data point. However, broadly speaking, I don’t think it’s happening with the “larger family-sized suites” that most people imagine in their minds when they talk about this opportunity.
So how do we address this? There are a number of interesting ideas in the above Twitter thread that I would encourage you to check out. Ratcheting down or eliminating development charges (and other government levies) on larger suites is one of them. But what is obvious is that this is a challenging problem to solve. So the brutally honest answer is that I don’t really know what will be most effective. But here are three potential places to start.
As-of-right mid-rise buildings
Remove the barriers to building more mid-rise. One irony of mid-rise buildings is that they are probably the most desirable form of multi-family housing and yet they’re the most expensive to build. A lot of this has to do with construction costs and other unavoidable diseconomies of scale, but there are other things we can do. In my view, we should target to make all mid-rise buildings fully as-of-right. This means no rezoning costs, no community meetings, and overall simpler designs. Instead, the rough process should be: buy site, work on permit drawings, and start marketing new homes.
“Growth Pays For Growth” is one of the big lies at the root of Canada’s housing crisis. https://t.co/IW5LMr5tns
— your local self-inflicted housing crisis ouroboros (@itsahousingtrap) June 3, 2023
This is also something that we talk a lot about on this blog. But most people outside of the industry don’t think of it in this way, or they don’t care. The mantra is that “growth pays for growth”, which obviously sounds good. Tax new housing based on its impacts. But in reality this is not what’s happening. What is happening is that “growth pays for as much as possible as long as new home prices keep rising.” And it persists partially because nobody except evil developers see these large bills. But if we really want to make new housing more affordable and if we really want to encourage more families in new multi-family buildings, then we need a more equitable solution.
Financing new family-sized homes
The way we finance new homes impacts the kind of housing that gets built. Here in Toronto, new condominium projects generally require a certain percentage of pre-sales, because construction lenders want as much certainty as possible that they will get their money back upon completion. In theory, it also reduces the chance of overbuilding because you’ve pre-sold most/all of the homes. So there are obvious benefits to this approach. However, the problem is that you need people to now buy in advance. And oftentimes, the people buying early aren’t families who expect to need 3 bedrooms in 5.2 years. Should there be another financing solution for larger homes?
Once again, these are just three potential places to start. But I think they’re all critically important. If you have any other suggestions or ideas, please leave them in comment section below.
I am really drawn to live/work spaces like these ones here in Oklahoma City’s new Wheeler District. (Additional project info can be found over here.) We have some examples of this in Toronto, but I wouldn’t say it’s commonly done. And oftentimes they don’t work at all. More often than not, these spaces seem to just get used as strictly residential (which is okay).
But there are some arguably successful examples that we can point to. CityPlace is maybe one. When the area was first getting developed, retail would have been an extremely difficult use to underwrite. It was a development island. And so live/work suites were introduced at grade along much of the area’s main artery.
The area did eventually get new dedicated retail, but its live/work suites also started taking on more “work” as demand in the area grew. Today, nobody is going to confuse it with Bloor Street, but importantly, the ground floor was able to change and adapt. And this is one of the great benefits, or at least promises, of live/work: you get additional flexibility.
Personally, I would love to have a live/work space. I’d use it to incubate new ideas and sell random stuff. And I have a feeling that, given the opportunity, many others would do the same. So I plan to spend some more time thinking and writing about this topic. If any of you have shining examples of live/work successes, please share them in the comment section below.
Not surprisingly, the responses were divided. Some responded saying that beauty is more important than density, and a lot of people were quick to point out that there’s good density and there’s bad density. And because I can appreciate both of these comments, it made me think that I should probably elaborate on my glib tweet.
The points I was trying to vaguely imply are the following.
More often than not (at least for North American cities), I think our problem is not too much density, it’s too little. This translates into cities that aren’t walkable, aren’t conducive to transit, and that are overall less sustainable. Right now, every mayoral candidate in Toronto is promising to fix our crippling traffic congestion. I don’t know how they’re going to do it, but they’re promising it because they know it’s something people are pissed off about.
But here’s my take: counterintuitively, the problem is not enough density. The problem is that too many people in our region have no reasonable way to get around without a car. So they’re forced to drive. The way you fix this not as simple as more traffic enforcement or better signal timing. Good luck! You fix it through density, because density is what makes other forms of mobility suddenly possible.
All of this is not to say that density alone will render you a great city. Obviously things like beauty also matter a great deal. But in my opinion, density is a fundamental component. Because what good is beauty if you don’t have any urban vibrancy? The answer is that you probably don’t have a real city.
The other point I was trying to make is that space and density are both relative and oftentimes difficult to understand. We think building height and density are correlated, but that’s not always the case. Look at Paris or Barcelona. We also like to make a lot of spatial rules that we think are right and make our cities better: streets should be at least this wide, buildings should be no taller than the width of the street, and so on.
But here (pictured above) is a street that narrows to around 6 meters and has buildings that are probably 2.5-3x the width of the right-of-way. Sure, it also happens to be beautiful, historic, and Italian. But what would happen if you maintained this same beauty and made the street 5x as wide and lined up parking in front of the stores?
Somehow it wouldn’t be as enjoyable as what you see here.
