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: toronto

  • Toronto got flooded out today

    It rained a lot today. According to Environment Canada, Toronto’s Pearson Airport saw 97.8 mm of rain fall before 2 PM. This is the fifth rainiest day on record; the record being July 8, 2013, which saw 126 mm fall. But today feels a lot like it did in July 2013. The same rivers, streets, and underpasses flooded. People needed rescuing. Cars got marooned. And more than 167,000 customers were left without power. I lost power in the Junction around lunchtime and it didn’t come back on until just before 7 PM. That really hurt productivity, although I did manage to get in a workout during the outage.

    Sadly, all of this is expected. The thing about air is that its ability to hold water depends on its temperature. For example, according to Nasa, a given volume of air at 20°C can hold 2x the amount of water vapor compared to air at 10°C. So as the earth’s atmosphere warms, it is automatically going to hold more water vapor, and that means the potential for bigger and more severe storms. Some scientists predict that for every 1°C increase in atmospheric temperature, we should expect precipitation intensity during extreme storms to increase by about 7%.

    This means that flood and water management are only going to become increasingly more important to all cities — not just the most vulnerable cities like Miami. And it’s going to require constant adaption as we figure out how to best manage the climate damage we’ve done. Of course, it’s easy to want to do something about this on days like today when everyone is sharing videos of flooded streets and floating cars. But the trick is continuing to do something about it once most people have forgotten what July 16 was like.

  • Toronto is the fastest growing metropolitan area in Canada and the US

    Last month, I wrote a post called, More people, fewer new homes. And in it, was a chart showing that for the 12 months ending July 1, 2023, Toronto grew by approximately 126,000 people, and the Greater Toronto Area grew by about 233,000 people. Big numbers. At the end of the post, I also mentioned that this is more growth than the city has seen over the six preceding years.

    But how does this compare to other cities in Canada and the US? If we look at only central cities (not metro areas), Toronto is, in fact, first. Canadian central cities, in general, also seem to be growing more quickly than their US counterparts. After Toronto is Calgary, which added nearly 87,000 people for the same time period.

    Looking at metro areas, Toronto is still first. I don’t know why the ~222k figure, here, doesn’t reconcile with the ~233k figure from last month’s post, but presumably it’s some sort of boundary difference. In any event, Toronto is first. But now, once you include metro areas, US cities do much better in this list. Number two is Dallas-Fort Worth-Arlington.

    This difference between central cities and metro areas likely tells us something about the way in which these city regions are growing. Still, it would be interesting to see how much of this population growth is being accommodated through infill development vs. greenfield development. One way to measure that might be to look at changes in the footprint of their built up areas.

    For more about the above two charts, check out this recent post from TMU’s Center for Urban Research and Land Development.

  • Elevators in North America are broken

    It was not my intention to make this building code week on the blog, but for some reason that has happened. So let’s continue. Here is an interesting guest essay — about elevators — written by Stephen Smith for the New York Times.

    Stephen is the founder and executive director of a Brooklyn-based non-profit called the Center for Building in North America. And what they do is conduct research on building codes, specifically in the United States and Canada, and then advocate for reforms.

    Here’s what he thinks about elevators (taken from the above essay):

    Elevators in North America have become over-engineered, bespoke, handcrafted and expensive pieces of equipment that are unaffordable in all the places where they are most needed. Special interests here have run wild with an outdated, inefficient, overregulated system. Accessibility rules miss the forest for the trees. Our broken immigration system cannot supply the labor that the construction industry desperately needs. Regulators distrust global best practices and our construction rules are so heavily oriented toward single-family housing that we’ve forgotten the basics of how a city should work.

    Here’s how the US compares to a few European countries:

    Nobody is marveling at American elevators anymore. With around one million of them, the United States is tied for total installed devices with Italy and Spain. (Spain has one-seventh our population, 6 percent of our gross domestic product and fewer than half as many apartments.) Switzerland and New York City have roughly the same population, but the lower-rise alpine country has three times as many single-family houses as Gotham — and twice as many passenger elevators.

    And here’s a set of cost comparisons:

    Behind the dearth of elevators in the country that birthed the skyscraper are eye-watering costs. A basic four-stop elevator costs about $158,000 in New York City, compared with about $36,000 in Switzerland. A six-stop model will set you back more than three times as much in Pennsylvania as in Belgium. Maintenance, repairs and inspections all cost more in America, too.

    If you’re interested in this topic, I would encourage you to give the full article a read. It’s highly relevant to our ongoing discussions around missing middle housing. If cities, like Toronto, hope to build a lot more apartment buildings (especially smaller-scale ones), they are going to need affordable and plentiful elevator options.

    (Thanks to Michael Visser for sharing this article me.)

  • Single exit stairs in buildings up to 4 storeys

    Conrad Speckert got in touch with me following yesterday’s post (about single-stair buildings) and he was kind enough to let me know that, this Thursday, Toronto Planning and Housing Committee will be considering this single exit stair item.

    Included in the agenda item is a building code report that was done because City Council wanted to know if it were feasible to design multi-residential buildings up to four storeys that wouldn’t be detrimental to human health.

    Now that the report is done, one of the recommendations being put forward this week is for Toronto to create a guideline that would help people prepare alternative solution proposals under the Ontario Building Code.

    Alternative solutions provide greater design flexibility. We almost always have them come up on our projects. In essence, they are a way of saying, “yeah, I know this design doesn’t precisely meet the code, but it still satisfies its intent, and it works, so please approve it.”

    In this particular instance, the idea is to create a public-facing guideline so that more people will be able to figure out how to build 4-storey buildings with a single means of egress. Again, the current maximum is 2 storeys.

    Four storeys isn’t quite six storeys. But we’re getting there. And it has become increasingly obvious that it is now just a question of when, not if. At some point, we won’t be calling this an alternative solution proposal. It will just be — the way.

  • Using maps on a bike

    I have started using Apple Maps when I cycle. I’ve been using Apple instead Google because it automatically pairs with my watch and tells me (through vibrations) when I need to turn somewhere, but I’m not here to argue that one is better at navigating than the other.

    What’s great about using either Apple or Google Maps is that it will take you on routes that have bike lanes or, at the very least, routes that have less vehicular traffic.

    Toronto’s cycling network is far from complete. But I have been impressed by how far I can go on dedicated lanes and by how many lanes/trails exist that I didn’t know about. Here is the city’s 2024 map showing only dedicated bikeways:

    It is not fun riding a bike when you have to fight with city traffic. And so this is a great way to try and avoid that, and not think too much about which routes you should be taking. It’s also a great way to test the completeness of your city’s biking network.

    I’m glad that Toronto is becoming a much better place to ride a bike.

  • Montréal is making yet another case for pedestrian-only streets

    There are parts of Toronto that are pedestrian only. There’s the Distillery District, some small laneways in Yorkville, the Toronto Islands (though this is a bit of a unique situation), and various other pockets around the city.

    There are also streets that we temporarily open up to only pedestrians, such as Market Street and King Street, and areas, such as Kensington Market, that we have been rigorously considering pedestrianizing for as long as I can remember.

    What is clear is that pedestrian-only streets are controversial. Motorists fear that it will make driving in the city even more inconvenient. And businesses fear that it will limit their customer base.

    While it is true that not all streets can and should be pedestrianized, there are countless examples of streets and areas that appear to be thriving because of it.

    Take, for example, Montréal.

    Since 2021, the city has been pedestrianizing a stretch of 30 blocks along Mont-Royal Avenue during the summer months. And according to Mayor Valérie Plante, the commercial vacancy rate for the street has dropped from 14.5% in 2018 to 5.6% in 2023:

    Maybe you don’t want to infer causality here, but at the very least, it seems to suggest that the street isn’t dying and bereft of human activity. This year, pedestrianization is also planned to be extended further into the fall.

    This won’t necessarily be the outcome for all streets, but I do agree with this recent Globe and Mail article that, oftentimes, the reasons for not pedestrianizing are “a question of philosophy, not geography.” Because there’s lots of research and data to support doing this.

    If any of you are business owners along Mont-Royal, I’d love to hear about your experiences and how you think, for better or for worse, it has changed the area. Leave a comment below or drop me a line.

  • So, what is Globizen doing?

    First, the why. The why is to build better cities. And it’s as simple as that. I love cities. The team loves cities. And we all feel a great sense of responsibility when it comes to doing our part to make them more prosperous, more beautiful, and overall better places to live and work.

    It is for this reason that Globizen refers to itself as a city builder. We obviously didn’t invent this moniker, but we do take it seriously. And our specific intent is to be both a city-building company and a city-building community.

    What this means is that we do the things that most companies do, including trying to make money. But in parallel to this, we also aspire to create a community of like-minded city builders.

    City building isn’t just about real estate development. It’s also about the artist that just painted a mural, the local restauranteur that just opened up a new concept, and the individual that just did something, whatever that may be, to improve their community.

    We would like to do our part to celebrate these actions and support more of them. This is how we want to build.

    As for what we actually do, we are developers of creative mixed-use infill projects. Currently, we are developing and managing projects on our own account (we invested our own equity) and on behalf of great partners. But in all cases, we have a consistent investment philosophy and approach to development:

    • Focus on fundamentals
    • Search for overlooked assets and opportunities
    • Embrace non-consensus views
    • Create value by innovating with design, culture, and technology
    • Execute with discipline and passion
    • Think long term

    We are actively looking for new development opportunities. We are also exploring/underwriting a number of income-producing asset strategies. If you’d like to pitch us a site or project, or you just want to grab a coffee somewhere cool, please feel free to send me an email (brandon.donnelly@globizen.com).

  • Where 3+ bedroom homes are getting built in Ontario (Hint: It’s not Toronto)

    Here’s an interesting, though not shocking, chart from a recent Globe and Mail article talking about “Canada’s dysfunctional housing market.” What is noteworthy is that Toronto is dead last when it comes to the number of new 3+ bedroom homes built between 2016 and 2011.

    Peterborough, for example, is a census metropolitan area with somewhere around 130,000 people. And yet, based on this data, it is building more family-sized homes than Toronto.

    Why this is not surprising is that the vast majority of new homes now built in Toronto are high-density and built out of reinforced concrete. This means that they are relatively expensive on a per square foot basis.

    In fact, you could argue that mid-rise housing — the exact high-density type that is supposed to be most attractive to families — is the most expensive to build. What this means is that if you’re building a 3+ bedroom home in this way, it’s not going to be affordable to most.

    It also means that people are going to go shopping elsewhere: Ottawa, York, Simcoe, Durham, and so on. The expected market outcome is decentralization. But in my mind, this raises an important question: Is this what people really want?

    This is a great debate. And many will argue that grade-related suburban housing is exactly what people want. What we are seeing is a result of raw consumer preference.

    However, the costs are so skewed in favor of low-rise housing, that I think it’s hard to say with absolute certainty the degree in which this is true. What if higher-density 3+ bedroom homes were the cheaper option? My bet is that we would see a lot more centralization.

    The development charge rate for a 2+ bedroom apartment in the City of Toronto is currently $80,690 per unit (effective June 6, 2024). As development charges work, this is supposed to pay for the growth-related impacts of adding a 2+ bedroom apartment in the city.

    However, the above chart suggests that there are also impacts to not building that 2 or 3 bedroom apartment in an already developed area next to existing infrastructure. It means the home goes somewhere else (further away) or doesn’t get built at all.

    Both of these outcomes also have costs.

  • Toronto approves new Rental Housing Supply Program

    This past week, Toronto City Council approved the launch of a new affordable housing initiative called the Rental Housing Supply Program. Here’s the agenda item if you’d like to dive into the details and read some of the supporting reports. There are a number of components to the program, and one of them is a subsidy that will be administered by way of a forgivable interest-free loan:

    Subject to the adoption of the Rental Housing Supply Program, the City will continue to support RGI and affordable rental homes through the allocation of up to $260,000 per eligible affordable rental and RGI home. This is the maximum allowable funding allocation under the Rental Housing Supply Program. Actual funding per project will be determined based on the evaluation of applications on a site-by-site basis, in consultation with the Chief Financial Officer & Treasurer, and based on project parameters and additional sources of funding that can be leveraged to support the project’s financial viability. These funds will be provided as interest free forgivable loans to eligible and approved projects and will be tied to milestones and requirements in agreements with housing providers.

    Total funding for the program is $351 million. And the intent is that these funds will be distributed in the near term to 18 affordable housing projects in the city, all of which are expected to start construction sometime between now and the end of 2025. In total, this is anticipated to create about 6,000 new affordable rental homes. That’s a good thing.

    Now, I don’t know anything about these projects. I don’t know if $260k is the right figure. And I don’t know if a forgivable interest-free loan is the exact right mechanism to deliver these funds. But what the program does do is recognize this: Deeply affordable housing cannot be built without some form of subsidy.

    Developers are often criticized for only building expensive housing. But the reality is that developers are, for the most part, takers of market pricing. In other words, we can’t just decide to build for less. We can reduce build and finish quality to get costs down, but at a certain point, the cost to build is the cost to build.

    And if that cost to build isn’t what the market would view as affordable, then you’re not going to get there without a subsidy. No developer is going to build if their expected revenues are less than their costs. Directionally, that’s what this new program appears to recognize.

  • Approved but unbuilt

    Recent data from the City of Toronto indicates that there were approximately 106,000 new residential units completed between 2019 and 2023. That averages to about 26,500 homes per year.

    At the same time, Toronto is reporting that 258,397 units are currently approved for development and that 436,421 units are currently under review. The former means that the projects have been approved and that a building permit has been applied for or has been issued. And the latter means that the units are still under review or under appeal.

    These feel like staggering numbers. If we were to use the same completion rate as 2019-2023, it would take over 26 years to build these 694,818 new units (homes approved + under review).

    However, I think it’s safe to assume that not all of these homes will be built; at least not in the short term. Many (perhaps most) of these projects are simply going to evaporate in the current market environment. They’re unfinanceable.

    Because that’s the thing, zoning approved does not necessarily equal built and occupied. And right now, in this market, these two things feel like they’re diverging. Toronto grew by about 207,000 people between 2019 and 2023. And it built about half of this number in new homes.

    When we look back at the next four years, I suspect that this housing supply number will be noticeably lower. This is despite the staggering headline numbers.