Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1083

I had a friend ask me this week about how I decide what to write on this blog. His comment was that I tend to write about a variety of different topics. He wondered: Isn’t it better to focus on one particular niche?

The simple answer is that I write about what interests me. And secondary to that is any concern around what will get the most clicks. In fact, I try not to fall into the trap of worrying about the latter. Sometimes it can be paralyzing to fixate on what will appeal most to the tens of thousands of people who read this blog on a regular basis.

The reality is that my interests are much broader than, say, just design and real estate; though these two topics are clearly central. 

I learned a long time ago while studying architecture and art history that what we make as a society is generally a product of the cultural milieu at the time. In other words, the built environment doesn’t happen in a vacuum. It is the physical manifestation of what we believe to be true at a particular moment.

Today, it’s pretty hard to ignore the importance of tech. Think of some of the most valuable companies in the world right now: Apple, Google, Amazon, Facebook, and so on. Now, technology has always shaped our cities, but what makes this moment different is the decisive shift toward software.

It’s arguably no longer about who can build the best mousetrap. It’s about who can build the best software layer on top of that mousetrap.

In 2011, venture capitalist Marc Andreessen (previously the co-founder of Netscape) published a widely shared essay called, “ Why Software Is Eating the World .” And over the past 6 years he has been proven to be very right.

The 3 main points he aimed to make with that essay are as follows:

1. Every product or service that can become software will become software.

2. Every company will have to become a software company.

3. The winning companies will be the best software companies.

Depending on your industry, this may sound ludicrous to you. Certainly in 2011 it probably seemed that way. 

But a perfect example of this phenomenon is the iPhone. The phone itself is manufactured in China, albeit where a lot of great hardware innovation is taking place. 

But at this point, phones have become fairly commoditized. The profits that Apple makes from the iPhone disproportionately come from the software layer and the app ecosystem it has developed.

You could make a similar argument with Tesla. Autonomous navigation – which most of us can agree will have a profound impact on cities – is largely a software challenge. 

And so if you believe that autonomous vehicles will be a fundamental part of the future of mobility, then it’s not that hard to believe in point number three: the winning car company will also have to be the best car software company.

Some industries have been less touched by tech and software – real estate being one of them. But if Andreessen is right and it’s not a question of if, but a question of when, then it behooves all of us to think about the potential impacts.

I love how Andreessen ends this podcast discussion with Barry Ritholtz of Bloomberg and so I’m going to repeat it here to close out this post. He says: “There are no bad ideas. There are only early ideas.” 

And that’s why I write about tech on my city building blog.

Photo by Michal Pechardo on Unsplash

Over the past 5 years or so, real estate headlines in the Greater Toronto Area have often focused on the rapid appreciation of low-rise housing. High-rise housing simply wasn’t appreciating at the same rate – at least in aggregate terms.

But 2017 has brought a different story. 

If you look at  BILD’s  “New Homes Monthly Market Report” (data provided by Altus Group as of July 2017), you can see that high-rise pricing is now on a similar trajectory to low-rise pricing.

Here is that graph:

This sharp uptick in pricing is also apparent when you look at the average price per square foot of new high-rise inventory. As of July, it was $764 psf across the GTA. See below.

At the same time, average unit sizes have also jumped up to 871 square feet. So not only are new high-rise homes becoming more expensive on a normalized basis, they are also getting bigger, which further increases prices.

I recognize that we’re only seeing data up to the end of July, but, from the looks of it, 2017 is shaping up to be an extraordinary year for the condo.

Of course, part of the reason this is happening is because remaining inventory for both low-rise and high-rise product is hitting 10-year lows. We’re back to the topic of supply .

If you’re curious how some of these numbers have changed from the month prior (June 2017), check out this post .

The Globe and Mail just published a piece called: How Morguard CEO Rai Sahi became Canada’s $2-billion real estate king . It’s a Globe Unlimited piece, so some of you may not be able to access the article. 

But here’s a snippet that talks about the moment Sahi left his job at the Bank of Montreal and went out onto his own as an entrepreneur:

In 1981, Sahi spotted an opportunity: Advanced Extrusions Ltd., a small manufacturer of aerosol cans and toothpaste tubes based in Penetanguishene, Ontario. Along with several partners, he bought the business for $7 million. Quickly, Sahi and his partners kicked Advanced into high gear by installing a high-speed assembly line and taking advantage of the low Canadian dollar to boost exports to the United States. Revenues doubled, and CCL Industries Inc. bought the company in 1985 for a reported $22 million. He then used the proceeds from the Advanced sale as a launchpad to buy control of two transport companies, combined them, and sold them to Winnipeg-based Federal Industries for $70 million, much of it in shares.

The reason for this Globe article is no doubt because Sahi’s Glen Abbey golf course is in the news  right now. He acquired the course by buying ClubLink when they were in a cash crunch and has since put forward plans to redevelop the land. 

On Monday night, Oakville city council voted unanimously to seek a heritage designation for the course.

I don’t know much about golf courses, but I do think Sahi’s story is an inspiring one. Here is a guy who moved to Canada at the age of 24 and started out by selling insurance door to door. And today his net worth is estimated at $2 billion.

Full disclosure: I used to work at Morguard.

Photo by juan gomez on Unsplash