Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1096

I have long told myself that if I ever needed to rent self-storage space, it would mean that I own too much stuff and that I need to get rid of some of my shit. But I recognize that there are many reasons why someone might need extra storage and I recognize that the storage market in the United States alone is something to the tune of $30 billion a year .

Here is an interesting case study about the storage company MakeSpace , which to-date has raised almost $60 million in equity funding . Their model is likely one that you’ve heard of or used before. Instead of you yourself going to the “self-storage” facility, they do the pickup and delivery. So they call themselves a logistics business, like Amazon, except that it works in reverse. Instead of you receiving deliveries, they take your stuff from your home back out to their warehouses.

Because of the route management software that they’ve been building over the last 4.5 years and because there’s enough density in the areas that they service, their pick-up and drop-off routes are apparently profitable. You no doubt need a certain amount of scale for that to happen, but they seem to have it. By the end of this year, they expect their reoccurring revenues to be in the $10′s of millions. That’s coming from the volumes of green boxes you see at the top of this post.

What’s particularly relevant for this audience are the built form and real estate implications. Because their customers aren’t physically visiting their facilities, they’ve been able to locate all of their distribution centers on the outskirts of the cities in which they operate. And because of this, their physical real estate costs are said to be less than 50% of traditional self-storage firms and they believe this number will trend to around 20% as volumes continue to grow.

All of this has me thinking about some of the other implications of the on-demand economy on cities and on real estate.

Image via  Both Sides of the Table

I spent this evening driving around Toronto with an architect friend of mine looking for laneway houses. (Late summer sunsets have a wonderful way of extending the day.)

I think most people would be surprised by how many of them are hidden away behind our streets. I think of laneways as a forgotten third layer behind our major avenues and smaller streets.

One of my favorite laneway houses, pictured above, is Armstrong Avenue by Taylor_Smyth Architects. It’s a bit unusual in that it’s exceptionally large for a laneway house (2,200 square feet). But that’s because the building was originally built as a dairy (1912).

What’s interesting about the house is that from the outside it looks rather nondescript. Okay, it looks raw and rundown. Here is a closer photo:

But then inside, it looks like this . Modern. Clean. Polished. And light-filled.

I’m not suggesting that this should or could become a repeatable model for laneway housing in Toronto. Again, it’s a unique circumstance. But I think contrast is an extraordinary poetic device. And in this case, it speaks to both the past and the future of this city.

Over the weekend, Marcus Gee of the Globe and Mail published a terrific article about Toronto’s King-Spadina district and how “condos conquered a rundown district of the city.” (This post will argue that condos were not the catalyst, but an outcome of other changes.)

The image at the top of this post (City of Toronto Archives) is the intersection of King Street and Spadina Avenue around the early 1900s. And here is roughly that same view from May 2016 (Google Streetview):

From this perspective, it may look like not much has changed. The buildings at the two corners are still there, although their uses have changed. The streetcars are still running, although we now have slightly newer machines. And there are overhead lines providing a canopy across the intersection.

But as Gee points out, the reality is that in recent years King-Spadina has arguably seen more change and development than any other precinct in the city:

No fewer than 99 projects have been built, approved or pitched since 2004. That’s one quarter of the total for the entire city and more than the count for two vast suburban districts – Scarborough and Etobicoke – combined. King-Spadina is overtaking even high-rise hubs such as Yonge and Eglinton in midtown Toronto and the Bay and Yonge corridors downtown.

Below is a diagram showing the built form of that change.

But as we talk about this massive change, I would argue that this didn’t happen by accident. 

Gee starts his piece by saying that “cities have an endless ability to evolve, to rebound, to reinvent and regenerate themselves, sometimes in ways that would astonish generations past.” I would add one word: Successful cities have an endless ability to evolve.

King-Spadina has indeed reinvented itself many times. Prior to its current iteration, it served as a manufacturing district and as the center of Toronto’s garment industry. But from the 1970s through to the early 1990s, the area fell into decline as its manufacturing base left.

The game changing moment happened in 1996 when “The Kings” – which includes the areas around both King-Spadina and King-Parliament – were redesignated as “Regeneration Areas.” The overarching goal was to deregulate away from single-use industrial zoning and allow the area’s buildings, both old and new, to take on almost any use.

Now all of a sudden it was possible to have light industrial, commercial, entertainment, retail, residential, and live/work uses all mixed together. And with the bones already in place, the market responded. 

In my view, it is these earlier changes that laid the groundwork for what has become one of the most exciting neighborhoods in the country.

However, today some are worried about whether or not this is too much of a good thing. And I am sure that many would like to blame developers for piling up in this neighborhood. Why continue to build here when there’s lots of land elsewhere?

King-Spadina is a perfect example of what Richard Florida would call “winner-take-all urbanism.” There are powerful clustering forces at play both globally and locally in our cities. And so there are real economic reasons for why King-Spadina has seen more development than Etobicoke and Scarborough combined.

Permissive land use policies and the right building stock may have kickstarted things, but now economies of agglomeration have taken over. Retailers, restaurants, clubs, tech companies and people, among many others, are now fighting for space in this area for the same reason that Toronto’s garment industry once felt the need to cluster here. There are tangible benefits to doing so.

What people are effectively asking today is at what point do we start to see diseconomies of agglomeration. This is an important question and one that needs to be actively managed. 

Without getting into any of the details, I believe that the King Street Pilot Study  – which puts transit first along the King corridor – is one very appropriate answer to this question. It is a direct response to diseconomies of agglomeration, in this case traffic congestion.

But there are important corollaries to this question that are also worth considering: How do we now create more King-Spadinas and how do we create more broad-based and inclusive urbanism in the face of these powerful clustering forces? These are questions that go well beyond King-Spadina, but there are lessons to be learned from the successes seen on the west side of downtown Toronto.

Images via  The Globe and Mail  and Google Street View